Last month, Zappos CEO Tony Hsieh said in a memo to employees that the company would be moving to a flatter management structure and doing away with “people managers.” Those people who didn’t want to make the switch were offered a buyout…and about 14 percent of the company took it.
The Amazon-owned shoe seller told the Las Vegas Sun that it lost 210 employees in total as a result of the offer. That’s a significant chunk of Zappos’s total base – it only had 1,503 people working there prior to the buyout. It’s not yet clear what roles or departments were most affected by the departures, or if there was a common thread among those people who wanted to leave.
Taking the buyout offer was an arduous process, too. In order to be eligible, employees had to first read through Hsieh’s memo – which included two essays on self-governing companies – then watch an almost two-hour-long video by Frederic Laloux, the author of “Reinventing Organizations.” After that, they needed to either read Laloux’s book (which was provided for free in digital form to all Zappos employees) or write a letter explaining that they did not intend to do so.
Only after that would they get three months’ severance and 3 months of COBRA benefits, unless they were a Zappos employee for more than four years, in which case they would get one month of severance for every year with the company.
In the end, it may be the right move for Zappos. Not everyone wants to work for a company that actively tosses out hierarchies in favor of self-governing “circles,” and offering those people a comfortable way out may ease the transition. Of course, it remains to be seen if the flat leadership structure will actually work.
Zappos is one of the largest companies to move to a flatter structure, but not the only one. Bellevue-based Valve Software operates under a similar model, which doesn’t always work perfectly, as some former employees have argued.