Zappos and Employee Empowerment

Continuing with the stories brought to mind by the business news accounts of Zappos.com.

News accounts point out that 14% of Zappos employees accepted a severance package instead of go forward with the fad of the month: Holacracy.

I’m not surprised with the percentage of employees who choose to leave the company. I’m sure there are many reasons but one resonates with me.

Peter Block described a simulation his colleague Joel Henning designed, which rings true in most of my experience:

Three teams role-played high-control patriarchal leadership, cosmetic empowerment, and genuine participation and empowerment. The high control group was quiet, had their arms folded, and had one or two pale, informational questions at the end. When asked their feelings about the meeting, they said they felt controlled and punished.

The cosmetic empowerment team had many questions, all of which were cynical and reeked of barter and deal making. They asked, “What’s in it for me?” and “Where did this fad come from?” They wanted the leaders to prove their sincerity. There was a lot of laughter and energy during the meeting. Upon reflection, they felt manipulated and doubtful, although they admired the cleverness of the strategy.

The genuine participation group went last and when they shared their intention to involve everyone in defining the program and solution the employees would have none of it. They wanted a common vision and strategy, they wanted to know what was expected of them and were fed up with this soft, open-ended non-solution. They questioned who was in charge and who was going to steer the ship to a safe harbor. They wanted to know what management was going to do to fix the problem. In processing the meeting, they felt management had abdicated. The employees had 20 suggestions about how the team could have done a better job and voted no confidence.

What disturbed Block?

• We resent patriarchy and its dominance,
• We become cynical at attempts at cosmetic change,
• Yet faced with the prospects of real participation and accountability for an unpredictable tomorrow, patriarchy begins to look better and better.

Block concluded that while we may talk blithely about the end of command and control, emotionally we miss it when it’s gone. If we are offered real choice and power, we push our leaders back into a controlling and directive stance. Our lips may say no to a benevolent monarch, but our eyes say yes. Leaders see the longing for good parenting in our eyes, and they have little choice but to respond.

Genuine empowerment carries freedom, responsibility, and accountability with it. We get to make choices about the work that we do. We get to select between alternatives that matter. It is our job to make our decisions real and to implement action steps. We get rewarded or punished, praised or criticized for our choices and actions. We get to act like adults and are treated like grownups. Many of us don’t want this level of adulthood in our work lives. Many of us, instead, want freedom from responsibility and escape from conflict.

Genuine involvement is messy, difficult, and time consuming. Reactive problem-solvers have to learn to be imaginative anticipators and that is hard to do—maybe impossible. People disconnected from others throughout their competitive work histories have to learn to listen, engage, connect, cooperate, compromise, empathize with others, and find win-win solutions. People who only feel okay when they are accomplishing a task have to learn to sit still, think, and engage with others. For them it feels unproductive

Many of us don’t want to develop new emotional and intellectual muscles. When put in a situation that asks us to stretch, we can’t get away from ourselves fast enough. We may prefer to be one of the walking dead so prevalent in our organizations. Aliveness is way too threatening for us.

Zappos & Happy Employees

True happiness involves the full use of one’s powers and talents. John Gardner in Self-Renewal

Zappos.Com has been in the business news recently. See my recent posts: Zappos, Teams and Pizza Pie and Zappos and the Dark Side of Leadership. I’m interested in the organizational work at Zappos because it is similar to leadership and consulting work I did long ago. No, Zappos organizational work is not new—just repackaged and renamed. Zappos likes to call attention to itself so we can get a glimpse inside.

Zappos CEO Tony Hsieh wants employees to be happy. He even wrote a book about happiness.

Other company’s invest in employee happiness.

The media tends to focus on glitzy stuff like a kitchen for employees, flashy meetings, and Zappos even pays people to leave the company (few take the offer). I understand the quick-fix mentality of the business world and the “for public consumption” success stories so I look with skepticism on the stories.

Here’s one organizations story and what we learned about happiness.

I led a transformation at the Star Tribune newspaper (Minneapolis, Minneapolis) in the early 1990’s. This change effort began when employees invited the Teamsters union to organize a union in the Customer Service Center: a call center that answered a million calls a year. Employees were upset with a reorganization plan for the department that leaders commanded and controlled from the top-down without employee involvement.

Senior management, determined to not have a union in this department (there were 13 unions at the Star Tribune), fired five women managers–scapegoats for the higher-ups who created the conditions for the organizing effort. I was asked to take over the department and told to defeat the organizing effort AND save millions of dollars at the same time. I created the vision for a new business unit: The Customer Service Center would join the newspaper’s Circulation field operation, which had already moved to self-managed teams.

We wanted to make employees happy to defeat the Teamsters.

We soon realized that being in the happiness business led to frustration and disappointment. We found happiness an elusive idea.

I learned that it was better to create conditions where employees could come to work and feel valued, involved, and informed and have their talents and passions utilized in jobs big enough for them–if they wanted to. Profits would grow as involved, engaged and self-managed employees pursued noble goals and they would feel alive in the process.

Back in the early 1990’s, not many books were available to help us chart our course. We had to learn on our own with the help of a consultant by the name of Diane Olson who practiced as a clinical psychologist and organizational consultant. She guided our process, made sure our decisions were consistent with our vision and values and helped us understand how to lead in a new kind of organization. We learned to understand and incorporate the emotional side of change into our leadership. We were action oriented: we planned (but didn’t get bogged down), took action, reflected on what happened, and adapted as we went–just like all pioneers.

Such an organization–much more difficult to work in and lead than the mechanistic model of command and control– required trust, diversity, relationships, excellence and a tough-love leadership. I had as much or more to learn than anyone. I asked for regular feedback and received it. I apologized often for my slips back to the old ways of leading.

Here’s what employees did in the customer service center:

•I met with employees in groups of 10 and described to them what we had already done with self-management in the field operations. I invited them to join in the vision of employee engagement/involvement, value driven leadership, and the goals–in this order: to improve employee quality of work life, improve customer service, become faster moving and more creative, and increase revenue/cost savings. The employees choose to join us.
• I selected my staff and got the right people in place.
• Employee groups worked to design 15 self-managed teams, and a skill-based pay system. We invited the more skeptical and outspoken employees to become change process teams who insured that employees felt valued, involved and informed as we went through change. They reported to me and became engaged.
• We downsized the workforce by 35% and eliminated most supervisory positions (see my post Zappos, Teams & Pizza Pie).
• Employees created and implemented a process that required all employees to apply for the new positions (jobs big enough for them) and teams.
• We saved millions of dollars, customer service measures improved dramatically and we celebrated.

In the process, we freed up vast untapped energy, talent and potential in employees.

Were the employees happy? I think so. They accepted the difficulties of this change and rejected the Teamsters union.

I felt inspired and I left the company to return to graduate school at age 48 to complete a Ph.D. in Leadership and Organizational Change and to teach others about leading the transformation from a mechanistic world view to a living system world view and how a shift in organizational metaphors leads to dramatic changes in how we work, lead and follow.

I learned over the years that I am responsible for my happiness. I use the Sigmoid Curve as a model to review the stages of my life and help me to become aware of the need and time for continued evolution in my life hence more time of flow or feeling alive. Organizations can use this model to find the right time to change before decline sits in. Enterprises don’t renew themselves just once: they do it routinely from the peak of their success to a new vision of their organizational life—that is, if they want their enterprise to be sustainable.

I agree with John Gardner: happiness comes not from perks but as an outcome of the pursuit of noble goals.

Zappos and The Dark Side of Leadership

Zappos CEO Tony Hsieh described a dramatically new design for the company and told employees to get on board or leave the company with a severance package. He made this announcement via a 4,552 word email. The email was long, directive, jargon-filled and overwhelming.

Approximately 14% of Zappos employees left the company.

One paragraph from the email:

As of 4/30/15, in order to eliminate the legacy management hierarchy, there will be effectively be no more people managers. In addition, we will begin the process of breaking down our legacy silo’ed structure/circles of merchandising, finance, tech, marketing, and other functions and create self-organizing and self-managing business-centric circles instead by starting to fund this new model with the appropriate resources needed to flourish. Functions that were previously silo’ed will be embedded inside these business-centric circles instead — this structure will require fewer roles that primarily manage expectations and drive alignment across legacy silos. We will continue using Holacracy’s systems and processes for prioritization and resource allocation, so it’ll be extremely important for all of us to keep Glass Frog up to date.

Say again?

I imagine that in the beginning Zappos.Com, like almost all organizations, operated from a mechanistic/paternalistic model: linear, hierarchical and compartmentalized organizations with functionalized departments with detailed job descriptions and rigid rules and boundaries.  A machine where managers tell workers to follow directions and leave the thinking to management. Mechanics (supervisors) with metaphorical wrenches tighten controls in search of consistency and predictability. Not a place of self-management, self-organization or humanistic values–anti-human places where conformity is the first rule.

Here’s what happens too often: Smart executives want to transform their enterprises from  mechanistic/paternalistic systems to various forms of employee involvement/engagement such as self-managed teams or self-organization for the bottom-line benefits of fully engaged employees. Suddenly the company talks about valuing employees. Leaders get excited to get going. They begin to put self-managed teams or self-organized teams in place. But their deeper beliefs and perhaps the only model of organizations they have ever known–often unconsciously–remain mechanical/paternalistic. With good intentions, they unconsciously fall victim to what author Peter Block defined as the dark side of leadership, “The very system that has patriarchy as the root problem uses patriarchal means to try to eliminate its symptoms.” We recreate what we want to change. Befuddled employees might feel crazy.

We cannot create organic–relationship based–organizational forms (self-management) with the thinking and skills used to manage mechanistic organizations.

Was Mr. Hsieh’s email an example of the dark side of leadership?

Before they rush into the fads (fads not because the theory is bad; fads because leaders like quick-fixes and move on quickly when change gets hard) of the day, people must have what Peter Senge called “moments of Metanoia.” Their inner shift opens them to a new and more expansive world view. Their underlying beliefs and assumptions about people, leadership and organizations change. The light bulb goes on and they “get it.”

Organizational mechanics can still use the mechanistic world view and tools of Newtonian physics for machines and linear work processes but now organizational artists can use the living system worldview from chaos theory, quantum physics and other natural sciences–where relationships are fundamental–for people.

This shift in thinking, required for self-management to succeed calls for new thinking and new skills not generally common  in mechanistic organizations. For example, systems thinking, emotional intelligence, conflict management skills, facilitation skills, a tough-love mentality. Evolved people must be developed or found. People with the courage and character to live by their personal and organizational values. Self-directed and assertive people who will take risks and who want to learn. And leaders must love people.

Most efforts to transform organizations fail. Real transformation is hard and rare. Few leaders have the skills, ability, wisdom, maturity or experience to lead successful organizational transformation. And many leaders, at all levels, are needed.

Instead of a paternalistic top-down memo, the leaders at Zappos might have used their imaginations to find a way to engage directly with employees about the vision for the future.They might have invited employees to engage in examining and charting the future course of Zappos.Com.

People comply and conform to top-down orders and threats; they support what they help create.

See Value Driven Leadership: A Story of Personal and Organizational Transformation.

Zappos, Teams & Pizza Pie

Zappos.Com, an online shoe and clothing shop based in Las Vegas, Nevada, offered employees three months’ severance pay to leave if they felt they could not get behind the company’s move to self-managed teams. The Washington Post reported that about 14% of Zappos 1,500 employees took the money and left.

The article reminded me of a similar story.

In the early 90’s, I was privileged to lead a business unit at the Star Tribune newspaper in Minneapolis, MN through a cultural transformation, which included the move to 15 self-managed teams in the Customer Service Center (we also added 15 self-managed teams in the Circulation department’s field operation spread throughout the newspapers Primary Market Area).

Our goals were to improve the quality of work life for employees, improve customer service, become faster moving and more creative and save millions of dollars. On top of that, we had to defeat a Teamster’s Union organizing effort in the Customer Service Center.

We wanted to downsize 100 positions without laying anyone off. We froze hiring in the Customer Service Center, the newspaper froze the hiring of outside candidates so our employees could apply for positions throughout the company and some employees accepted an early retirement incentive. And we offered an incentive similar to Zappos.Com for employees to leave if they wanted to do something else.

More people signed up for the incentive plan than we had anticipated. Nineteen employees who counted on the money had to be told they would not receive the severance pay. We scheduled a lunch and had pizza brought in.

The people were excited and filled with anticipation as they walked into the conference room. They thought they would get the severance pay. I welcomed everyone and invited them to dig into the pizza. I said I had good news and I had bad news. They looked at me expectantly. The good news was that we had achieved our downsizing goal through voluntary means. The bad news? They would have to stay.

The people were shocked, angry and disappointed. One married couple had booked a cruise. A man had bought a new car. They were critical of me. Some felt we were obligated to give them the money anyway. Some were critical of the process. I never thought I would be criticized for telling people they had a job.

We survived and went on to implement 15 self-managed teams, a skill-based pay system, reduced job descriptions from 25 to 12, eliminated most supervisors, reduced staff by 35%, improved customer service dramatically and saved millions of dollars. Employees told the Teamsters to go away.

The teams were engaged, empowered and morale was high.

I wrote the story of our transformation in my e-book, “Value-Driven Leadership: A Story of Personal & Organizational Transformation.”

The leadership experience changed me. I left the company after the transformation was finished. I completed a PhD in leadership and organizational change, wrote about life and leadership and consulted for 13 years before I retired.

What happened to the teams? Neglected by a mindless senior management, the teams faded away. A great opportunity was missed.

I  believe in the vision of organizations filled with engaged and involved employees who produce phenomenal business results. I’ve lived the experience.

I also believe that at this time in history we lack the number of leaders, at all levels, who have the talents, skills, maturity and experience to understand the difficulty of such transformation and lead such change.

My  prediction: Another transformation will prove unsustainable for lack of leadership.

Best wishes to Zappos.

I hope you prove me wrong.

 

P.S. to Zappos leaders: Knock off the jargon. It shows your lack of experience. It’s your job to learn the theory and explain it to employees in ways that they can understand. Realize that what you are doing is not new. Do your homework on self-management, employee involvement and past efforts to transform organizations.