The decision Tony Hsieh, the CEO of Amazon.com, Inc. (NASDAQ:AMZN)-owned Zappos, to change his company’s management style to pure Holacracy is a bit of hypocritical, says Professor Jeffrey Sonnenfeld in a discussion on CNBC.
The comment comes from the Yale School of Management senior associate dean for leadership studies after news that Zappos will be transforming its structure into a pure Holacracy and as a result, has lost over 200 employees who have opted to leave the organization.
Holacracy is a management style that believes in people being equal in a company which means that each employee is encouraged to lead themselves. This in turn is hoped result in more self-management and self-organization. Essentially, in a sense, Hsieh is saying that his employees should not treat him as their boss but rather a colleague who isn’t higher up the chain of command. Amazon.com, Inc. (NASDAQ:AMZN) bought Zappos in 2009 in a deal that was worth about $1.2 billion.
“There is an order there whether or not [Hsieh] wants to acknowledge it and he’s just not in control of it. It creates a lot of confusion over who is in control of what and, of course, the biggest paradox of all […] is that he initiated it. It is a bit of a hypocrisy that [Hsieh is essentially saying], ‘Thou shall participate or else.’ How is that employee participation if they didn’t elect?” Sonnenfeld tells CNBC.
Meanwhile, another guest in the interview, MRY CEO Matt Britton, suggests that employees who left the Amazon.com, Inc. (NASDAQ:AMZN) subsidiary may be feeling a bit cheated or that Hsieh is acting a bit patronizing to them.
“The fact is that Tony sold his company to Amazon for a big sum of money and when he did so, the equity of the company was not exactly distributed in a way that was pro-rata towards the employees. The switch is over now after he has had that big sellout and after he has had that big windfall can kind of be counterintuitive to most employees where they are saying, ‘Okay, fine. We’re all on one flat level now but where’s my cut when you sold the company to Amazon?’” Britton says.
It also appears from the interview that Sonnenfeld really does not believe in Holacracy. He says that Amazon.com, Inc. (NASDAQ:AMZN), its subsidiaries and other firms need very different leadership styles. Some are autocratic, some are more consensual, but chaos is never really the answer, he says. He adds that there is an order for every organization whether or not people are trying to allow it.
Ken Fisher’s Fisher Asset Management owned about 2.42 million Amazon.com, Inc. (NASDAQ:AMZN) shares by the end of the last quarter of 2014.
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