Zappos only lost 7% of its managers in its recent employee exodus

Zappos All-Hands meeting in May.
Zappos All-Hands meeting in May.
Image: Aimee Groth
We may earn a commission from links on this page.

The recent employee exodus at Zappos has been linked to CEO Tony Hsieh’s goal of eliminating traditional managers in an effort to move the company toward self-organization. In an internal memo from March, Hsieh asked employees to either get behind the company’s new strategy or leave. He shared that managers would soon have to find new roles to fill: “To be clear, managers were absolutely necessary and valuable to the growth of Zappos over the years under our previous structure,” he wrote.

Despite uncertainty around compensation, which will no longer be tied to job titles, 93% of Zappos managers decided to stay with the company. Zappos shared with Quartz the breakdown of initial offer-takers (there is a second offer on the table for a subset of employees), which shows that of the 210 employees who took the first offer, 20 were managers. In other words, while 7% of all managers took the offer, 18% of non-managers accepted the buyout, making up a total of around 14% of employees leaving the Amazon-owned subsidiary:

Zappos chief of staff Jamie Naughton, who has been with the company for more than a decade, says that although she previously oversaw a team of roughly 25 people, the bulk of her work wasn’t managing. “Most of my work is doing my own projects,” she tells Quartz. “That’s how it was for a lot of managers. Managing was second to their primary job.” Naughton now fills roles in 12 circles and is lead link of the chief of staff circle, which is “mainly focused on helping scale and drive efficiencies for other members of the General Company Circle—including Tony, Fred [Mossler], Arun [Rajan].” (Mossler has long held a broad scope of duties with the title “No Title”; Rajan has held several titles, including CTO and more recently COO.)

In 2012, Naughton told Quartz she once considered leaving Zappos after being passed up for a promotion, until Hsieh started throwing projects at her. Eventually, he offered her the option to either stay in a traditional HR role or work directly with him. She chose the latter and became speaker of the house. “It didn’t feel like a promotion,” she tells Quartz. “It was just that ‘you’re moving departments and you’re going to do other things now.’ It was a promotion to a lot of freedom. Usually you’re bound by departmental goals. … I feel that [Tony has] now found a process that will allow him to scale that idea to the organization.”

Part of that process involves asking employees to buy in to some degree of uncertainty. Hsieh tells Quartz that having a clear answer, for example, on compensation “comes from the perspective of a framework where those types of decisions are planned and centralized. Long-term, our goal is to have things such as compensation be self-organized as well, so it would be a bit of a chicken and egg problem to have the plan for self-organized compensation plans to be figured out before we commit to self-organization.”