Holacracy is a management style that relies on a lot of self-management and self-organization. The concept challenges the traditional top-down approach, and leans to towards a model in which each employee is his or her own leader.
Zappos is among the most visible companies using Holacracy. But in a leaked memo Zappos CEO Tony Hsieh offered those who did not want to continue with the new management style a buyout offer. Those who opted out make up about 14 percent of the company (210 people out of 1,503).
Read an excerpt of the memo below, obtained from fastcompany.com:
As previously stated, self-management and self-organization is not for everyone, and not everyone will necessarily want to move forward in the direction of the Best Customers Strategy and the strategy statements that were recently rolled out. Therefore, there will be a special version of "the offer" on a company-wide scale, in which each employee will be offered at least 3 months severance (and up to 3 months of COBRA reimbursement for benefits) if he/she feels that self-management, self-organization, and our Best Customers Strategy and strategy statements as published in Glass Frog are not the right fit.
Zappos was acquired by Amazon in 2009.
Steve Odland, Office Depot's former chairman and CEO, is interested in seeing how a holacracy will work across an entire organization. In an interview with CNBC Monday, he said the management style was successful when temporarily used at his company in certain departments.
"If anyone can pull it off, Tony can," he said. "He's trying to get the best and brightest who innovate on their own and direct on their own."
Jeffrey Sonnenfeld, professor at the Yale School of Management, said in an interview with CNBC's "Power Lunch" on Monday, that the holacratic method could easily lead to chaos in the work place.
"There's an order there, whether or not we want to deny it," he said. "It creates a lot of confusion over who's in charge of what, and of course, the biggest paradox of all is that he [Zappos CEO Tony Hsieh] initiated it."
"How is that employee participation?" he added.