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The office without bosses: Zappos employees test 'holacracy'

Headquartered in Las Vegas, the billion-dollar online shoe company is gambling that its employees will thrive without bosses.
/ Source: TODAY

Headquartered on the famed Las Vegas strip, the billion-dollar online shoe company Zappos is gambling that its employees will thrive — without bosses.

Zappos CEO Tony Hsieh recently decided to nix the traditional corporate-management hierarchy in favor of workers managing themselves — a system called "holacracy."

Now, instead of having a single job and a direct boss, every employee is part of multiple groups, called circles, that revolve around their skills and interests. Employees who thrive in sales, event planning and customer service, for example, can contribute to each of those circles and manage themselves in the process.

One of more than 1,000 Zappos employees, Kelly Wolske has spent the last seven years working for Zappos, where it's not unusual to find streamers or stuffed animals among the office decor. But she may never have imagined working without job titles or direct managers.

"A lot of people think you can do whatever you want," she told TODAY. "And, you can do what you want, as long at what you want to do intersects with the needs of the business and also your skills."

John Bunch is part of a circle working out the kinks in the company's transition.

"This system that we're moving to, holacracy, does have complicated rules and complicated procedures," he said. "It has been kind of a big shift and journey for us as a company."

Not everyone was on board with the structural shift. When the CEO offered three months' severance to employees who didn't want to make the transition to self-management, almost 15 percent of them — 210 workers — accepted that offer and left the company.

For those who stayed, promotions and raises are still in play. "Employees are given what we call badges based on the skills that they're using in their day-to-day work," Bunch said. "As you acquire skills and use them at work, you get promoted."

Staffers acknowledge there's a steep learning curve to the holacracy, but also say it's led to a more streamlined system.

"The thing that's really exciting is new initiatives," Bunch said. "New ideas are getting off the ground a lot faster than they used to."

Zappos employee Christa Foley compared the transition to learning a new game.

"It's been hard for sure, but at some point the rules disappear, just like learning to play Monopoly," she said. "There's pretty complex rules, but at some point you just pay Monopoly."

Follow writer Chris Serico on Twitter.