7% of Zappos managers quit after recent CEO ultimatum to embrace self-management or leave

tony hsieh crazy hat

Getty Images/Ethan Miller

Zappos CEO Tony Hsieh.

On March 24, Zappos CEO Tony Hsieh sent a long, company-wide email that came with an offer: Decide by April 30 if you want to embrace "self-management" or take a severance package and leave.

The Amazon-owned, Las Vegas-based online retailer had been transitioning to a "Holacracy," an organizational structure that gets rid of manager roles and job titles, and wanted everyone on board.

Zappos revealed in May that 210 employees - 14% of its staff - took the severance package.Advertisement

That means a majority of managers (93%) decided to stick around in new roles.

The current and former Zappos employees Business Insider spoke to on background last month said the March ultimatum divided the company into three camps: the believers, the nonbelievers, and those who decided to remain out of convenience despite their reservations.

While presumably managers would have the most to lose in the new company structure, the term "self-management" can be deceiving, since a Holacracy is not flat and some people have more authority to direct resources than others.

Zappos still needs to determine salary processes and fine-tune tools to assign and approve projects throughout the company, but Hsieh told Business Insider they're making good progress and that he was not discouraged by the number of employees who left.Advertisement

"This was a misalignment-cutting effort," he said. "We're headed in a new direction … and want to ensure as much alignment as possible, since not everyone is comfortable with the concepts of self-organization and self-management that were outlined in the memo."