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

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.

On Tuesday, Aimee Groth reported for Quartz that of those 210 workers, 20 were managers, representing 7% of all managers who were at the company.

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.

In a Holacracy, a company is split into circles dedicated to a specific function, such as marketing or human resources. The circles consist of sets of responsibilities called "roles" that are overseen by a "lead link." Rather than managing a team of employees, a lead link manages a set of roles that need to be fulfilled. The Holacracy is structured so that lead links do not have powers a traditional manager may have, like being able to hire and fire employees.

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.

"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."