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July 26, 2016

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Amid holacracy, 50 Zappos employees take buyouts

Image

Steve Marcus

A view of the Zappos headquarters in the old city hall building downtown Monday, Sept. 9, 2013.

Online retailer Zappos, which offered buyouts last year when it changed to a self-management system known as holacracy, has announced an additional 50 buyouts.

The latest round of buyouts involves employees working on a project known as Super Cloud to help Zappos migrate to the back-end computer infrastructure used by its parent company, Amazon.

It brings the total number of buyouts since CEO Tony Hsieh announced them in March to 260 employees, about 18 percent of the workforce.

When Zappos switched to holacracy, an alternative management structure whereby employees are organized by roles rather than titles, the company offered a package for employees who felt holacracy was not the right fit for them. The offer included at least three months’ severance.

Employees working on the Super Cloud project were given an extension until the end of the year to take the buyouts.

“While we have lost a number of folks, it is important to note that we have a significant group of highly talented individuals who will be staying to help move Zappos forward,” said Arun Rajan, a Zappos executive who announced the buyouts. His memo was posted on the Zappos website.

He said the 50 buyouts for employees on the Super Cloud team were in line with the company’s expectations. Rajan said the company expects to complete the Super Cloud project this quarter, despite wanting to have it done by the end of last year.

Having the employees stay on longer than other employees who took buyouts last year helped mitigate risk with the project, Rajan said.

Rajan told Quartz today that the majority of those who took the recent buyouts were managers. If there were no buyout takers, there likely would have been layoffs, he said.

Zappos, headquartered in downtown Las Vegas, is known for a quirky culture that values customer service and experimentation.

During a speech in October, Hsieh said at least half of the buyouts were taken for reasons other than holacracy. Some employees had already been planning to leave to pursue their own projects or for personal reasons, he said.

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