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Zappos Is Nixing Managers, But Are They Needed?

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Zappos CEO Tony Hsieh Zappos CEO Tony Hsieh Flickr user nan palmero

A recent news story on how the online shoe company Zappos has eliminated the position of manager has raised again the question of whether management matters. A new Harvard Business Review article says “yes” and the data is there to prove it.

The Zappos story about eliminating traditional managers has an exciting air to it. The author Jena McGregor, says: “The idea is to replace the traditional corporate chain of command with a series of overlapping, self-governing ‘circles.’ In theory, this gives employees more of a voice in the way the company is run.”

Maybe this can work in a 1,500-person organization like Zappos. In fact, in the early years of Google, its co-founders experimented with a flat organization. According to David Garvin, author of a recent Harvard Business Review article about Google, the company’s engineers “long believed that management is more destructive than beneficial, a distraction from ‘real work’ and tangible, goal-directed tasks.” But now that Google is a 37,000-person company, things are different.

Google Analyzes Value of Managers. As Google grew, its founders realized that managers contribute in a variety of ways: “by communicating strategy, helping employees prioritize projects, facilitating collaboration, supporting career development, and ensuring that processes and systems align with company goals,” the article says.

But this realization did not come quickly. And Google still strives to give its staff room to innovate. The culture in the company prizes technical expertise, problem-solving and good ideas over formal authority and titles. In fact, Google oftentimes has 30 engineers reporting to a single manager by design -- to prevent micromanagement.

Google legendarily spends a great deal of effort handpicking its new technical hires, but these engineers often don’t value management. So Google set out to prove managers’ worth in 2006 by applying the same empirical rigor to its human resources processes that it traditionally applied to its business and marketing efforts.

Google launched Project Oxygen to see whether it could prove that managers don’t matter. “Luckily, we failed,” said project co-lead Neal Patel. He said members of the team surveyed employees and interviewed departing employees. In 2008, they found there was less turnover on teams with high-scoring managers. They also found a statistical connection between worker satisfaction and high-scoring managers. They concluded that managers mattered, and then set out to understand what Google’s best managers did.

Google’s Eight Behaviors of Good Managers. Project Oxygen identified eight behaviors shared by high-scoring managers, especially first- and second-level managers. None are surprising:

  • Is a good coach
  • Empowers the team and does not micromanage
  • Expresses interest in, and concern for, team members’ success and personal well-being
  • Is productive and results-oriented
  • Is a good communicator -- listens and shares information
  • Helps with career development
  • Has a clear vision and strategy for the team
  • Has key technical skills that help him or her advise the team

Google offers training and feedback to low-scoring managers, but found the best approach is to have panels of highly rated managers tell their stories. “That way,” the author says, “employees get advice from colleagues they respect, not just from HR.”

Interestingly, the Federal Employee Viewpoint Survey also provides a great deal of insight, at an increasingly granular level, on workers’ perceptions of their managers. A recent report by the Partnership for Public Service, which analyzes the federal survey data, examined six agencies that improved their standings as the “best places to work.” The greatest driver for employee satisfaction? Effective leadership at all levels.

John M. Kamensky is a Senior Research Fellow for the IBM Center for the Business of Government. He previously served as deputy director of Vice President Gore's National Partnership for Reinventing Government, a special assistant at the Office of Management and Budget, and as an assistant director at the Government Accountability Office. He is a fellow of the National Academy of Public Administration and received a Masters in Public Affairs from the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin.

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