When Zappos got rid of managers, some underperforming employees entered a limbo known as 'The Beach'

When Zappos CEO Tony Hsieh decided in March that his company was going to fully operate as a "self-organizing" Holacracy, he told his team that it was going to take years to operate optimally and wouldn't be easy.

Zappos had been making the transition to Holacracy since 2013, but by the start of this year only 85% of the company was operating under it, compelling Hsieh to "rip the band-aid off," as he put it in a company-wide offer to either stay with the company or take a severance package, which 210 of the 1,503 employees ultimately did.

In a Holacracy, there are no traditional manager roles, power typically reserved for executives is spread across the organization, and job titles are replaced by "roles" that an individual acquires. A pyramidal hierarchy is replaced by a series of "circles" dedicated to specific functions like marketing and customer relations. "Lead links" of each circle maintain a level of control over their colleagues, but through the control of roles rather than of individuals.

In this management system, a circle is in charge of firing employees. But because lead links will often be the first to determine that an employee needs to go, confusion over how to best deal with underperforming employees arose at the company, according to a new report from Roger D. Hodge for The New Republic. When lead links stripped employees of their roles, Hodge reports, they were sent into a kind of purgatory that employees sarcastically nicknamed "The Beach," as if they were being sent out to pasture.

"Some people who got beached found themselves being shunned as if they were contagious," Hodge writes. "These were people who, for whatever reason, were not successful at manning the phones, for example, but perhaps could make a contribution elsewhere in the company. It's not that they were suddenly bad people. They just needed help."

Tammy Williams, who formerly held the title of senior manager of human resources, noticed this limbo and decided to take lingering employees and give them a way to right themselves before they were fired. She took over The Beach and renamed it the Why Space, "a kind of in-company outplacement agency," Hodge writes.

From the article:

"Tony has allowed me two weeks to three months," Williams said, for "beachgoers" to reinvent themselves. All beachgoers who enter the Why Space start off with two weeks, and Williams extends their stay a week at a time, "as long as they are doing the work," which means keeping a journal, attending workshops, and taking personality assessments as they seek to be redeployed within the company.

When Williams had one of these employees, named Rosemary, read her journal at a recent all-hands meeting, "everyone was so inspired by Rosemary's example, by the way she had 'slain her dragon,' that the Why Space was rebranded as Hero's Journey" and its members were re-named "explorers," Hodge writes.

When we interviewed John Bunch, the head of the Holacracy transition, earlier this year, he said, "There are going to be a lot of bumps along the way, and we're going to have to get through it together." Whether it's the Hero's Journey for bottom-tier employees or the badge-based payment system Zappos is experimenting with, the solutions are guaranteed to be anything but traditional.