2 how did employees react to the change and what were

2. How did employees react to the change and what were the underlying reasons?
Resistance to change: emotional response to real or perceived threats → fear
•Individuals‘ natur al character
•Surprise / fear of unknown
•Climate of mistrust
•Fear of failure
•Loss of status
•Peer pressure
•Disruption of group relationships
Consequences of resistance to change
• If organization can‘t overcome employees resistance → extreme consequences
• Reactions can be overt (strike), subtle, implicit, immediate or deferred
• Sometimes very difficult see (sabotage)
• Data points
o Tardiness (Verspätung), more (sick) leave (mehr Krankenstand)
o Higher turnover
2. how did employees react to the change?
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Holocracy brought chaos and misperceptions
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No hierarchacy, even though there was hierarchy. (Only in a different form)
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No managers that employees felt they could refer to

Summary Digital Transformation & Organizational Development
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Confusion about how to get the job done
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When they wanted consultation there was none
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Frustration of multiple mandates
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Employees felt like the human element was lost completely
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numerous mandates, endless meetings, confusion about who did what
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260 people total exodus
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82% remaining
3.What could management have done differently?
- There is never a good time to make a transition and we probably hesitated too long. So if I
could do anything differently, I would do it earlier. Tony Hsieh
- Implementing the change more slowly – many small initiatives (Lean Change Management)
incremental iterative step by step process, unfreeze – change – refreeze
- → Management should have gone for a complete unfreeze, reshape, refreeze approach
- Not overwhelming the organization
- Show the clear advantage and need/purpose for the change → change is required, not
optional and this in a constant manner
- Even more active communication & engagement of all employees
- Communication critical part of implementing change. → Zappos could have designed a
structured communication (more active communication) plan to present the idea of
holacracy to its employees. → open and transparent communication
- Management could have worked to arrive at consensus. → ensure that all the stakeholders
and team members agreed to its goals and expectations
- Development of proper transition plan
- Proper coaching should be given to employees to adapt the new procedure
- Change should have realistic schedule since the fastest way to lose credibility is to change
the schedule without a good reason.
- Some rewards should be linked with the change process to motivate the employees to
accept the change faster
- Adapt holacracy more to Zappos itself rather than seeing holacracy and its theory at the
ultimate bible
- Cleaning the company from the people, who are skeptical helped to retain the engaged
employees right from the beginning
o option for buyout from beginning of change
o nurture the right culture from early steps
- the change of structure was intented to remove any hierarchies in terms of people!