Imagine a company without managers, structure or even job titles. Sounds like a fantasy of some anarchist collective? Think again, the Las Vegas-based online shoe retailer Zappos which is entirely owned by Amazon has recently announced that it will become a Holacracy. This rather strange name is inspired by the idea of a Holon, whereby a part of the system embodies the whole. For most companies, adopting a Holarchy entails getting rid of a top-down hierarchy.

Now, in place of clearly defined positions and job titles, Zappos will introduce 400 circles within which employees will have different roles. The idea is for employees to stop hiding behind job titles. Instead, they should take responsibility and become more entrepreneurial. John Bunch, who is responsible for creating this new structure described it as “politics-free, quickly evolving to define and operate the purpose of the organisation, responding to market and real world conditions in real time”.

Zappos is by no means alone in trying to dispense with hierarchy. Seattle games company Valve has implemented a similar system. It has no managers, employees can sit where they want, and they can choose the project which they want to work on. It even has furniture designed so employees can easily and quickly move between teams. If you don’t like how the people you are working with, you can pack up and move.

Big shoes to fill

Indeed, if we look carefully, there are many companies which operate on non-hierarchical systems which would seem highly disturbing to most managers. As it turns out, hierarchy is not a universal rule for a functioning organisation anywhere. Some non-hierarchical systems include co-operatives, self-managed workers enterprises, communes, households, autonomous collectives and more. Perhaps companies such as Zappos and Valve are simply returning to older traditions of organisational wisdom which were almost lost during industrialisation.

The picture of self-organising systems might sound very appealing, but there are some potential hidden costs which enthusiasts ignore at their peril. Business leaders have been trying to create organisations that break away from the traditional machine bureaucracy since the 1960s. Inspired by the various alternative lifestyle movements of the 1960s, these new-age executives sought to replace hierarchy and titles with networks and fluidity. The hope was to develop a workplace where you could “be yourself”. Instead of being bueraucrats who stick to the rules, employees could become “authentocrats” whose job is to express themselves.

Management gurus such as Tom Peters would tour sports stadiums filled with middle managers in the 1980s and 1990s and “beg each and every one of you to develop a passionate and public hatred of bureaucracy”. Business schools continue to warn their MBA students of the dangers of hierarchy and encourage them to experiment with self-directed teams, network organisations and careers that matter. Executives no longer want to be tainted with the title of manager. They want to be called something far more sexy and less hierarchical: change agent, intrapreneur, customer champion, or anything with “leader” in the title. Even David Brent, the hapless manager in The Office described himself “a friend first, and a boss second, probably an entertainer third”.

The other shoe drops

As well as not being particularly new, much of the research on non-hierarchical organisations suggests they often do not deliver on their grand promises. John Bunch’s claim that Zappos’ that holarchy would be entirely non-political. This might sound very appealing, but it is also unrealistic.

Stanford Business School Professor, Jeff Pfeffer recently pointed out that many of the non hierarchical firms in Silicon valley are far from being politics free zones. He points out, “bosses still demand loyality and – more important – agreement from subordinates”, “rewards still accure disproportionately to those at the top”, and “illusions of superiority” continue to haunt the halls of event the hippest start ups. Pretending power does not exist might be a comforting illusion, but a terrible career move.

Down at heel employees

Much of the research suggests non-hierarchical organisations can be harmful to their employees. Because employees are asked to bring themselves to work, there is a very blurry line between personal issues and professional issues. Because you should be passionate about what you do, it is not clear when you are working and when you are not. This often means work begins to bleed out into people’s personal lives – often quickly taking them over and leaving little room left for non-work related pursuits. But it also means we come to have unrealistic expectations of what we might get from work or indeed our workplace.

In a fascinating study, Susanne Ekman from Copenhagen Business School followed employees who invested themselves heavily in their work. She found they would frequently make unrealistic demands on themselves (hoping to have constantly amazing breakthrough experiences during the work day), but they would also demand extraordinary praise and constant recognition.

All this spoke to the fact that because these employees had over-invested their whole sense of self in their work, then they often developed very fragile self-esteem which could not be fulfilled by any amount of praise. This can become disastrous when employees who are so heavily invested in their work suddenly find themselves to be out of a job. Because they do not have anything else in their lives to hang their sense of self-worth upon, job loss is frequently experienced as not just unfortunate but a mortal blow to one’s very sense of self.

It remains to be seen whether the Zappos experiment will work. But the evidence seems to suggest it won’t deliver on the fantastic promises. Power and politics will continue to be played out, albeit under the radar. Managers will continue to get greater rewards and tell employees what to do – albeit in more saccharine language. The only thing that may change is employees will become addicted to the company because it does not just pay their bills, it defines who they are.