Fluid Leadership Cost Zappos 18% of Its Staff in One Year

Only 23% of employees are engaged at work, and tenure-based promotion is part of why. Ownership pays better, but it can also reward the loudest person.

Feb 24, 2025

The career ladder is over. Companies built on tenure and title lose people and revenue to companies built on merit and ownership, and most managers have not noticed the shift yet.

Read the next decade: agility keeps beating hierarchy in every industry that gets rebuilt around software. The fix is a new deal with the people who already do the work: less waiting on a title, more pay tied to what they actually built.

Hierarchy Pays for Attendance, Not Value

Most disengagement at work comes from a system that pays for showing up over creating value, not from laziness. That system still promotes people on tenure, long after tenure stopped meaning anything on its own. Gallup's 2023 State of the Global Workplace report found that only 23 percent of employees worldwide were engaged at work. A team that does not wait on a title to approve a call moves faster than one that does, because the approval step never added judgment, only delay.

Ownership Replaces the Promotion

The old promotion cycle asks you to wait a year to learn if anyone noticed your work. The alternative is direct. You ask for feedback the day you need it. You get paid for the value you created that quarter, not for the year you have logged. There is no ceiling built into an org chart when the org chart is gone.

Zappos ran this experiment for real. In 2015, CEO Tony Hsieh removed every job title and manager and moved the company to a structure called Holacracy. Within a year, 18 percent of the company, 260 people, took a buyout rather than work inside the new structure. The Zappos exit rate shows what an open, ownership-based system can cost in practice. It can reward the person who is loudest about their value over the person who quietly created more of it. It can burn out anyone who never learns to stop.

Hustle Only Counts When It Points at the Right Problem

A flat, merit-paid system rewards people who already work like owners, the ones who still chase a problem after 6 p.m. because the problem stays open, not because a manager watches. It punishes the opposite case just as hard: anyone who needs a manager to point at what matters gets less direction here, not more. Hustle earns nothing on its own if it points at the wrong problem.

What to Do With This Monday Morning

Test this on your own team before you take my word for it. Ask one direct report this week what they would need to feel like an owner instead of an employee. Act on one answer within a month. If nothing changes because a title is in the way, that is the data worth trusting.