Even in Teal organizations, people do not always fit in or perform adequately. But when this occurs, the responses in Teal are different from earlier stage organizations.
A New Perspective
In Teal organizations, dismissals are rare. Roles tend to evolve to fit an individual’s strengths, and people are generally highly motivated by both a sense of autonomy and a desire not to let their colleagues down. Layoffs are infrequent since Teal organizations tend to adjust more flexibly and rapidly to downturns. More likely, departures are voluntary. Some people are not comfortable with this new approach to worklife and they overwhelmingly return to other environments of their own volition.
But, as a last resort (and only if a mediated conflict resolution process is unsuccessful), dismissal can occur. When it does, the associated emotions are embraced. People and choices are respected. Support is provided. And departure is treated as a learning opportunity, for both parties.
In contrast, dismissal in earlier stage organizations can be summarized as follows:
In the Red paradigm, it’s up to the boss/leader to decide who to fire or keep. Formal processes are not necessary. Voluntary departures may be seen as betrayal.
In Amber organizations, dismissals often follow a lapse of discipline, or a violation of the rules. The consequences may be well defined. For example, a first offense (perhaps arriving late) might mean suspension for a day. Repeated offense might result in dismissal.
In today’s versions of Amber — some government agencies, religious organizations, public schools, the military, etc. — extended (even lifetime) employment is the norm. These long relationships may extend to social circles. The possibility of dismissal carries the threat, not only of the loss of a job, but also of the associated social fabric. Those feeling unfulfilled in an Amber organizations face a painful choice.
Orange organizations have a wide range of practices for dismissals. Authority commonly lies with the boss (maybe after HR approval or counseling).
The causes are typically either performance or organizational cost-cutting/strategic redirection. Rarely is there implicit or contractual understanding that employment is guaranteed.
It is common to have elaborate systems of performance management. Then, dismissal can follow when attempts to lift below-par performance have failed.
On the other hand, the need for a dismissal may also be seen as a flaw in the hiring process. In part, this is because the cost of hiring someone who later proves to be unsatisfactory is high. . Severance packages are not uncommon. Sometimes, assistance in finding a new job is offered. Orange organizations may have quite progressive dismissal practices.
Green organizations have a high tolerance for individual differences and are likelier to look for an alternative to letting people go. People who do not conform to the community rules and values may feel marginalized, and leave as a result. Otherwise, dismissal practices are similar to the Orange paradigm.
People choose to leave before dismissal
In Teal organizations, dismissals prove to be surprisingly rare—because of the in-built flexibility. Self-management means people can customize a job at which they excel. A person with “performance issues” might shed one or more roles in which she is not strong and take up others that better match her skills, interests, and talents. In traditional workplaces, where a job is well defined, there is usually less flexibility.
Moreover, feedback on performance in Teal does not come from another, remote level (like a boss or HR). It comes from colleagues. There is much less reason to find fault with their feelings about your performance. These are the people you need to work with everyday. If this feels awkward, you can take an adult decision to move on.
For example, at Sun Hydraulics, an engineer might notice that somehow little work comes his way — few colleagues invite him to join their projects, or solicit his advice. At Buurtzorg, a nurse will feel in her interactions with colleagues that she doesn’t fit the team, or that self-management doesn’t suit her after all. About 25 nurses elect to leave each month for that reason (while 250 nurses join every month).
Almost universally, people choose to leave before they are dismissed. And almost always the departure happens by mutual consent, and on a friendly basis. This does not change the fact that on a personal level the process can be painful. The self-managing context helps people realize that no one is to blame; that they are perhaps not meant for this kind of work.
Dismissal still happens occasionally
But occasionally, self-managing organizations do face situations where they need to part ways with people who don’t fit. Perhaps someone breaches company values, or systematically fails to follow the advice process (in many Teal organizations, failing to follow the advice process is the only “fireable” offense). In both of these cases, the fundamental fabric of self-management may be threatened. These situations don’t rely on a hierarchy for action, but on peer-based mechanisms.
It usually starts with a conflict resolution effort, initiated by a team or an individual. They talk with the person in question and try to find a mutually agreeable solution. If this fails, they can call a mediator, or a panel, to facilitate resolution. In most cases, this brings resolution. In some cases, the person and the team decide on some mutual commitments and give it another go. In others, the person comes to see that trust is irrevocably broken and understands it is time to leave.
If no agreement can be found, and as a last chance to settle the matter, the team may ask an owner/founder to mediate. In the rare cases where even that fails, the team can ask the founder to put an end to the person’s employment. This process, with some variations, is followed at Buurtzorg and Morning Star.
Economic troughs are handled differently
Few Teal organizations have laid people off during downturns. Self-managing organizations are exceedingly flexible and accumulate little overhead. They weather downturns better than traditional organizations. FAVI and Sun Hydraulics, for example, have both withstood severe recessions (with revenue decreases of 30 to 50 percent) without layoffs.
In some cases, colleagues agree to share the pain and opt for temporary pay reductions. From a Teal perspective, it would be improper to lay off colleagues just to boost profits for a few months if the overstaffing is deemed to be only temporary.
When an organization moves to self-management, people in management roles are no longer needed. Zappos faced that situation and offered former managers substantial time and assistance to find new roles where they could add value. They also offered all employees a generous severance payment if they did not feel fully committed to the new organization. .
This is different to structural overstaffing. AES faced this many times with power plants it bought in Eastern Europe, Asia, Latin America, and Africa. In some cases, the previous government owners had used the plants to create artificial jobs. After acquisition, AES swiftly reduced the number of employees, mainly via a generous voluntary severance program. Only rarely were people asked to leave. In Panama, AES created a loan fund for employees who took the package. This helped many to start new businesses.
Maintaining jobs artificially makes no sense from a Teal perspective. A concern about job security is partly inspired by fear. It neglects the truth that everything changes. It dismisses the possibility that a person whose talents are wasted in an overstaffed organization might find a better way to express his gifts where they are needed. Life is continuously unfolding; dismissals and even layoffs can be part of that unfolding, although they are rare in self-managed structures.
Frequently Asked Questions
In Teal organizations the decision about whether a person will stay with the organization belongs with that individual and/or their team. Forced dismissals are infrequent because people are given clear indications if they are not a fit so that they can choose to leave voluntarily. In many cases a parting of the ways happens by mutual consent in the process of self-managed conflict resolution. Only when everything else fails do organization founders fire people, but this is also initiated by the team or a conflict mediation panel.
When you don’t have a fear that your boss may fire you at will, it’s easier to show up fully at work. If you’re not being judged and do not depend on adhering to a set of rules to stay in the job, you tend to bring your whole self to the workplace.
Teal organizations don’t reduce dismissals to cold, contractual transactions that avoid dealing with the emotions and pain. Instead, they accept and work with those human issues to turn departures into a learning experiences that can meaningfully enhance the person’s and the organization’s future path.
Giving people the opportunity and encouraging them to actively find a new role in the company when they are not performing well or when their current role is no longer needed contributes to the organization’s ability to listen and understand what it is trying to become, to fulfill its evolutionary purpose.
Concrete cases for inspiration
Notes and references
Quartz's article "Internal Memo: Zappos is offering severance to employees who aren’t all in with Holacracy" ↩︎