No Managers: Why We Removed Bosses at Treehouse

On June 20th 2013, we decided that our 4-day work week at Treehouse was’t insane enough so we went further: We removed all Managers.

It was a bold move and one that not everyone was convinced of. We proposed to change the way the company operated and give all employees 100% control of their time and let them decide what they work on each day. From now on no one would tell anyone what to do, not even the CEO. (Me!)

This is not a new idea. Valve, GitHub, Gore Associates and Medium (and probably more) are all #NoManager companies. Knowing that someone has done it before us didn’t make it any less daunting or even any easier. This is the story of how we did it, why we did it, the highs the lows and a few pointers for anyone thinking this craziness might be for them.

Why we Removed our Managers

We started the company in 2010 and operated in the normal command-and-control structure. By 2013 we had grown to 60 people with seven managers and four executives. As we added more people to the team, we noticed something disconcerting: rumors, politics and complaints started appearing.

Alan, my Co-Founder, and I started exploring possible solutions and considered removing the lowest layer of managers and asking them to go back into producing (which is what they were originally hired for). Then we went up the chain and asked hard questions about the value of the mid-tier managers, and then we kept going all the way to the executives at the top.

What if we removed all management and simply empowered everyone to choose what they do every day? We laughed at first and then the conversation turned serious. We had hired talented and motivated people. Did they need managers?

I can only speak from experience so I’ll limit this to my journey being an employee at two companies and running four companies.

In my experience, managers started off as workers and then moved up the ladder, getting farther and farther from the front line. They gained power but slowly lost their touch with the day-to-day realities of talking to customers and actually creating solutions to their problems. The manager’s team lost respect for them because they could no longer produce, which means they would set unrealistic deadlines.

Everyone was getting abstracted away from actually doing and instead focused all their attention on structuring.

As our team grew, we spent more and more time talking about priorities, aligning everyone and checking in on progress. The whole structure we designed was taking power and responsibility away from everyone on the front lines.

What do Managers Do?

In my experience, managers’ responsibilities were …

Communicating messages from top to bottom
Settling disputes
Managing careers
Keeping their teams motivated and happy
Shielding their teams from things they didn’t think they needed to know

If we could find a way to replace the function of the managers and focus everyone on actually producing for our Students (customers) then it would actually be possible to be a #NoManager company. In my future posts I’ll explain how we’re doing this at Treehouse.

What Motivates People?

In my experience, people want to be amazing at their job. I can’t count the number of times that people had really great ideas but were powerless to implement them. I watched as they went from zealous excitement to indifferent cynicism.

If you have 10 minutes, please watch this video by Dan Pink: Drive: The surprising truth about what motivates us. I think it sums up almost all my thoughts on why we decided to remove management.

Good managers act like servants to their team but far too many like the power and let it go to their heads. If Treehouse ever grows to 500 people, we’d need at least 50 managers. If we were starting to have morale problems now, what would that be like? Blurgh.

Go time!

Alan and I decided that if we were going to do this, the company would have to enact it by a majority vote.

The Treehouse Team is spread over the entire United States (with one person in the UK) so we do most of our communication in an internal forum called Convoy. We wrote an epic post on Convoy called Radical new idea: No managers at Treehouse, took a deep breath and hit the post button. The whole company ground to a halt for two days as 447 comments were posted, upvotes and downvotes were cast and passionate opinions flared.

After two days, we did a company-wide Q&A over video and at the end we asked everyone to vote via an online form. The votes flooded in and over 90% voted to go flat.

It was go time. Now the real work would begin.

How We Transitioned to No Managers

Once 90% of the company voted to remove management, we started the task of transitioning the company to the new flat structure. The first thing we did was write a huge FAQ for everyone. We did this in Google Docs so people could comment directly in the doc and everyone could see their questions and our following answers. I’ll cover the FAQ content below.

Once the FAQ had been written, Mike Watson created a detailed list of logistical things that needed to happen in order to transition successfully. Example: Who would be doing the backups of our video?

Here’s a simplified version of our FAQ. It will answer many of your questions about how we operate as a #NoManager company.

Projects

Projects are the primary unit of work at Treehouse. Anyone can have an idea and propose a Project. Projects do not have to relate to the core expertise you were hired for. Example: A Designer could propose a project to teach a course.

How do Projects work?

If you have an idea …

Open up Flow (our internal tool).
Click ‘Propose a Project’.
Explain the Project goals.
Determine how you will measure success. We encourage you to use measurable statistics and metrics.
Choose a Focus Area (Education, Marketing, Finance, etc)
Add the Team roles that are necessary to complete the Project (Developer, Designer, Audio, Video, Data Scientist, etc)
Spread the word and try to recruit great people to your Project. A good idea is to create a post in Convoy (our internal forum) and ping people on HipChat (our company-wide chat tool).
People join your Project by going to the Project pitch and clicking 'Join’.
Once enough people join, hit 'Start’. If you don’t need anyone else to help, you can just begin, providing you’ve bounced the idea off people who need to know and starting the new Project will not hamper your ability to execute on existing Project commitments.
If you don’t gain enough support for your Project you can click 'Abandon’.

Once your Project starts …

Conduct an initial kickoff meeting with the new Project team
Once a day, everyone working on the Project needs to post a quick update on where they’re at with the Project and what % complete they are with their tasks. For example, if you’re the Designer, and you feel like you’re 50% done and the Developer feels they’re currently 0% done, assuming it is a two person team the average ‘completeness’ will average out at 25%. The average completeness for each Project will be posted publicly to give the whole company an idea of how complete each Project is.

After your Project completes …

The team measures how successful the Project was and posts a post-mortem thread on the Project in Convoy (our internal forum).
The Project team is responsible for providing ongoing support and maintenance of that Project

Can I leave a Project before it completes?

If you want to move to a new Project, you chat to your current Project Team to let them know you’ll be moving on and then simply sign up for another Project. It’s not cool to leave your team hanging when they need you, and we would expect that poorly timed and communicated moves from teams would be reflected in your peer reviews.

How big can a Project team be?

This is naturally dependent on the nature of the Project. That said, it is in everyone’s best interest to keep the size of Project teams to a minimum. Remember our biggest costs at Treehouse are team salary and the opportunity cost of your time.

How many Projects can I work on at once?

It’s up to you, just don’t disappoint any of the Teams you’ve joined by getting behind schedule and dragging down the team. The importance of focus in creating quality cannot be understated.

Many of the folks at GitHub have blogged about how this is one of their biggest day-to-day challenges: over-committing. Better to over-deliver than under perform.

What happens if a team forms, and produces a Project that they all thought was a good idea. But when it’s complete, it turns out to be of poor quality. Who decides if it goes live or not?

We cannot make a rule for this that will always work. There needs to be a robust QA structure in place but beyond that we’re relying on everyone’s good judgement to decide if something is shippable. Once it ships we need the Project Team to be measuring its success and reporting back on whether it succeeded or failed.

If I propose a Project, but there’s not enough bandwidth, do I wait on Team Members to finish other Projects or convince others to join mine instead, or do I just have to join another member’s Project in the meantime?

There will be a very small percentage of Project Proposals that actually get started. If yours doesn’t gain traction right away, then just jump into another Project or find something you can do on your own that uses your skills to best serve our Students and advance our Mission.

Where do I post my daily Project updates?

For each Project you’re working on, you need to do a daily update in Flow and include your % completeness.

It is vital that everyone posts daily updates on what they’re working on or this whole idea will fall down.

Will people ‘lead’ Projects?

Each Project Team will have it’s own way of working. Sometimes the best thing to do will be to elect a leader who makes sure everything is driving forward and organized, for example coordinating with teams outside of that particular Project or product. Other times, it may make sense to not have a leader and just divide roles and tasks as needed.

Some people are natural leaders and will automatically influence Projects because of their experience and charisma. However, no one is forced to follow anyone so only people how are actually good at leading will be 'leaders’. As the saying goes, “If you call a meeting an no one shows up, then you’re not a leader.”

How does everyone know what’s happening on other Projects?

You go to the Project page in Flow and read the status updates. If you need more info you can jump into HipChat (company-wide chat room). We discourage email as it creates information silos.

What tools do Project Teams use? (Trello, Asana, etc)?

After a Project has been started, it’s up to the Project Team to use whatever tool is best suited for their work.

Who prioritizes Projects?

There isn’t any top-down prioritization (unless we are required by law to act on an issue or some “red alert” type work is required, which should be rare). Each person will be prioritizing their todos based on maximizing their ability to advance the company-wide goals and Mission.

How do we spend money and are there budgets?

We want to be clear about something, moving to a flat structure does not mean everyone has carte blanche with Treehouse financial resources. There is one exception:

We are going to start off with no set budgets for Projects at Treehouse. If your team needs to spend less than $500, then you can go ahead and do it on the condition that everyone on the Project Team has unanimously approved it. This will probably mean that whenever you spend money, you have to file a claim through Expensify or you can request a cash allowance from the company. Project teams can spend up to $500 if unanimously agreed amongst the team.

If a Project’s spend increases or is expected to increase above $500 in aggregate, you need the approval of the Co-Founders.

Project spending will be listed publicly so we can all see who’s spending what. Remember, it is absolutely important that we exercise as much thriftiness as possible. When the company has more financials resources (is comfortably generating positive free cash flow) we will probably increase the thresholds for approval above.

Again, for any spending not related to Projects, for example travel, product based spending, non-Project related supplies, etc., you will need to get approval from the CFO.

What’s happening with our current top five priorities?

They have been deprecated. You all will be deciding your day-to-day priorities. The Co-Founders will be communicating their 50,000-foot view of the monthly priorities but they are just guides.

How do we make decisions?

We use our company wide goals, Mission Statement, and impact on free cash flow as a guide for decision making.

Who decides company-wide priorities? Who sets the general direction for the company?

Alan and Ryan (the Co-Founders) are actively steering the ship and setting company-wide goals, our Mission Statement and areas of focus.

What are the Co-Founder’s roles in this new system?

Ryan and Alan are still very much leaders of the company. They will decide on company-wide goals, make sure our Mission remains relevant driving force, and keep our current areas of focus updated.

No Ladder to Climb

Now that we’ve removed managers, there isn’t a traditional career ladder to climb. At most companies the way to get more money and influence is by becoming a manager. How does this work in a #NoManagers company?

Everyone is hired at Treehouse at an industry-standard salary level that matches their job description. Most of our team is distributed and outside of expensive outlier markets (like Silicon Valley or NYC).

The only way to get a salary increase is by performing consistently well in reviews. We don’t have a profit-sharing plan or bonuses (other than the sales team which has a traditional sales team bonus structure).

One of the great advantages of a #NoManager company is that people aren’t forced to go into management to get more money or increase their power. Instead of climbing the corporate ladder they can focus on getting better and better at what they love and were hired to do.

Peer Reviews

Accountability is vital for #NoManager companies to succeed. Since no one is telling anyone what to do, slackers could just sit around and do nothing, right? Peer Reviews make sure that bad folks are rooted out and asked to leave the company. We chose to implement a system that’s similar to the 360 Degree Review but with a twist. I’ll explain how it works below.

How Reviews Work: The Review Cycle

A Review Cycle will occur every three months. Each person writes anonymous reviews of colleagues that they’ve worked with closely since the last review period*. For example, if you were a Developer and you worked with a Designer and a Customer Support person on a Project, you’d review both of them and they’d both review you.

What does “worked with closely” mean? Typically this would include anyone you worked with on a Project or product since the last reviews occurred. It will also include people you collaborate with closely even if you aren’t explicitly involved on a Project with them - for example, Designers are going to be in constant communication and will collaborate with each other on ideas even if they’re not officially on Projects with each other, and we want to be sure to capture that interaction in our review process. If a Project is extremely quick (for example, less than a day) then a review isn’t needed.

The great thing about only reviewing people that you actually worked with, is that you know if they were any good at their job. You experience it first hand, instead of through a manager’s report or through occasional interaction.

Everyone is expected to write a solid review in ~15-20 mins, per person. It could take much less time if we’re organized about keeping notes between review cycles.

Reviews are submitted to a Review Committee made up of myself, Alan (my Co-Founder), Mike (CFO) and Rich (Accounts). The Review Committee then reviews all submissions and asks for clarification if needed. Afterwards, they anonymize and consolidate all reviews on an individual into one Review Document. That document will be used to guide the review (in-person or Google Hangout between person being reviewed and the review committee). Each person gets a copy of their review documents.

The Review Questions

You rate your colleague on the review form (we use a password protected form on Wufoo) on the following things:

Objective judgement
Communication
Energy giver, positive working style, attitude and effort
Level of skill

You have to choose between 1 - 5 for each area and can add accompanying text to explain your answer.

Outstanding
Exceeds expectations
Meets expectations
Below expectations
Unsatisfactory
Not applicable

We also have an optional text field for additional comments and/or constructive criticism for the person you’re reviewing.

We also ask everyone to answer the following questions about themselves:

How do you think you are doing?
How do you think Treehouse is doing?
How do you think your team is doing?
What’s keeping you from doing the best work of your life?
Is there anything else you think the Review Committee should be aware of?

Good vs Bad Reviews

If someone performs below expectations they will most likely not be recommended for a raise. Depending on the circumstances for why they performed below expectations, they may be issued with a formal warning to improve performance. If subsequent reviews are below expectations again and performance hasn’t improved, they will probably be asked to leave Treehouse.

Major Cons

Two large drawbacks to this Peer Review system so far are:

It is very time consuming. As we grow the company we’ll need to find a way to make this as seamless and easy as possible. Theoretically it should scale as there’s a practical limit to the number of people you can work closely with during a 3-month period - no matter how large the company grows.
People weren’t as harsh on each other as they should’ve been. Our belief is that because we only finished the first review cycle that people are just getting used the the system. In the future however, feedback will need to be much more constructively critical to be valuable.

Raises

Alan and I are in control of raises. Recommendations from the Review Committee and Treehouse’s financial situation will be the key determining drivers of whether or not a raise will be given. As of now, there are two types of raises that can be awarded at Treehouse:

1. Good Performance Increase

The key input to determining performance is the peer review process. The review committee will look at all the feedback compiled, and contextualize each individual performance within the company. People who perform well will be awarded with increases to their salary. We may also take into account other factors, for example student feedback. The Review Committee has established basic salary bands for each job role and when a salary increase is awarded, the person goes up to the next level. There is an eventual ceiling to the salary level for a job role. If someone wants more money once they’ve hit the ceiling, then they either have to change jobs to a more lucrative position (but they’ll have to apply for the job like normal candidates) or leave the company.

2. Cost of Living Increase

Everyone who is performing well will receive a cost of living increase for their hard work. In Q1 of each calendar year, everyone that is performing at or above expectations will be awarded with an increase in their annual salary. This increase will most likely be based on inflation, but will also take into account market rates and conditions.

Confidentiality

It’s important to keep reviews confidential. This encourages more direct feedback. People shouldn’t share the content of their reviews with anyone other than the Review Committee. Sharing reviews with anyone outside this group will mean you’ll get an automatic official warning, and possibly be asked to leave Treehouse immediately.

Communication Tools

We actively discourage use of email because it silos information, discourages accountability and causes busywork. The default mode of communication at Treehouse is ‘public’. This is important because without managers, everyone needs to be able to drop into a Project and understand where it’s at. If all the progress and information is hidden away in email, no one can access it except the sender and receiver.

We have four primary tools:

Convoy - General discussions, celebrations, animated GIFs, banter and trolling
Flow - Project status
ipChat - Group chat and IM
Email and Docs - Google Apps

Our hope is to open source Convoy and Flow at some point, but it’s not high on our priority list right now.

Convoy

We’ve found that the forum model works really well for company-wide discussions. We built a simple Reddit-clone to do this (read more on that here) called Convoy.

Email is a terrible tool for group discussion because …

It clutters everyone’s inbox
It’s hard to parse discussions because of the lack of threading
You have to evaluate if you should open/archive/delete/star each incoming email

Convoy is great for company-wide discussions because …

You only read/interact with things that interest you
Voting up/down adds a subtle and quick way to interact with other people without having to type
We have person-tagging so that if you want someone to see something, you simply type @persons-name and they get a notification inside Convoy (not email).

Convoy has worked wonderfully for us. We use it for …

Discussing competitors
Throwing around ideas
Trolling each other and having fun
Celebrating victories
Discussing industry news or trends

The drawback of Convoy is that it can be distracting. You need to have a highly disciplined team to self-police themselves. This is a general drawback of #NoManagers - it’s noisier and more chaotic. Our belief, however, is that creativity and innovation arise from the chaos.

Flow

Since we don’t have Managers to decide which ideas get implemented, we had to build a simple tool to allow anyone to propose ideas and tell the whole Team.

I explained how we use Flow in this post, so if you want details, please head there.

Once a Project is started, there is a discussion forum attached to the Flow project. If you want to discuss something then you create a new discussion thread. Everyone who’s joined the Project is then emailed so they can stay in the loop. We felt email was necessary because if you’ve joined a Project, then you should be aware of all discussions related to the Project.

Every day, you update your status on the Project in Flow. This way anyone can drop by the Project page and see what’s happening, without bothering anyone.

The actually project management happens outside Flow. Each Project chooses whatever software or system they feel is best suited for the Project. This has caused some friction in the company as some people want Flow to also offer Project Management functionality (like Basecamp or Trello). I’ve been against this idea as I feel it could bloat pretty quickly into a Trello/Basecamp clone, which is overkill.

Flow is basically a simple communication tool: Which Projects are happening, who is working on them and what their current status is.

HipChat

We use a group-chat/IM tool called HipChat. It’s a desktop/mobile/web app for private group chat. We currently have 23 rooms spanning everything from 'Design’, 'Marketing’, 'Audio’ to 'The Nerd Herd’.

Anyone can create a room and they’re primarily used for quick-fire chat related to Projects. Because I’m the CEO, I join almost all rooms so I can get a birds-eye view of what’s happening.

We ask everyone in the company to log into HipChat during work hours. We’re spread out over the World so everyone needs to be contactable.

Email and Docs

We use Google Apps for our email and documents. We use commenting and live-editing in Google Docs quite a bit. We only use Excel for finances (Google Spreadsheets can’t handle the complex spreadsheets we need for financial models).

Email is email. Blech. Here are the email rules …

Don’t use it unless it’s your last resort
Never discuss Projects in email. Use the discussion forum in the Flow Project. All information should be as public as possible.
Don’t worry about inbox zero. Focus on your Projects in Flow. Ideally check your email only once or twice a day.

Urgency

We use this rubric to determine the urgency of communication …

Phone or Google Hangout: Need an answer immediately
IM or Text: Need an answer in the next hour
Flow Discussion: Need an answer in next day or two
Email: Need an answer in next day or two
Convoy: No answer required