Some Tech Firms Ask: Who Needs Managers? Among Smaller Companies, Disdain for Hierarchy Collides With Need for Oversight

August 6, 2013, 7:35 p.m. ET

Some Tech Firms Ask: Who Needs Managers?

Among Smaller Companies, Disdain for Hierarchy Collides With Need for Oversight



Sonya Green, left, who helps lead GitHub’s customer-support team, says the staff doesn’t need her to sign off if it wants to change a procedure.

This spring the Chicago software firm 37signals took a big step: It appointed a manager. The promotion wasn’t an entirely welcome one for Jason Zimdars, the veteran designer who was selected for the job. Rather than manage coworkers, he says, “I like to code and design and make things.” Disdain for management sometimes seems as common as free snacks among tech startups and other small or young companies founded without layers of supervisors, fancy titles or a corporate ladder to climb. Leaders of these companies, including 37signals, say they are trying to balance the desire to free workers to create and the need for a decision maker to ensure projects run smoothly. Management has traditionally been a worker’s best way to get ahead and increase earnings, but at startups, where speed and autonomy are prized above all else, managers are often dismissed as archaic, or worse, dead weight.37signals, which got its start in 1999, keeps head count low and hires people capable of managing themselves.

Two-thirds of the 38 staffers, including Mr. Zimdars, work off site, and coding, designing and helping customers—not managing others—are the contributions that matter most.

“I want people here who are doing the work, not managing the work,” says Jason Fried, one of the company’s co-founders.

The trick for smaller companies, such as 37signals, is making sure decisions get made and tasks get done without evolving into a bureaucracy.

Mr. Fried previously oversaw the company’s main product, Basecamp, in addition to looking after other products and setting strategy. But he was stretched so thin that key decisions about the project-management software, which serves as a hub for workers to share messages, collaborate on documents and discuss ideas, were sometimes left hanging for weeks or months.

By this past April Mr. Fried realized it was time to hand the reins over to Mr. Zimdars, who had worked as a designer for the company for several years. As Basecamp’s product owner, Mr. Zimdars is now empowered to make decisions about the product and handles a team of five or so employees.

The 38-year-old father of two, who works from a stand-up desk in his Oklahoma City, Okla., home office, doesn’t see himself as a typical manager. He even avoids the language of management; for instance, he doesn’t refer to members of his team as “direct reports.”

When a co-worker recently presented Mr. Zimdars with an idea for a new feature, Mr. Fried suggested they come back with some alternative, bigger-picture ideas. After some back and forth, Mr. Zimdars decided to overrule his boss—though he thought twice about it—and went with his colleague’s original idea.

While Mr. Zimdars says he is glad product development now moves more quickly, he has reservations about his new assignment. “In my past experience, moving into more managerial roles has sort of been the exit out of other companies,” he says.

37signals tried out middle management a few years ago, when Mr. Fried hired someone to oversee the customer-service team. But the employee, who is no longer with the firm, did little besides overseeing others, he says.

Since then, the customer-support team has rotated some management duties, such as keeping track of group performance and ensuring goals are met. The manager-of-the-month also handles customer-support requests.

“If you are too far away from actually doing the work, you don’t really understand the work anymore and what goes into it,” says Mr. Fried.

Still, research shows middle managers may affect company performance more than anyone else in an organization, even top executives or workers in creative roles.

In reviewing 12 years of data for 395 companies in the videogame industry, University of Pennsylvania’s Wharton School professor Ethan Mollick found that middle managers were more important to the success of individual products than creative game designers or than other organizational factors, such as firm leadership or HR practices. Dr. Mollick measured how much of the performance difference among companies could be explained by middle managers. According to his analysis, middle managers accounted for 22.3% of the performance differences among companies, more than three times as much as the game designers who invent storylines and characters. Dr. Mollick says middle managers play a critical role in “making sure the people at the bottom and the top are getting what they need.”

GitHub, a five-year-old San Francisco collaboration-software company, struggles to weigh the need for managers against the desire to keep things loose.

GitHub says employees can join projects in whatever capacity they feel they are most useful and can switch roles depending on the project. Co-founder Tom Preston-Werner has declared that the company has no managers or organizational chart and says that performance feedback is offered informally by co-workers. But as GitHub has grown—it now employs about 200 people—its leaders are coming to terms with the need for some oversight.

“I’m not denying that the work of a middle manager still has to get done,” says Mr. Preston-Werner, who is also the company’s chief executive, a title he says he holds in name only. “But,” he adds, “how do you solve that problem in a way that embraces freedom, as opposed to hierarchy?”

One symbolic gesture: Avoiding the word “manager.” a “very bad term” in Mr. Preston-Werner’s view. He prefers “leader,” or the company’s own acronym, PRP, for “primarily responsible person.”

One of those responsible people is Sonya Green, 34, a former librarian who helps lead GitHub’s 15-person customer-support team.

While Ms. Green describes herself as bossy, she says she doesn’t feel like a boss. Members of her team don’t need her to sign off if they want to change a customer-support procedure, but she trusts them to do so when it matters. “Things still go out the door and are made public without me looking at it,” she says.

This relaxed approach to management isn’t for everyone. Firms such as GitHub and 37signals are careful to hire staffers who are self-motivated and comfortable in the generally boss-less environment they purposely built from the start. One of 37signals’ mottos is to “hire managers of one.”

As for Mr. Zimdars, he says he is gratified that his company’s flagship product is “getting someone’s full attention” and decisions aren’t put off—even if it means he is doing less design and coding. “We don’t want to accept that we need management,” he says, “but we kind of do.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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