Zappose case study



For this assignment you are required to review the following company case study, then analyze it based on the listed organizational behaviour categories. More instructions are found at the end of the case.

“Imagine a retailer with service so good its customers wish it would start up an airline. It might sound like a marketing fantasy, but this scenario is reality for ” Headquartered in Henderson, Nevada, Zappos (a word play on zapatos, the Spanish word for shoes)is an “e-commerce ‘service provider’ of shoes, apparel, handbags, accessories and more, representing about a thousand brands. Zappos gets rave reviews for “its fast, free shipping90% of orders arrive the next business dayand a 365-day return policy that allows footwear fans to order a bunch of shoes, try them on and return those that don’t suit or fit. Three-quarters of sales are from repeat customers.” Hsieh views “customers as human beings, not just ‘consumers,’ and so makes customer service the defining feature of the brand.”

Zappos doesn’t do anything quite the way other companies do. For instance, the company’s headquarters, which is located in a nondescript office park, is quite modest on the outside. But inside is a different story! “There are the outlandish decorations adorning walls and cubicles, including jungle creepers that hang from the ceiling and a menagerie of toy monkeys and other creatures. There are the boisterous employees, some of whom rattle cowbells, shake pompoms and bellow greetings as visitors pass their desks.

Tony Hsieh and his team have focused their efforts on creating a distinctive culture at Zappos. This distinctive culture is built upon a foundation of ten core values that all Zapponians—the name that Zappos personnel give themselves—follow in their work lives. These values are as follows:
• deliver WOW through service;
• embrace and drive change;
• create fun and a little weirdness;
• be adventurous, creative, and open-minded;
• pursue growth and learning;
• build open and honest relationships with communication;
• build a positive team and family spirit;
• do more with less;
• be passionate and determined; and
• be humble.

Hsieh believes that the success of Zappos is a direct reflection of the culture he has built and nourished. “A fun-loving, change-embracing culture drives the Zappos engine. Zappos has consistently been on Fortune magazine’s list of “The 100 Best companies to Work For,” So, why do Zappos employees (known as Zapponians) think that it is a great place to work? Why do they love the company?

Developing and maintaining the Zappos culture starts with the hiring process. Interviews of prospective employees are not ordinary. They are sometimes conducted in a speed-dating format, in which applicants talk with five or six managers in fast-paced five-minute dialogues. If the applicant survives this initial round of conversations, then more traditional interviews are conducted to assess the candidate’s technical abilities in the specific area in which they desire to work. Finally, the applicants are interviewed by human resources professionals to ascertain whether they will fit into the Zappos culture.The Zappos HR team uses offbeat, cartoony applications and wacky interview questions to screen for creativity and individuality while filtering out egomaniacs and wallflowers.” Regardless of the position, everyone hired at Zappos attends a four-week training program that includes discussion of the company’s history, culture, and philosophy. They also undertake a two-week stint in the call centre, to get to know customers, and spend one week in the company’s distribution centre in Kentucky. Exposing everyone to the same training process serves to get everyone on the same page. One major aim of the whole training process is to weed out half-hearted new hires. Hsieh says, “[w]e do our best to hire positive people and put them in an environment where the positive thinking is reinforced.”

Culture building continues after the hiring and training process is over. In fact, it is an important ingredient of everyone’s job. “[A] passion for having fun is the unwritten requirement in everyone’s job description.”Zappos “bases half of an employee’s performance review on how well he/she has lived up to the company’s values.”

Zappos gives its employees plenty of freedom to do their jobs. For example, employees in the call centre are told to do whatever they think is necessary to solve a customer’s problems—and they don’t have to get a manager’s approval to do it. With this level of freedom, one employee observes, “You have as much power to help a customer as Tony [Hsieh, Zappos CEO] does himself.”

Compensation practices also differentiate Zappos. “Most employees are hourly, and you won’t get rich on a call centre salary.”“Zappos pays salaries that are often below market rates the average hourly worker makes just over $23,000 a year.” Zappos covers 100 percent of employees’ health care costs and offers free food to its employees, but it’s nothing special—essentially, little more than a pile of cold cuts set up in a small cafeteria.And Tony Hsieh, though he owns a significant chunk of Zappos, only takes a salary of $36,000 a year.

All employees are encouraged to spend time together outside of work. This includes CEO Hsieh as well. Zappos managers are required to spend 10 to 20 percent of their time goofing off with the associates they manage. After managers have spent time goofing off with their team members, they invariably tell Hsieh that the time has improved communication, generated greater trust, and fostered budding friendships within the team and they report an efficiency increase in the range of 20 to 100 percent.

As the CEO of Zappos, Hsieh is as unique as the organizational culture that he has fostered. “What most of Hsieh’s admirers—and even some Zappos employees—don’t know is that this openness doesn’t come naturally. Hsieh has been exceptionally shy all his life and finds meeting strangers exhausting. Still he has become an accomplished public speaker, giving many talks without notes.
Technology supports that culture and the work of all Zappos employees in delivering great customer service. A prime example of the role that technology plays is provided by the use of social networking communication sites and the company’s distribution centre (DC).

“Hsieh has embraced an ethos of transparency, using social networking tools such as Facebook, Twitter and blogging to share information, both good and bad, with employees, customers and anyone else interested in Zappos.” The goal is to respond to customer comments and form personal connections with their Twitter followers, as well as with friends on Facebook, where employees post blogs and videos. For employees who are not Twitter users, Zappos offers classes to help them become familiar with the communications application.

The frequent and transparent communication applies to bad news as well as good news. Like many companies, Zappos was hit by the recession that started in late 2007. The Zappos management team decided to lay off 124 employees, approximately 8 percent of its workforce. CEO Tony Hsieh wanted to inform employees quickly so as to help alleviate the inevitable stress the layoffs would cause. “He announced the move in an e-mail, on his blog, and with Twitter.”

A recent technological change at the DC was the installation of 72 Kiva robots at a cost of $5 million. The Kiva “bots” pack 12 percent of the shipped items at the DC, and the results have been tremendous. “The labor costs are 50%, and electrically it’s only using half as much power as our old system.”The Kiva “bot” system allows the Zappos DC to ship a pair of shoes in as little as eight minutes.

Another important aspect of life as a Zappos employee is personal growth. Zappos maintains a small library that contains multiple copies of business and self-help books. Employees are urged to take—not borrow—whatever appeals to them. The availability of these books is intended to help employees grow along with the company. However, the fun-loving nature and a personal commitment to remain humble never obstruct Hsieh’s business acumen or his dedicated work ethic.

Review the Zappos Case Scenario in depth and address the required five (5) topics listed below in your paper. Marks are allocated for thoroughness of coverage of the topics and their analysis-linkages to appropriate OB theories and concepts from the course and external sources. It is not enough to just describe the happenings at Zappos. Analysis should include the effectiveness of the current approach for each of the five topics as well as recommendations for improvement in each. Use each topic as a heading in your paper.
The required five (5) topics to be analyzed, are:
1. Job Design& teamwork – Use of job design principles to impact employee motivation and employee engagement – use the job characteristics model to discuss this.
2. Organizational Culture – What type of culture does Zappos display? How does Zapposmaintain the organizational culture that it has developed? Ensure you discuss the stories, rituals, material symbols, hiring, training and performance appraisal processes. Do you think activities outside of work—like goofing off with managers and co-workers—are useful ways to promote culture and teamwork? Why or why not?
3. Organizational Change – Discuss either the need to lay-off employees or the Kiva bot robots as it relates to change. What were the change forces driving these changes at Zappos? How did this impact the labour force at Zappos? How might have the company helped the employees overcome their potential resistance to change. Finally, regardless of your change choice, what is your opinion on Tony Hsieh’s decision to email employees that lay-offs were occurring? Is this an effective form of communication in this situation? Why or why not?
4. Leadership Style -How would you describe Tony Hsieh’s approach to leadership? What personality traits does he display? Make sure you discuss extraversion and introversion and how Tony displays both tendencies.
5. Power, and Influence (The types and use of leadership power to influence employee behaviour).

Finally, provide a summary to your paper by answering the following question:
Zappos is viewed by many as a great place to work. Do you agree with this viewpoint? Why or why not?
Your thorough answers to each section are worth up to 2% each for an overall total of 10%. However, marks will be deducted for spelling and/or grammar errors. As well, you need to include at least two references, using APA or MLA style, at the end of your paper.