Designing an Organisational Culture: Tony Hsieh Wrapping Zappos' Organisational Culture?

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Designing an Organisational Culture: Tony Hsieh Wrapping Zappos'; Organisational Culture?

 

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Zappos ensures that the employees enjoy while they are working. Employees are never pressurised to achieve targets and are given complete liberty to work the way they want. Although the customer loyalty team is available 24/7 and handles around 5,000 phone calls a day, call times are not measured and even a call that continues for an hour with no sale is not considered an offence at Zappos. They handle calls without scripts and are under no pressure to wind up the conversation with the customers. “This is not some place that you wake up and you're dreading,” says Derek, an employee of Zappos.36 Moreover, employees are bestowed with benefits like free lunch, snacks, pop corn, coffee, etc. Many surprise events like random acts of kindness, employee of the day, etc., are organised and employees are also provided with full medical coverage including the dental coverage. Zappos' employees are given complete liberty to write about their experiences as well as their feelings about what culture means to them in a 300-page culture book. Tony explained, “We really believe in trying to take care of people and to wow our employees, customers, partners and investors. We want to give all of them complete transparency”37

In order to make Zappos a fun place to work, employees are also urged to communicate openly.Zappos managers are encouraged to spend 10% to 20% of their time with team members outside the office, and any employee can give any other employee a $50 bonus for a job well done. There's also a full-time life coach. Of the life-coach, Lin observed, “ you can't provide great service if you're upset about something in your life. He easily pays for himself.” Tony polls managers after they've taken teams to dinner or on a hike, and they invariably talk about improved communications, greater trust and budding friendships. “Then we ask, ‘how much more efficient do you think your team is now?', Tony pointed out. “The range is anywhere from 20% to 100%.” Zappos organizational culture has become so ubiquitous that executives from the likes of Lego, SouthWest Airlines, etc. have witnessed the zappos work ethos firsthand. For those who can't make the trip, Tony has started an online service called Zappos Insights. For $39.95 a month, anyone can watch videos and read white papers on how the company hires, deals with vendors, evaluates workers, etc.

Unlike many other companies, in Zappos, employees are encouraged to use Twitter, a micro-blogging tool that is used by 435 Zappos employees out of the total 1,600 employees.³⁸ While initially, Twitter was used as a tool to strengthen the company's culture, Tony realised that twittering was emerging as a great way to connect with Zappos' customers. Zappos used Twitter to strengthen their customer service by paying attention to customers' queries and personally connecting with the customers. Taken very seriously, employees are offered Twitter classes where they are taught about how to sign-up and how to use it. However, they are never given any specific guidelines about what has to be written. An avid twitterer himself, Tony feels, “We want our customers to feel like they are interacting with real people, not a faceless corporation.”³⁹

The transparency and strategy followed by Zappos was adopted by the company also in laying off its employees. In October 2008, Tony took one of the toughest decisions of laying off 8%⁴⁰ of its employees in order to cut the expenses. Zappos' approach in laying off its employees earned the company an overwhelming response both from its affected employees as well as existing employees. Tony stuck to the company's core values by revealing complete details about the Zappos layoffs on Twitter. According to Tony, “Zappos' success depends on its 10 core values including open and honest communication. We're open with everything on how we run our business internally. When people don't know what's going on, rumours start.”⁴¹

While generally the layoffs were determined on the basis of performance, in case of call centre employees, attendance and reliability of the employee were the determining factors. Informed directly by the managers, the laid off staff were paid through the end of the year, and also received severance pay for 1 month for every year they worked. Even their Consolidated Omnibus Budget Reconciliation Act (COBRA) payments were extended for the next 6 months. Besides, the existing employees were given counselling to deal with their stress.

Zappos' lay off approach was applauded to such an extent that Tony even received complimentary letters from its departing employees. Zappos' organisational culture earned it several accolades. By 2009, Zappos was ranked 23rd in Fortune's top 100 best companies for the employees to work, making the company the highest newcomer. Apart from that, Zappos has also been listed in INC magazine's yearly list of the 500 fastest-rising private companies in the US for 4 consecutive years since 2004,and TIME magazine's “25 Sites you can't live without.
However, is organisational culture an outcome of Zappos' business nature or is it the architecture of Tony Hsieh? Denying that Zappos' organisational culture cannot sustain if he leaves, Tony said, “The Zappos culture is a reflection of all of our employees' personalities and values. My role isn't to dictate the culture. My role is to create an environment where employees feel comfortable being themselves and driving the culture forward by expressing their individuality.

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36] Everitt Lisa, “Zappos Tells New Employees: Please Go Away”, http://industry.bnet.com/retail/100066/zappos-tells-newemployees- please-go-away/?tag=content;col1, May 21st 2008
37] Bye Adrian, “Alfred Lin, Zappos Chairman and COO”, http://meetinnovators.com/2008/12/04/alfred-lin-zappos-chairmanand- coo/, September 11th 2008
38] Nimetz Jody, “Zappos Does it Right with Twitter”, http://www.marketing-jive.com/2009/01/zappos-does-it-right-withtwitter. html, January 7th 2009
39] Nelson Shannon, “Improving Brand Value Through Social Media: Zappos Gets it Right”, http://www.piercemattiepublic relations.com/2008/05/improving_brand_value_through.html, May 15th 2008
40] “Deathwatch: Zappos lays off staff”, http://vator.tv/news/show/2008-11-06-deathwatch-zappos-lays-off-staff, November 7th 2008
41] Stern Gary M., “Tapping out a Gentle Layoff Strategy”, http://totaltrust.files.wordpress.com/2006/02/investors-businessdaily- interview-on-layoffs-and-the-internet-1-17-08.pdf, January 16th 2009