Read the case, Zappos, from page 48 of the textbook. Please respond to the following: Discuss how Zappos achieved this initial strategic objec

Case Zappos: Facing Competitive Challenges

Zappos, based in Las Vegas, is an online retailer with the initial goal of trying to be the best website for buying shoes by offering a wide variety of brands, styles, colors, sizes, and widths. The Zappos.com brand has grown to offer shoes, handbags, eyewear, watches, and accessories for online purchase. Zappos strives to deliver happiness through four Cs: Commerce, Customer Service, Company Culture, and Community. The company wants to offer customers more clothing styles and variety, exceed customer expectations, protect and sustain its company culture, and serve communities in which it operates. Zappos has received many awards for its workplace culture and practices, including being recognized by Fortune magazine on its Best Company to Work For list. The company’s culture, brand, and business strategy are influenced by 10 core values:

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

Be Humble

Deliver WOW Through Service means that call center employees need to provide excellent customer service. Call center employees encourage callers to order more than one size or color because shipping and return shipping are free. They are also encouraged to use their imaginations to meet customer needs.

Human Resource’s (HR) job at Zappos is to protect the culture and to educate employees. HR focuses on interactions with managers and employees to understand what they need from HR. Zappos’s employment practices help perpetuate its company culture. For example, its hiring practices equally weight job skills, the potential to work in Zappos’s culture, and a willingness to change and learn. The HR team uses unusual interview questions–such as, How weird are you? and What’s your theme song?–to find employees who are creative and have strong individuality. Most of the over 1,500 employees at Zappos are hourly. Every new hire undergoes four weeks of training, during which the company culture must be committed to memory, and spends two weeks dealing with customers by working the telephones. New recruits are offered $2,000 to leave the company during training to weed out individuals who will not be happy working at the company.

Zappos provides many perks in its unique office environment such as free snacks and meals and a fulltime life coach (employees have to sit on a red velvet throne to complain). Call center employees can use an online scheduling tool that allows them to set their own hours, and they can earn more pay if they work during hours with greater customer demand. Work is characterized by constant change; a loud, open office environment; and team interactions. To reinforce the importance of the 10 core values, Zappos’s performance management system asks managers to evaluate how well employees’ behaviors demonstrate the core values, such as being humble or expressing their personalities. To evaluate task performance, managers are asked to regularly provide employees with status reports on such things as how much time they spend on the telephone with customers. The status reports and evaluations of the core values are informational or used to identify training needs. Managers are encouraged to spend time with employees outside of the office, and any employee can reward another employee with a $50 bonus for good performance.

Zappos also believes in helping others understand what inspired the company culture. The company created the Zappos.com library, which provides a collection of books about creating a passion for customer service, products, and local communities. These books can be found in the front lobby of Zappos offices and are widely read and discussed by company employees. Corporate culture is more than a set of values, and it is maintained by a complex web of human interactions. At Zappos, the liberal use of page 49social media including blogs and Twitter facilitates the network that links employees with one another and with the company’s customers. Zappos takes the pulse of the organization monthly, measuring the health of the culture with a happiness survey. Employees respond to questions as whether they believe that the company has a higher purpose than profits, whether their own role has meaning, whether they feel in control of their career path, whether they consider their co-workers to be like family and friends, and whether they are happy in their jobs. Opportunities for change are identified from the results of the survey and acted upon. For example, when it was clear from the survey that one department had veered off course and felt isolated from the rest of the organization, a program was instituted that enabled individuals in the group to learn more about how integral their work was.

Zappos uses a management philosophy, holacracy, which gives employees the freedom and responsibility to decide how to get their work done and eliminates people managers. Holacracy allows employees to act more like entrepreneurs and help stimulate new ideas, bring their full selves to work, and have a purpose beyond making money, all of which can benefit the business. Employees work in teams or “circles” rather than as individuals, and team membership can change. To encourage employees to expand their role within their teams or accept a permanent or temporary role on another teams who could benefit from their skills, Zappos created an internal job board. Teams can post specific skills or tasks they need completed on the Role Marketplace. Employees earn badges that recognize their experience and skills they have acquired in their team as well as assisting other teams. The badges make it easy to identify and choose employees who have the qualifications the teams need.

Zappos provides other companies with the opportunity to learn from their practices. Zappos Insights is a department within Zappos created to share the Zappos culture with other companies. Zappos Insights provides programs about building a culture (3-Day Culture Camp), its WOW service philosophy (School of WOW), the power of a coaching-based culture (Coaching Event), how the HR function protects the culture and how its programs support it (People Academy), and custom programs. The cost to attend these programs ranges from $2,000 to $6,000 for each attendee.

Tony Hseih, Zappos CEO who retired in August of 2020, is credited for establishing Zappos’s unique culture and business success. He unexpectedly died in November 2020 in a house fire in Connecticut.

Here are some resources for you to experience Zappos and better understand holacracy management style. Watch the videos at www.youtube.com/watch?v=0fykBkaLyLA (What it is like to work at Zappos) and www.youtube.com/watch?v=7mkFk-bol4c (Why company culture matters). Visit the Zappos website at www.zappos.com. Scroll to the bottom of the page and under “About Zappos” click on “About.” Review “What We Live By,” “Who We Are,” and “How We Work.” Under “How we Work,” click on “Learn About Holacracy” and gain an understanding of holacracy as a management philosophy. Watch the video “A Little Bit About Holacracy” at www.youtube.com/watch?v=8hejcdYFJ1k. Read www.mycustomer.com/service/manage-ment/the-zappos-story-is-holacracy-a-proven-struc-ture-for-improving-customer. Go to www.zapposin-sights.com/resources and read the Frequently Asked Questions to see how Zappos helped its employees continue to work during the pandemic. Click on www.zapposinsights.com/about/core-values to learn more details about Zappos’s core values.

What challenges discussed in the chapter will have the greatest impact on Zappos’s continued success as an online retailer? For each challenge you identify, explain how training and development can help Zappos overcome them. Which of Zappos’s 10 core values do you believe training and development can influence the most? The least? Why? Do you think employees at Zappos typically have a high level of engagement? Do you think their level of engagement remained high even during the pandemic? Justify your position.

Sources: Based on www.zappos.com, accessed March 3, 2021; A. Levit, “Bend & Flex: Building Learning Agility,” Chief Learning Officer, January/February 2019, pp. 44, 46, 48, 65; A. Groth, “Zappos Has Quietly Backed Away from Holacracy,” Quartz at Work, from qz.com/work, accessed June 27, 2020; J. Hagerty, “Zappos’ Former CEO Changed Online Retail,” The Wall Street Journal, November 30, 2021, pp. Al, A8; E. Bernstein, J. Bunch, N. Canner, and M. Lee, “Beyond the Holacracy Hype,” Harvard Business Review, July/August 2016, pp. 38–49; J. Reingold, “The page 50Zappos Experiment,” Fortune, March 15, 2016, pp. 206–14; The Columbus Dispatch, April 6, 2015, p. C3; “Zappos Insights,” www.zapposinsights.com, accessed March 3, 2021; D. Richard, “At Zappos, Culture Pays,” Strategy + Business, August 2010, p. 60; www.strategybusiness.com, accessed March 25, 2013; K. Gurchick, “Delivering HR at Zappos,” HR Magazine, June 2011; R. Pyrillis, “The Reviews Are In,” Workforce Management, May 2011, pp. 20–25; J. O’Brien, “Zappos Knows How to Kick It,” Fortune, February 2, 2009, pp. 55–66.