Zappos is considered by many to be a shining example of customer service, culture, and ethics (Chafkin, 2009). Zappos was founded in 1999. It is an online shoe and apparel company that has grown to be the largest online shoe store. In July 2009, the company announced it would be acquired by Amazon.com in an all-stock deal worth $1.2 billion (Chafkin, 2009; Lacey, 2012). The executive team would include key founder Nick Swinmurn, CEO Tony Hsieh, and CFO Chris Nielsen. As an end result to the acquisition, Zappos will be moving their headquarters in 2013 from Henderson, Nevada to Old Las Vegas City Hall in downtown Las Vegas (Lacey, 2012).
Research shows that organizational culture is a primary driver in employee behavior and that leaders shape this behavior (Burkus, 2012). Zappos has become renowned for its ethical culture (Chafkin, 2009; Burkus, 2012). The course text states that there is an alignment between culture and core values (Bauer & Erdogan, 2009). Hence, culture is the primary driver of employee behavior. Consequently, these cultures are greatly influenced by the actions of organizational leaders (Bauer & Erdogan, 2009).
Approach Used By Zappos
According to the case, Zappos approach was to create an environment that encourages motivation and builds inclusiveness. The company lacked a formal statement of core values for the first six years of its existence (Hsieh, 2010). Zappos CEO Tony Hsieh believed that writing out core values was too corporate and ineffective. Subsequently, Zappos took the time to understand what they uniquely valued or possessed and developed its ten core values: (1) Deliver WOW Through Service; (2) Embrace and Drive Change; (3) Create Fun and a Little Weirdness; (4) Be Adventurous, Creative, and Open-Minded; (5) Pursue Growth and Learning; (6) Build Open and Honest Relationships With Communication; (7) Build a Positive Team and Family Spirit; (8) Do More With Less; (9) Be Passionate and Determined; (10) Be Humble (Hsieh, 2010).Once the core values were established they were able to guide all decisions for the company including the selection of applicants and customer service guidelines. Zappos offers an unprecedented training program to its new employees.
The training course is five weeks long which includes an offer of $2,000 to walk away from the company if one discovers that it is not suitable him or her (Taylor, 2008). This approach is a very bold statement that states the company is looking for desired candidates only and would rather pay money up front for a loss than to invest money over time just to conclude that this individual is not a good fit. This approach is not very common because employers are aware that their employees work to earn money in order to survive. Most companies would not adopt this approach because they need to fill seats in regards to the needs of the business and they would view this offer as unnecessary. From a business aspect, this offer may save the company money in the long run.
Zappos created and reinforced a culture that held its core values. The strength of Zappos’ beliefs was put to the test on May 21, 2010, when a computer glitch developed on 6pm.com, a Zappos-owned bargain retailer. A flaw in the website caused the price of every product on the site to be reset to $49.95 (Albanesis, 2010). Within six hours of discovering the error, Zappos employees had fixed the glitch. Additionally, Zappos promised to honor every transaction (Magness, 2010). This decision ended up costing Zappos over $1.6 million (Albanesis, 2010). However, it also served as an example of how Zappos sought to stay true to its culture and core values and deliver ―WOW through customer service (Hsieh, 2010).
Zappos training model also creates organizational commitment and positive work attitudes. Organizational commitment is the emotional attachment people have toward the company they work for. While positive work attitude is concerned with person-environment fit, job characteristics, and work relationships (Bauer & Erdogan, 2009). Thus, Zappos recruits and aims to retain employees that are the best fit for the company in order to provide exceptional customer service.
In addition to the immersive training, Zappos offers exceptional customer service. The company offers a 365 day return policy and free shipping. This speaks to the customer base in that Zappos places great emphasis on customers. If for some reason, customers are not satisfied with the product they have the ability to return it and are not charged extra fees for having it shipped to them. The benefits their customer service approach would be that employees are motivated to show up to work and are not placed with quantity pressures.
This means that employees are under a structure in which they can take as much time as needed to provide excellent customer service rather than being expected to finish as fast as possible. Unlike other companies Zappos is not basing performance off of rapid movement of customer but yet the quality of service provided to each customer. Excellent customer service yields satisfied customer who will want to continue giving their business. Zappos is one of the companies forging a new era of business that emphasizes making personal and emotional connections. In return, Zappos builds satisfaction and fuels loyalty.
Challenges and Benefits
The challenges of their training program offer would be a short term payout of money to an individual who is not a great fit for the company. However, in the long term it would be an investment in the company’s future and overall employee base. Their customer guidelines in respect to a gracious 365 day return policy, free shipping and no time constraints spent on the phone with customers has its advantages and disadvantages. The disadvantage could be a decrease in revenue for inventory; when customers are allowed to return products and receive money back with no intention of purchasing a new product in return. Additionally, the possible revenue generated in shipping costs are completely lost due this policy but in return Zappos creates the perception of putting their trust in consumers to not take advantage of such a system (Gordhammer, 2009). However, if enough revenue is not generated based on goods sold they may have to revisit this policy to make up the difference.
According to a Shanghai Daily article, the airline industry is an example of this approach. Customers have expected to pay low for flights but the airlines have not been able to keep up with the service. For this reason, they have begun adding fees for luggage, snacks/meals on the airplane and other things in orders to make up for the revenue they need to stay in business. There are great benefits to not having constraints on customer service via phone.
Customers like to know that someone is dedicated to helping them solve their problems no matter how big or small they can be. Some customer issues can be solved very quickly and some take intensive time and investigation. All customers want to feel that their issue is important and is being addressed accordingly; no customer wants to feel rushed off the phone without the opportunity to present all issues. This policy will great customer relationships and will be long lasting if done correctly. The only down side to this policy is that the call volume may continue to grow and all customers may not be able to get their issues addressed in a timely fashion.
Organizational Changes due to Acquisition
Organizational changes due to the acquisition would probably include adaptive changes and transformational changes. These changes are the first things companies look at when acquisitions and mergers take place in a company. Adaptive changes can be fine tuning which would include anticipating needs and adjusting accordingly. Transformational changes would include downsizing, restructuring, and reengineering the organization (McGraw- Hill). Overtime, it is believed that Amazon’s vision of low prices may take over Zappos; thus leading to a reduction of the culture.
The culture may begin to fade little by little and the reason for that is the mentality of the customer is always right along with the desire to compete with low prices. It was previously mentioned that low prices can compromise service due to the fact that companies have to make revenue. However, the acquisition should strengthen both companies as Amazon is already the master of online product distribution; they take online orders faster, ship goods cheaper, and trounce their competition. Amazon promised to accelerate the growth of Zappos business, brand and culture without folding the company in to Amazon (Parr, 2009).
Concept of Motivation
Zappos appears to be using Maslow’s Hierarchy of Need theory with relation to motivation. The theory depicts categories that seemed to be used by Zappos’s work environment and overall core values. According to the case study, applicants are questioned about the company’s values, how they feel about their own weirdness, open mindedness and sense of family (Bauer & Erdogan, 2009). These are all open ended questions that play on a person’s psyche; which is the foundation of Maslow’s theory. This would be a great place to work because the company understands one’s physiological needs which are food, water and other as defined by Bauer and Erdogan (2013). The way that it does this is by the benefits offered to its employees as well as the good salaries which help fund these needs.
Zappos training model seems to complement the acquired needs theory. According to this theory, individuals acquire three types of needs as a result of their life experiences. These needs are the need for achievement, the need for affiliation, and the need for power (Bauer & Erdogan, 2009). Zappos bribes its new employees to quit to weed out individuals that lack the sense of commitment or need for achievement and affiliation. Zappos’ culture is not suited for everyone, thus the company is willing to pay to learn sooner rather than later. About ten percent of new call-center employees take the money and quite (Taylor, 2008). ConclusionZappos has become renowned for its culture and customer service. Even when challenged by a $1.6 million mistake, Zappos remained committed to delivering on its promises and its core values. Additionally, the company is very selective in its hiring process in order to recruit and retain the best employees.
These employees are committed to Zappos, its culture and core values. As a result, Zappos offer exceptional customer service and has customer loyalty. Overall, Zappos would be a great place to work but an applicant needs to be sure that the environment fits their personality. Most people who are successful in the workplace are happy employees. If an employee is unhappy with their capacity then they may not be a great fit for the company or their culture. However, if a company can bring out the best quality in a person through self-actualization, social needs and self-esteem then those factors alone can make for great company to have as your employer. Honestly, nothing feels better than finding yourself and your talent to give to the community.
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