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EXERCISING STRATEGY Zappos Faces 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 offer Deliver WOW through Service means that call center ing a wide variety of brands, styles, colors, sizes, and widths. employees need to provide excellent customer service. Call The zappos.com brand has grown to offer shoes, handbags, size or color because shipping and return shipping is free. center employees encourage callers to order more than one eyewear, watches, and accessories for online purchase. The They are also encouraged to use their imaginations to meet company's goal is to provide the best service online, not just customer needs. in shoes but in any product category, Zappos believes that the speed at which a customer receives an online purchase plays a Zappos has received many awards for its workplace cul- ture and practices including being recognized as the 86th critical role in how that customer thinks about shopping online Best Company to work for in Fortune magazine's 2014 again in the future, so they are focusing on making sure the ranking of the 100 Best Companies to Work For HR's job items get delivered to our customers as quickly as possible at Zappos is more than just a rule enforcer. HR's job is to Zappos CEO Tony Hsieh has shaped the company's cus- protect the culture and to educate employees. HR focuses tomer service focused culture, brand, and business strategy on interactions with managers and employees to understand around 10 core values. They are: what they need from HR (HR is even invited to attend work Deliver WOW through service, teams' happy hours!). Zappos' employment practices help Embrace and drive change. perpetuate its company culture. Only about one out of 100 Create fun and a little weirdness. applicants passes a hiring process that is equally weighted Be adventurous, creative, and open-minded. on job skills and on the potential to work in Zappos culture Pursue growth and learning. Some managers at Zappos believe that if you want to get a job the most important value to demonstrate is "be humble" Build open and honest relationships with communication including a focus on "we" instead of "L" Job candidates are Build a positive team and family spirit interviewed for cultural fit and a willingness to change and Do more with less. learn. For example, they observe whether at lunch job candi- Be passionate and determined. dates talk with others or just the person they think is making Be humble HER1 Human Resource management Gaming ompetitive Advantage the hiring decision. The HR team uses unusual interview cnabled individuals in the group to learn more about how questions such as, How weird urc you? and What's your integral their work was. To keep the vibrant company CEO theme song?-to find employees who are creative and have Tony Hsieh spent $350 million to develop a neighborhood strong individuality. Zappos provides free lunch in the cafete- in downtown Las Vegas which is the home of Zappos.com's ria (cold cuts) and a full-time life coach (employees have to new headquarters. Hsieh wants to provide employees with sit on a red velvet throne to complain), managers are encour great place to work as well as to live and socialize. Recently, aged to spend time with employees outside of the office, and Zappos adopted a management philosophy. Holocracy, which eliminates managers and gives employees the freedom and any employee can reward another employee a $50 bonus for good performance. Call center employees can use an online responsibility to decide how to get their work done. Hsieh's Scheduling tool that allows them to set their own hours and intent was to allow employees to act more like entrepreneurs they can earn more pay if they work during hours with greater and help stimulate new ideas which would benefit the busi- customer demand. Most of the 1.441 employees at Zappos ness. However, employees are finding the new management are hourly. Every new hire undergoes four weeks of train- system confusing and requiring them to spend more time in ing, during which the company culture must be committed meetings. Also, they wonder how they will earn raises and to memory, and spends two weeks dealing with customers advance their career without management jobs. Two hun- by working the telephones. New recruits are offered S2,000 dred ten employees found the new philosophy so dissatisfy to leave the company during training to weed out individualsing that they took three months of severance pay and left the who will not be happy working at the company. Zappos pro- company vides free breakfast, lunch, snacks, coffee, tea, and vending Despite this setback, other companies are trying to learn machine snacks. Work is characterized by constant change, from Zappos' practices. Zappos Insights is a department a loud, open office environment, and interacting in teams. within Zappos created to share the Zappos culture with other Employees at Zappos move around. For example, in the call companies. Zappos Insights provides programs about build- center employees can bid for different shifts every month. ing a culture (3-Day Culture Camp), its WOW service phi- To reinforce the importance of the 10 core values Zappos losophy (School of WOW), the power of a coaching-based performance management system asks managers to evaluate culture (Coaching Event), how the human resources function how well employees' behaviors demonstrate the core values protects the culture and how its programs support it (People such as being humble or expressing their personalities. To Academy), and custom programs. The cost to attend these evaluate task performance managers are asked to regularly programs ranges from $2,000 to $6,000 for each attendee. provide employees with status reports on such things as how much time they spend on the telephone with customers. The QUESTIONS status reports and evaluations of the core values are informa 1. Zappos seems to be well-positioned to have a competi- tional or used to identify training needs. Zappos also believes tive advantage over other online retailers. What chal in belping others understand what inspired the company cul- lenges discussed in Chapter 1 pose the biggest threat to ture. The company created the Zappos.com library which Zappos' ability to maintain and enhance its competitive provides a collection of books about creating a passion for position? How can human resource management prac customer service, products, and local communities. These tices help Zappos meet these challenges? books can be found in the front lobby of Zappos offices and 2. Do you think that employees of Zappos have high levels are widely read and discussed by company employees. of engagement? Why? Corporate culture is more than a set of values, and it is 3. Which of Zappos 10 core values do you believe that maintained by a complex web of human interactions. At human resource practices can influence the most? The Zappers, the liberal use of social media including blogs and least? Why? For each of the core values, identify the HR Twitter facilitates the network that links employees with one practices that are related to it. Explain how each of the another and with the company's customers. Zappos takes HR practice(s) you identified is related to the core values. the pulse of the organization monthly measuring the health 4. How might the change to the holocracy management of the culture with a happiness survey. Employees respond style undermine the core values and cause employees to to such unlikely questions as whether they believe that the have lower levels of engagement? company has a higher purpose than profits, whether their SOURCES Beden w for Zappos www.app.com own role has meaning, whether they feel in control of their IR. 2015. 2 McGregor Zappos heste Calle ha career path, whether they consider their co-workers to be like The Chiad April 2015. Zapposisie www family and friends and whether they are happy in their jobs. apper.com coad March 15, 20150M More Results from the survey are broken down by department The 10 Best Companies to Work for. March 15, 2015 10-15 Dund. "AZ Care Pays and opportunities for development are identified and acted www.us.com March 3, 2013. K. Gunhid. " upon. For example, when it was clear from the survey that HR Zappos HR Mac, June 2011: The Ret one department had veered off course and felt isolated from Worte Mon May 2011, pp 1-5.2.0.2 the rest of the organization, a program was instituted that to Fortuny 20. 35. GB Bado wapo The Wall Story 21, 2013. ALAI QUESTIONS 1. Zappos seems to be well-positioned to have a competi- tive advantage over other online retailers. What chal- lenges discussed in Chapter 1 pose the biggest threat to Zappos' ability to maintain and enhance its competitive position? How can human resource management prac- tices help Zappos meet these challenges? 2. Do you think that employees of Zappos have high levels of engagement? Why? 3. Which of Zappos 10 core values do you believe that human resource practices can influence the most? The least? Why? For each of the core values, identify the HR practices that are related to it. Explain how each of the HR practice(s) you identified is related to the core values. 4. How might the change to the holocracy management style undermine the core values and cause employees to have lower levels of engagement? SOUDE