Read Problem solving application case, page 628-630 of the text, Zappos CEO Asks Employees to Commit to Teal or Leave. and answer the three Discussion Questions that follow the reading. In your submission please use headings that correspond to the questions.

Directions:

Answer these Discussion Questions:

1.) Define the problem: Remember that the problem is the gap between the desired and the current state. State the problem as the gap and be sure to consider problems all 3 levels, and if one is more important than other levels, then focus on it for parts 2 & 3.

2.) Identify the causes of the problem: Use the procedure in step #2 to determine the cause and explain why?

3.) Make your recommendation for solving the problem: Use the procedure in step #3 for a recommendation and implementation plan.

B PA PROBLEM SOLVING APPLICATION CASE Zappos CEO Asks Employees to Commit to Teal, or Leave A BIT OF HISTORY in this chapter. The company preferred this design because it felt bureaucracy and hierarchy might Zappos had modest beginnings. In 1999, shoesite.com dampen the creativity and employee engagement was started by Nick Swimum to capture nine shoe sales Swinmurn reached out to Tony Hsieh (DO needed to provide great customer service, a primary nounced "Shay) and Alfred Lin, who were running corporate goal Although this design aided Zappos Venture Frogs, a kind of venture capital group, for ad- throughout is growing years, in 2013 Hsieh came to vice and funding Shoesite soon changed its name to believe that Zappos's organizational structure was Zappos, a riffon zapofos, the Spanish word for shoes limiting what employees had to offer. It was time for but abstract enough to let the company offer products a change Hsieh told The Wall Street Journal, Employees other than footwear In 2000 Hsieh joined Swinmurn as co-CEO and have so much more to offer. They're a full human be. then became sole CEO. Quietly charismatic, Hsieh ing that has all these skills that if they're given the gives quote-worthy interviews and for over a decade right context to collaborate with each other and be has served as the company's public face and voice creative and help move the company forward, they (Swinmurn left in 2006) will do that 30 Zappos has achieved great financial success In a holocacy, the traditional hierarchical structure Revenue jumped from $1.6 million in 2000 to over and reporting relationships are replaced by self-man- $1 billion by 2008. This success led Amazon.com to agement. There are no job titles and no managers, "It purchase the company for $1.2 billion in 2009. And removes power from a management hierarchy and today? While Amazon does not separate Zappos rev. distributes it across teams that have a clear set of enues in its annual report, the division's sales are as roles, responsibilities, and expectations. Instead of sumed to continue at well over $1 billion annually. being assigned to a particular job position or descrip Hsieh told Jennifer Reingold, a Fortune reporter, that tion, roles of employees are defined around the work. the company had achieved its highest operating profit These roles are constantly being updated and em- ever in 2015.11 ployees fill several roles. Additionally, employees work within a team in which authority is equally dis- TONY HSIEH'S VISION FOR THE tributed among its members. according to manage- ment blogger123 COMPANY These teams represent a hierarchy of work circles. Hsieh has long cared about employee welfare, as A writer for Fortune noted that each team has a dif- evidenced by his book titled Delivering Hoppiness ferent porpose, and the circles "operate next to, and He asserts that employee satisfaction is essential for on top of each other. Lead links are the nominal business success. Today, his goal is to turn Zappos managers--but they have little formal authority and into a "teal" company: teal represents a company can't force employees to do anything they don't want "characterized by self-management, bringing one's to do123 'whole self to work, and having a purpose beyond A writer from Forbes described the structure as a making money." according to Fortune. To get there. hierarchy of circles that operate according to detailed Hsieh implemented an organizational structure he procedures outlined in the Holacracy Constitution. calls a holacracy, Each higher circle tells its lower circle (or circles) what its purpose is and what is expected of it. It can do any- MOVING TO HOLACRACY thing to the lower circle-change it re-staff it, abolish it-if it doesn't perform according to the higher circle's Zappos historically favored an informal and flatter expectations. The word customer or a reference to organization structure that probably best fits the horizontal form of organizational design discussed any feedback mechanism from the customer doesn't appear even once in the Holacracy Constitution. The angre Durely word-booking and according to Forbes As of 2015, more than 300 med Hodacrocy implementation and other circles cord the curice The Holocacy Constitution was developes Bila Robertson, the software cutive who DO posed the form of organizational design. The doc ment contains a language unique to this form of structure and cota de procedures for running gove mance and tacticat meetings and expressing ten about something happening at the company Circles pected to use the language and procedural guidelines in the constitution On me downside the new structure Du how people comportammance evaluation and pay Some concerned about promotional oppor tunities because there no marsigt on Employees told The Wall Street Journal "The news tem has been confusing and time consuming so cially at first, sometimes requiring tive extra hours of meetings a week as worsunschied from the former bosses organize themselves morces and loam the vocabulary of holocracy ons. A tension is an employee concom or problem are expected to resolve tensions. Employees week- sich notes this process makes everything explicit in other words, bolacracy creates bureaucracy and erarchy. The ironic thing is there's actually a lot more structure and we have governance meetings. Each circle has its own governance meetings that is ac countabilities and change purpose statements and so Employees are allowed to move from Circle to de cle if they believe their talents can be used more ef- fectively elsewhere or they are unhappy in their on," he said. NOW WHAT? Hsieh wrote a 4,300 word memo to employees in 2015 called, Reinventing Zappos. The Road to Tel Remember that he earlier asked people to commit to ahol cracy culture and 14 percent of the employees quit. He then asked everyone to commit to teal or leave with a nice severance package). He felt that nonbelievers needed to go. According to Fortune, in the end, 18 percent of the 1.500 employees took buyouts, and another 11 percent left without a package.12 All told, about 29 percent of Zappos em ployees quit the company as a result of instituting a holacracy culture in pursuit of becoming teal Many remaining employees feel it's time to refocus on organizational culture. It was suggested that circles include a "culture check at overy governance meet ing. The company has also revised its recruiting pro- cess to assess whether applicants fit the new structure and philosophy of teal In 2016, Zappos did not make Fortune's list of Best Places to work for the first time in eight years, its scores on 48 of 58 questions had dropped. current circle APPLY THE 3-STEP PROBLEM- SOLVING APPROACH TO OB THE OUTCOMES OF HOLACRACY AT ZAPPOS In attempt to optimize P-o fit, in 2015 Hsieh offered employees three months of severance pay if they did not like working in the new structure. About 14 per- cent of Zappos's 1.500 employees took the deal. This is huge when you consider that the company's trade tional turnover rate has been about 1 percent. Hsieh isn't overly concerned and even provided this positive spin: "Another way to look at it is that 86 percent of employees chose to walk away from the easy money and stay with the company. Zappos simply went out and hired more people Fortune reporter Ral gold concluded that hol. acracy creates winners and losers. On the positive side, it sparked new ideas and provided more oppor tunities for less senior employees because experi- ence and expertise were de-emphasized in the new structure. It also benefited introverts in that they now are expected to speak up in meetings. It also helped dissatisfied employees such as Derek Noel. Noel was a customer service representative who wanted to transfer to the company's culture team. His boss had blocked the transfer, but under holacracy, he was no longer allowed to do this. So Noel moved to the Fungineering circle, an events-planning/ Step 1: Define the problem, A. Look first at the Outcomes box of the Organizing Framework in Figure 15.8 to help identify the Important problem(s) in this case. Remember that a problem is a gap between a desired and a Current state. State your problem as a gap, and be sure to consider problems at all three levels. If more than one desired outcome is not being accomplished, decide which one is most important and focus on it for steps 2 and 3. B. Cases have protagonists (key players), and problems are generally viewed from a particular protagonist's perspective. Take the perspective of Zappos employees. pep team, 127 Organizational Design, Effectiveness, and innovation CHAPTER 15