Discuss the approach used by Zappos. Why is the approach not used very often? What are the challenges and the benefits? Zappos was acquired by Amazon in 2009. What organizational changes do you believe occurred due to the acquisition and would continue to occur over time? Discuss the concept of motivation and Zappos. Would Zappos be a motivating place to work? Why? Why not? Your analysis must include supporting evidence.

Zappos has a very unique approach to motivating its employees, which is spearheaded by its CEO Tony Hsieh. This approach includes a study of happiness, respect, and the company is centered on the idea of “a corporate culture of caring a priority”. Zappos is able to accomplish this using David McClelland’s acquired-needs theory; they motivate employees by taking a strong interest in each employee. This allows each of their employees room to grow, and if they employees see and feel this way then it is reflected in their performance and in how they treat each of their customers.
This approach is very difficult to emulate and not used very often because a company has to invest a lot of time training, and trust in each of their employees to make this successful. This approach is a product of a couple of things: First, the CEO cares about his employees. This is made possible, largely because the company only employs around 1,500 people, and they are all located in a central location. Second, it is extremely difficult to measure the value of happiness. Shareholders like to see nice profits and growth represented in neat eye pleasing charts, but showing how much the happiness of employees benefits the company is almost impossible.
Interestingly, compared to Google, the benefits are not really out of the ordinary, it doesn’t offer recreational rooms, gourmet chefs, snacks all day, yet it is still ranked #11. This begs the question, is it little perks like nap rooms, really good benefits and job security, or a combination that makes Zappos so successful? The benefit of this positive and combination of perks has created a work environment where employees are encouraged to be adventurous, creative, and open-minded; they don’t feel like worker bees, they feel valued. Employers are viewed as potential leaders; the company allows them to pursue growth and to build open and honest relationships with their customers.
While the idea of a merger or acquisition is to boost organizational profits and ultimately a stronger company, historically many companies fall short of this achievement (50-70%). Challenges such as insensitive management, lack of trust in employees, poor communication, power struggles, and poor leadership all contribute to the low rate of successful merger or acquisitions. Zappos on the other hand is doing remarkably well in the acquisition from Amazon. This integration was a success because of the strong leadership of CEO Tony Hsieh. Since the acquisition, Hsieh remains at the helm of Zappos, and continues to be devoted to his company, and employees. Hsieh ensured that for now Zappos remains as it’s own entity, entirely separate from Amazon. For Zappos employees this means they retain the same benefits they always have. Aaron Magness, director of brand marketing and business development stated, “There hasn’t been a change in the way we do day-to day-business, and that’s exciting.” Operationally, they have their own payment system, inventory management, and website operation. For Amazon, this has been a huge profit boost; in the first quarter results since the acquisition of Zappos, the company’s “other” stuff sales reached 3.51 billion.
Corporations today use many differing methods to motivate employees. Some use the carrot and stick method, which uses an implied reward to motivate employees to work harder and more efficiently, while others rely on a fear method, which tells employees to work harder and longer or else lose their jobs, and some corporations motivate by attempting to measure the intangibles. Zappos takes the last method to an extreme and accomplishes its motivation goals utilizing an unorthodox system of incentives designed to increase happiness. Tony Hsieh, Zappos CEO, believes that “happiness is the driving force behind almost any action an individual takes.” It is this firm belief that drove him to build a company around the principles of happiness and inclusiveness. To accomplish this Hsieh developed a system of whereby all new recruits interviews are judged on how well they relate to the company’s values based on, “gauging their own weirdness, open-mindedness, and sense of family.” Only after passing this interview process are recruits allowed to participate in a 5-week training course with an offer of $2,000 to quit at any time during the 5 week training if they feel the company is not a good fit. Zappos also offers other benefits, such as a full time “goal coach,” whose job is to meet with employees and help them to set and meet personal and professional goals. While Zappos uses some typical motivation techniques such as paying for full health care, other perks to working at Zappos include; “a nap room, a petting zoo, a makeshift bowling alley,... karaoke, or a popcorn machine dressed up as a robot.” These perks help to make work less stressful and motivate employees to strive towards a common goal of improving the company. Indeed a key component of employee’s jobs are the challenge to make at least one improvement every week. This policy of inclusiveness is perhaps the secret to Zappos’ success in motivating its employees. In fact Zappos goes to extremes to create an inclusive environment, even going so far as to implement a “no-door” policy of no offices, where all employees, including executives, sit side by side in cubicles. This makes the executives accessible to employees at all times, and creates an egalitarian environment which makes employees feel as if their ideas and opinions matter as much as executives. As the company is relatively small with only about 1,300 employees Zappos also created a computer game called “Face Game,” where employees are shown a photo and are asked to provide the name of the employee. Whether the answer is right or wrong, the player is shown a short biography to learn more about other associates. All of this works to create a company culture that many employees consider to be more family than corporate. The real question to this approach is, does all of this truly work and could profits be higher without all the perks? While it is almost impossible to measure the effects of a single perk or benefit the answer, when all the pieces are added together seems to be an overwhelming positive. After all Zappos was recently bought by Amazon for 1.2 billion, and continues to post record profits to this day. Through analysis of Zappos, the motivational techniques they use, and through discussion of organizational changes, we feel that Zappos would be a motivating place to work, and would want to work there. They offer an extensive training program of five weeks. Not too many companies invest that much time in their employee’s initial training. This shows that they truly invest and believe in the employee to be successful in their work. The fact that they have intensive training sessions and give the option for employees to walk away (paid) is a sure sign that this company is invested in their employees. Additionally, It is also a motivating place to work for because they don’t set a time limit for each customer call that they handle. This aspect is extremely important in maintaining customer satisfaction. If the customer feels that they are being rushed and pushed aside, then there is a greater chance that they will not become repeat customers. As an employee it would be dissatisfying to know that at the end of the conversation the customer was unhappy with the service due to having to maintain customer contact quota. Employees at Zappos feel that their efforts and ideas are respected; this has lead to greater job satisfaction, and overall happiness of the employee.

References:

“The Guardian.” Jefferey Hollender, Lessons we can all learn from Zappos CEO Tony Hsieh. Guardian News and Media Limited. Viewed November 1, 2013. http://www.theguardian.com/sustainable-business/zappos-ceo-tony-hsieh

“Cindy Ronzoni: A blog about digital media, PR and other such things.” Cindy Ronzoni, Zappos Creates a Motivating Culture. Wordpress. Viewed on November 1, 2013. http://www.cindyronzoni.com/zappos-creates-motivating-culture.html

“Puget Sound Business Journal.” Eric Engleman, Amazon and Zappos, six months later: how they’re fitting together. 2013 American City Business Journals. Viewed November 2, 2013. http://www.bizjournals.com/seattle/blog/techflash/2010/05/amazon_and_zappos_how_theyre_fitting_together.html?page=all

“Leadership In Action.” Gunter K Stahl, Getting It Together The Leadership Challenges of Mergers and Acquisitions. Volume 24, Number 5 November/December 2004. http://www.ccl.org/leadership/pdf/publications/lia/v24n5together.pdf

Bauer, Talya and Berrin Erdogan. Organizational Behavior. New York: Flatworld Knowledge, Inc., 2010. Print.