This article examines Zappos’ approach to acquiring, training, and retaining tal

Question

This article examines Zappos’ approach to acquiring, training, and retaining talent for its e-commerce shoe business.

USE theories of motivation as well as how these theories are applied to real-world situations.

QUESTION:

Why is Zappos so successful? What theories and concepts apply to this company?

What do you think of Tony Hsieh’s approach to hiring and retaining employees? How does it fit in with your view of motivation?

READINGS:

If you're looking for a certain pair of shoes, there's a warehouse in Kentucky that probably has them. It has 1,000 brands in just about every style, size and color, totaling 4 million pairs of shoes.

Twenty-four hours a day, they're boxed up and shipped out to shoe shoppers sitting in the comfort of home.

Online shopping Web site Zappos is doing for shoes what Amazon did for books: trying to revolutionize not only how business is done but how people work.

The name is an adaptation of the Spanish word for "shoe." This year, nine years after going into business, Zappos is on track to sell $1 billion worth of shoes.

'The Absolute Best Company Culture'

Zappos is headquartered in Las Vegas, where the company has office carrels similar to almost any other corporation. Right there in the middle of these cubicles, in an area nicknamed Monkey Row, sits Tony Hsieh, the emperor of shoes with no more office space than Dilbert.

"One of the things that's really important for us, actually, probably the most important focus for Zappos, is to make sure we have the absolute best company culture, and part of our culture is just having a familylike atmosphere," he said.

At times Zappos looks like one of those Internet startups that disappeared when the bubble burst. One afternoon, the entire finance department was racing Pinewood Derby cars in the office.

But unlike those failed startups, last year Zappos made a 5 percent profit -- and it helps that the CEO is setting an example by making a lower salary than some of the call center employees.

"I don't have a calculator, but my salary is $36,000 a year," Hsieh said. "So I think some of them make more than me."

Of course, he can afford it. Just a few years out of college, Hsieh sold an Internet company to Microsoft for $265 million. But to look at him you wouldn't know it.

He's not really into shoes. Hsieh owns about 10 pairs at the moment. Before Zappos he "used to have one pair that I would wear for two years until it had holes in it and then buy the same pair again."

Free Shipping, Both Ways

What he is into is building a company where people love to work and customers like doing business. Do that, he says, and the rest will follow.

"For us, Zappos isn't just about selling shoes online. For us we really want this Zappos brand to be about the very best customer service, the best customer experience," he said.

Selling shoes over the Internet would seem difficult because people want to try them on, see the size and color. Zappos overcame that with free shipping both ways: order as many shoes as you like because you have a year to return what you don't want.

They'll take several hundred million dollars' worth of returns a year. And if they treat the customers well, they do pretty well by the employees, too. Free food is always available in the cafeteria.

Even the snacks are free.

But that's nothing. The company also pays 100 percent of medical and dental benefits.

It sounds almost revolutionary. Hsieh says that's because companies that offer such benefits don't see the payoff until two or three years down the line.

At the heart of the Zappos revolution is the call center, where actual human beings answer the phone. There's no script, no time limit on calls and no push to sell more than the customer wants.

Ninety-five percent of Zappos' business comes over the Internet, but the company spends a lot of time and money training people who talk to customers on the phone. There's a four-week training course that every single employee, from the executives on down, are required to take -- even if their jobs don't usually require interaction with customers.

Sari Levine works in the design department, but she is a member of the latest call center class. After Levine finished her training at the call center, she began shipping shoes in Kentucky.

"We call it KY boot camp. We go to our Kentucky fulfillment center, and you do, you understand every single aspect of how the warehouse works and you physically get to go and put shoes in a box and watch it go down the conveyor belt straight to the customer's door," said Levine.

Money Offered to Just 'Walk Away'

Just before she was hired, she and the rest of her class were offered cash to walk away -- $2,000 was the latest offer.

"We offer the money to trainees to quit because we really want to make sure that people who are working at Zappos are truly passionate about the company and this is the place that they want to be," explained Hsieh.

Very few take the money. Once graduation time arrives, there's a ceremony that includes pomp and circumstance, diplomas, and the Zappos pledge: "I'm on a Zappos mission to live and deliver Wow. Armed with core values, I'm going to start now."

Their list of 10 core values to work by includes the decree to "create fun and a little weirdness."

"What that's about is, it's just a fun way of saying that we really respect and celebrate everyone's individuality," said Hsieh. "I think it's just really important for people to feel engaged, that they always need to feel like they're learning and growing."

They refer to their call centers as customer loyalty teams. Employees even advise customers as to which competing Web sites have shoes if they aren't available on the Zappos site.

Hsieh says that policy begets customer loyalty. Seventy-five percent of Zappos' business is people who come back.

Now Zappos is branching into clothing, electronics and even cookware.

"We've received e-mails from customers that have asked us to start an airline, and we're not going to do that this year, but 30 years from now I wouldn't rule out a Zappos airline," Hsieh said.

Of course, in that case, you'd probably have to pay for shipping.

Explanation / Answer

1.Zappos is so successful in the industry by ensuring the best absolute company culture and maintaining a family like atmosphere. The strategy adopted by Zappos helps to build employee commitment and help Zappos to provide the very best customer service. The strategy adopted by Zappos with free shipping both ways helped to overcome the disadvantage of online shopping as the customers are not able to try the item before purchasing. The return policy is the main factor behind the success of Zappos. Zappos also advise on the best sites where the shoes are available if the demanded one is not available at Zappos.

Maslow’s Hierarchy of needs can be applied to Zappos. According to the theory there are five levels of needs to be satisfied which include Physiological, safety, social, esteem and self actualization. By providing god salary and benefits lke free food Zappos is able to fulfill the physiological needs of the employees and by giving personal security through medical benefits and job security Zappos is able to fulfill the security needs. The friendly and family like atmosphere helps to meet the social needs of the employees. The esteem needs are satisfied as Zappos give respect and consideration to its employees and the self actualization needs are satisfied by giving enough training and growth opportunities.

2. The CEO Tony Hsieh’s strategies have helped Zappos to bind both employees and customers to Zappos. Zappos provide free food and snacks to the employees at the cafeteria and also pays hundred percent medical and dental benefits. The company also spends lot of money o train the employees in call center and also give four week training to all the employees. The strategy adopted by Hsieh to offer money to quit the job which ensures that only passionate employees work in the organization is really exceptional. The pledge taken before starting the work also would help to ensure that the employees protect the company values. The approach adopted by Hsieh which gives employees the feeling that they are learning and growing is really great. The approach fits in with my view of motivation because my expectation from a company includes a workplace where I can enjoy my work and provide opportunities for learning and growing. The benefits provided by the company are also motivating and it gives a feeling that the company really care for the employees.

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