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HR & Organisational Culture: Zappos – The Rise & Fall Of A Captive Contact-Centre’s Employee Culture

 

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At Status, we understand the value of positioning a company’s employee value proposition to attract prospective talent in the local labour market. And, how a brand’s organisational culture is a key component of their being perceived and recognized as an employer-of-choice.

We work hard to position our clients as such in all work marketing their careers and jobs opportunities to the Cape Town labour market: http://www.statusstaffing.com/category/world-of-work/

In Cape Town’s BPO & Captive contact-centre industry, more and more management and HR professionals are applying their minds to the challenges of attracting the best local talent, training them, ensuring they’re engaged and productive, as well as trying to stem the tide of staff absenteeism and attrition.

Often, when they discuss how to solve these problems in the industry, the conversation turns to the organisational culture and how this affects human capital outputs.

Many managers are keen for their brands to be recognized as employers-of-choice offering careers-of-choice in the local labour market, as well as to increase awareness of their industry generally and their brand in particular.

But this isn’t easy to achieve…

So, in this context, we thought the story of how Zappos and how it built its organisational culture to be recognized as a world leader in this space might be of interest to you. And, how its gone wrong for Zappos in the last three years…

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Fortune (www.fortune.com) has just published its latest global ranking for the top 100 companies to work for – it’s survey of which companies treat their employees the best.

For the 7th consecutive year, Fortune’s top 100 list is topped by Google (www.google.com/about/careers/).

Sadly, however, a famous and inspiring top brand that usually makes this list (and who has a large captive contact-centre operation at the core of their business) fell off Fortune’s top 100 this year… Namely, Zappos (www.zappos.com).

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Zappos is an online retailer, started life selling trainers online in the early days of e-retail. Now, they sell lots more products online, but trainers are still their core product.

They started by outsourcing their logistics and contact-centre, but –overtime- brought these core functions in-house.

Zappos, now owned by Amazon (another top brand, with operations in Cape Town, South Africa) since 2009, have long been hailed by the world’s media as a trail-blazer for doing things differently – including its management of and investment in its employees:

This very different approach to employer-employee relations and company culture was led from the top, by Zappo’s CEO, Tony Hsieh. He had strong social, wellness and profit reasons for his approach, which he explains in this video here:

Zappos was deemed so successful in its approach to employee relations and engagement (and talent management) that it developed a ‘side-line’ revenue-stream in consulting to other businesses all across the world in how to apply its successes at other companies. (Not only was Zappos successful in the corporate culture that it built for itself, it also went from almost no sales or revenue in 1999 to over $1 billion gross merchandise sales annually by the mid-2000’s.)

Zappos even wrote a book about how they built this amazing company culture, available at its parent company here: http://www.amazon.co.uk/Delivering-Happiness-Profits-Passion-Purpose/dp/145550890X

In this book (and on their website: http://www.zappos.com/d/about-zappos-culture), Zappos share how they built a world-class organisational culture around 10 core brand values. They are:

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.

(It’s easy to see from several of those values why they’re a good culture fit for being part of Amazon, like ‘do more with less’ as well as their ‘work hard, play hard’ approach to life.) And they LIVE their values, like ‘play hard’, as you can see in this very amusing staff music video:

It’s interesting that their commitment to transparency and demonstrating that they live their values is evidenced in the enormous amount of multimedia content they share online, including lots of videos of their staff ‘working hard and playing hard’. They walk the talk and use social media to show this is so.

As Tony Hsieh often mentions, it took them over a year to arrive at these core 10 values and they involved the entire company throughout the process.

As easy as it’d be to dismiss their approach as the ‘entitlement’ of a vastly wealthy tech’ company, they’ve lived the 10 core values and the ‘have fun’ philosophy since they started – even when they were under serious pressure to demonstrate a successful revenue model and when they were not making lots of money in their start-up years.

Even with a large contact-centre full of agent-level staff, they’ve always taken the ‘road less travelled’ in their approach to talent acquisition and talent management. Sometimes they almost act in a counter-intuitive way in these practices.

For example, Zappos actually pays its new hires to quit. Yes, you read that correctly, Zappos pays its new hires to quit! What?! Why?! Are they crazy?!

No, they’re very sane and very smart. Basically, Zappos does this because they believe that a key differentiator it offers from its competitors is the quality of the customer experience. A key component of the customer experience is the service that they receive.

And, Zappos believe that without high employee engagement great customer service isn’t possible. So, rather than have employees who turn up to collect a pay check but are disengaged and poor performers who suck up managers’ time, they want a contact-centre (and a company) full of passionate individuals giving their best in their work. In order to ensure that they execute on this they bribe new hires (who aren’t enjoying being at Zappos) to leave ASAP.

They offer new hires $1,000.00 to leave in their first month, no questions asked. Interestingly, only 10% of new hires take this offer.

Still confused? Intrigued? Then watch this short video about why Zappos bribe their new hires to leave and why it works:

Now, imagine how this might be applied in the local BPO and contact-centre in Cape Town and South Africa?

Often, we hear managers at local contact-centre operations in Cape Town complain that many new agent-level hires leave within the first 1-6 months because they didn’t know what to expect of the work when they joined, but they’ve spent all the money training them, etc. Or that their team leaders are busy with the performance manage all the poor performers in their team that they don’t have time for much anything else….

Do any of these companies have a proactive policy to ensure new hires who are the wrong fit leave before they can have a material impact on the quality and productivity of the work at those companies? No, mostly not. Yet, it’s a big challenge for the local BPO industry here in SA.

Zappos also look for slightly kooky individuals to join their team (or people who are a bit ‘weird’ in their words).

For more HR articles on hiring unusual individuals in the local talent-pool and how to find them, see Status’ blog article on: What Abba Had To Say About Jagged Resumes 

So far so good. Zappos makes for an inspiring story of a successful virtuous circle in their approach to human capital and building a great organisational culture.

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But, recently, Zappos has lost its employee culture mojo and it’s nose-dived in employee satisfaction surveys.

Why? And, how?

It all started in 2013 with a new radical OD and management re-structuring, again, driven from the top by Tony Hsieh.

It’s called ‘Holacracy’: https://en.wikipedia.org/wiki/Holacracy

See Zappos’ CEO, Tony Hsieh, explain what holacracy is and why he decided to implement it at Zappos:

In this video, Fortune’s editor explains why Zappos didn’t make their top 100 list for the first time ever this year and why the disruption ‘holacray’ has caused Zappos’ culture is a big contributor of this fail:

In the questions Fortune ask the employees of the companies that participate in their Top 100 Employers To Work For survey, Zappos scored very badly in 48 out of 58 questions. And, in particular, Zappos got very poor results on two key survey questions:

  • Do employees think their management has a “clear view of where the organization is going and how to get there?”
  • Do employees think their managers “avoid playing favorites?”

Tony Hsieh accepts the feedback and the rebuke of the survey’s findings. In his typically open communications style, he shared all the findings with everyone in the company.

However, he believes that this is all part of the journey they’re on and that things always get worse before they get better when trying anything very different and challenging. If he has any regrets about ‘holacracy’, he says its not having implemented it faster.

Is he right? Will Zappos get through this and rise again to become the employer-of-choice that every other company aspires to imitate? Or has Zappos lost the plot for good?

Only time will tell. But, it’ll be interesting space to watch and see how it plays out. If they make ‘holacracy’ succeed then it might have radical implications for the future of HR and the world-of-work…

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Perhaps, Zappos’ experience offers some lessons for the recent fad of some companies floating the idea of ‘manager-less teams’, which is gaining currency in the marketplace right now.

For more on self-autonomous teams see: https://hbr.org/2011/12/first-lets-fire-all-the-managers or https://www.linkedin.com/pulse/20140720002021-4973136-the-three-requirements-of-manager-less-companies

What do you think about how Zappos built their organisational culture?

Do you think it can work in a South African contact-centre operation?

What do you think of ‘holacracy’? Utterly bonkers or a profound vision of future work organisations?

What are your experiences of trying to build an organisational culture that makes your brand an employer-of-choice to the local labour market?

What’s worked for you? What hasn’t?

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If you are interested in benchmarking your Salary & Benefits against other local Cape Town BPO & Captive contact-centre companies, then go to:

You can find lots of great free Status digital content on industry news, business intelligence, research & surveys, events, top local candidates, and sector trends on our HR & Ops Forum content website-page at: http://www.statusstaffing.com/category/hr-ops-blog/

Like the top brands above, at Status Staffing we also invest in creating content that promotes awareness of career opportunities in local industries-of-choice, especially the BPO / CSC sector and the Financial Services sector.

This includes digital content like: careers advice blog, then you might like our other blog about how you can find the right employer-of-choice for you at:

http://www.statusstaffing.com/how-to-find-your-employer-of-choice/& http://www.statusstaffing.com/category/world-of-work/

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If you’d like to find out more about what we do and how we do it, how we can help you and your organisation or to chat about local industry trends, then contact Jeff at: jeff@statusstaffing.com or our Marketing Team at: capetown@statusstaffing.com

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