Management Fundamentals 5th Edition by Robert Lussier

Exercise 22

If the shoe fits, wear it. If not, Zappos.com will gladly take it back at no cost to you. Zappos.com has become the #1 seller of shoes online (ahead of J.C. Penney) by emphasizing customer service. It stocks 3 million pairs of shoes, as well as handbags, apparel, and accessories, specializing in some 1,000 brands that are difficult to find in mainstream shopping malls. Through its Web site (and 7,000 affiliate partners), Zappos.com distributes stylish and moderately priced footwear to frustrated and shop-worn customers nationwide. The company was founded by its former chairman, Nick Swinmurn, following a botched mall-based shoe quest in 1999. It is now a subsidiary of Amazon.com. Zappos has a unique culture driven by its CEO, who leads his 1,500 perpetually chipper employees by broadcasting (through Twitter) all aspects of his life, business, and philosophy in 140 characters or less. Zappos is adored by employees, providing a model of how to manicure culture and treat staffers like adults, while simultaneously reassuring them that sometimes it's OK to behave like children.
The HR team uses wacky and off-topic questions during the interview process to hire new employees. "How weird are you?" "What's your theme song?" What two people would you most like to invite to dinner?" Zappos tries to hire people who have positive attitudes and then places them in an environment in which creative thinking is rewarded and reinforced. Yet fastgrowing Zappos must use caution in order to maintain its special way of life. "One of the biggest enemies to culture is hyper-growth. You're trying to fill seats with warm bodies, and you end up making compromises."
It is a blast for employees to work for a company that encourages growth and learning (throughadvancement courses), creates a fun and weird atmosphere (parades, pajama days, shaved heads, etc.), and delivers the "WOW" factor (offering free returns to customers, sending flowers to the customers, etc.). These values support management's philosophy of thinking outside the box and doing things (especially for customers) that no other shoe company would attempt to do. For example, front-line customer service representatives are trained to delight callers. Unlike most inbound telemarketers, they don't work from a script and are allowed to improvise. They're trained to encourage callers to order more than one size or color, because shipping is free in both directions, and to refer shoppers to competitors when a product is out of stock.
Teamwork is critical to Zappos's performance, and to promote teamwork Zappos management encourages managers and employees to spend approximately 10-20 percent of their time with fellow team members outside the office. When with team members, one individual can give a colleague a $50 bonus for a job well done while at the same time promoting ideas to be shared among team members.
A downturned economy in 2008 forced Zappos to lay off employees. The CEO wanted to get the news out fast to mitigate stress and announced the move in an e-mail, on his blog, and on Twitter. Laid-off employees with less than two years of service would be paid through the end of the year. Longer-tenured staffers would get four weeks for every year of service. Everyone would receive six months of paid COBRA health coverage. At the request of departing employees, Zappos also allowed them to maintain the 40 percent employee discount through Christmas. "The motivation was, let's take care of our employees who got us this far."
How does the issue of managing change apply in this case?