Boeing’s 737 Max issues highlighted the company’s sacrifice of safety for financial performance, resulting in a tarnished reputation. The prioritization of profit over core values also damaged the FAA’s credibility and revealed a lack of accountability for top executives. This downfall serves as a reminder of the importance of maintaining core values and prioritizing them over short-term financial gains.
Last week, we lost a great visionary when Tony Hsieh died from complications from burns and smoke inhalation sustained in a house fire that had occurred nine days earlier, on November 18. Among other things, Hsieh showed how that culture is the most important thing in an organization. He believed that by investing resources in its cultural commitment to customer service, the delighted customers then do the valuable word-of-mouth marketing.
For those that don’t know his background, Hsieh co-founded the Internet advertising network LinkExchange, which he sold to Microsoft in 1998 for $265 million. He then co-founded Venture Frogs, an incubator and investment firm, with his business partner, Alfred Lin. In 1999 following an approach from Nick Swinmurn to invest in Zappos, Hsieh and Lin decided to invest through Venture Frogs. Two months later, Hsieh joined Zappos as the CEO, and by 2009, revenues reached $1 billion, when it was sold to Amazon.
Hsieh stepped down as CEO until August of 2020, but his legacy at Zappos lives on. Hsieh learned how to make customers feel comfortable and secure with shopping online by offering free shipping and free returns. Hsieh’s belief in employees and their ability to self-organize let him rethink Zappos’ structure, and in 2013 it became for a time a holacracy without job titles. Of all the applicants that applied, the company hired only about 1%. Zappos was often listed in Fortune as one of the best companies to work for. Beyond lucrative salaries and being an inviting place to work; it delivered extraordinary customer service.
Hsieh made Zappos fanatical about great customer service. The company was not just about satisfying customers but amazing them. It always sought to over-deliver on its promises.
Also, to ensure great customer service, Zappos mastered the art of telephone service. Telephone services are a black hole for most Internet retailers. For Zappos, they made it key. The company publishes its 1-800 number on every single page of the site. All employees are free to do whatever it takes to make you happy, a step up from the Ritz Carlton where anyone could spend $1,000 to make a customer happy. The call center has no scripts, no time limits on calls, which means no robotic behavior! Zappos employees had an amazing emotional connection to the company through its culture and core values, which then infected their customers. As Richard Branson has said, “Clients do not come first. Employees come first. If you take care of your employees, they will take care of your customers.” Thus, Zappos is a company that’s bursting with personality.
According to Hsieh, if you get the culture right, the rest will take of itself. Besides, Hsieh believed that a company’s brand is just a reflection of the culture. You can see how this value was applied in Zappos’ hiring process.
There are two sets of interviews. The first set is done by the hiring manager looking for the appropriate skills and ability to fit with the team. The second is done by HR and is only looking at culture fit. You have to pass both to be hired at Zappos.com because they will only hire people who fit with its culture. Also, regardless of performance, they will fire someone who doesn’t fit with its culture.
All Zappos’ employees, when joining the company, spent the first four weeks going the same training regardless of whether they were a call center rep or a software engineer. The employees receive full pay during training, and this training immerses them in the company’s strategy, culture, and obsession with customers. The training starts with Call Center Training. The next two weeks, they all spent time on the phone taking customer calls because if the brand is all about providing the greatest customer service, then customer service is not a department but the entire company. A side benefit of this approach is that when the busy time of the year occurs, all employees can help in the call center because they have all done it, reducing the need for temporary workers to help. Finally, the last week is at one of their warehouses, picking and packing.
At the end of the first week of training, all the new employees are offered a bonus of $2,000 to quit and leave the company right then. This is a standing offer that remains throughout the training period. After the training period ends, the offer is raised to $3,000 and extended for a few more months.
As a Harvard Business Review article put it, “Because if you’re willing to take the company up on The Offer, you obviously don’t have the sense of commitment they are looking for.”
The rationale behind the offer was that Zappos.com didn’t want anyone who was there for the paycheck; they wanted people who bought into the company’s culture and vision. Furthermore, those who didn’t take the offer had to go home and tell their family and friends that they had turned down the offer because they believed in its culture and wanted to be a part of such an organization. Zappos.com found that those employees were more committed to the organization when they turned down the offer.
When Zappos started the offer, it was only $100, but the company has increased yearly because they feel not enough people take the offer. According to Hsieh, about 2-3% of employees took the offer. Amazon was so impressed by “The Offer” they have instituted a version of it.
All employee performance reviews focus on job performance, and are you living and inspiring the Zappos.com culture. If not, you will not remain at the firm. Culture is essential.
The Culture Book
Once a year, all employees are asked to write a few paragraphs about what the Zappos.com culture means to them, and these are put in the Zappos.com Culture Book. Their submissions are only edited for typos, but otherwise, everything left as written, the good and the bad. It is organized by department so you can see how culture may differ within departments. Here is a link to one of their culture books.
Some examples of how Zappos employees define their culture.
- Happiness. Great culture leads to employee happiness. The same way a toxic culture leads to unhappiness. Happy employees mean higher engagement, profitability, and low turnover.
- People. Our culture would not be what it is today without the people, past and present. We are all protectors and cultivators of the Zappos Culture; it’s what makes it unique and something that changes every day.
- Being Yourself. I love that I get to be me all day. The culture encourages you to be the same person you are at work as you are at home. I don’t have to pretend to be something I’m not, which makes Zappos a comfortable place to be.
- Unique. Every company has a unique culture that’s all their own. Just like every person has their own personality, every company has its own culture. Building a culture is a special process that can’t be taken lightly. It’s the responsibility of every employee to represent and foster culture.
- Fun. Work can be fun! We have 2 annual parties at Zappos. Our Vendor Party where we invite all of our brands to thank them and celebrate our partnership. And our employee holiday party. Past epic party themes have ranged from Mardi Gras and old-school hip-hop to a Hawaiian luau at a waterpark. Each has had its own twists and tricks to surprise and delight partygoers. This year, we invited our vendors to run away with us to the “Untamed Circus.”
- Perpetual. Your culture doesn’t stay the same; it will continue to evolve. Having a defined set of values will serve as your guide to continue your culture’s growth and evolution in a positive direction.
- Not Always Measured. A strong culture means lower employee burnout and, therefore, lower turnover. It leads to higher employee engagement and higher profitability. But really, companies should focus on their culture because it matters. Because it’s just the right thing to do. To quote Tony Hsieh, “Just because you can’t measure the ROI of something doesn’t mean you shouldn’t do it. What’s the ROI on hugging your mom?”
- Work-Life Integration. Companies and employees worry about work-life separation or work-life balance. But why? Wouldn’t you rather be a company where your employees easily combine their full self into everything they do? Wouldn’t you rather work for a company whose focus on culture allows your job to integrate with your life? It shouldn’t be a struggle to find a balance between life and work where you are truly fulfilled and happy.
- Partnerships. Your vendors have the same objective as you: to sell their product, be successful in their work, and maybe have some fun while doing it. Something unique that Zappos does is allow brand representatives access to all the same sales and inventory information on their products that Zappos has. By working as a team, by partnering, you are setting the stage for success!
- Real. Your company has a culture. You may not have “planned” it. You may not like it. Or maybe you love it. But it’s there. It is real. You can choose to be thoughtful about your company culture. You can set values and identify the behaviors that you want to be the core of your culture. That part is fairly easy. The hard part is committing to the values once they are set. Living them.
- Core Values. Values are more than just words; they’re a way of life. They are the foundation of your company culture. We know that companies with a strong culture and a higher purpose perform better in the long run. As we continue to grow, we strive to ensure that our culture remains alive and well.
- Your Brand. A company’s culture and a company’s brand are really just two sides of the same coin. The brand is just a lagging indicator of the culture.
The company is very active on Twitter. They introduce employees to Twitter during the training, and at the end of the training, it is up to the employees if they wish to remain engaged on Twitter. Zappos has a Twitter page that aggregates all the employee tweets together, enabling employees to learn about their fellow employees who they may not have met and build better relationships. As a result, many of its employees are power users of Twitter so that their friends, colleagues, and customers know what they’re up to at any moment in time.
Zappos didn’t initially have core values because they felt they had to “real” to the organization and not just some words on a wall developed by a public relations firm. Hsieh and his team emailed all the employees asking what they thought the company’s core values should be and then spent a year going through the responses to come up with Zappos core values. Zappos has 10 core values are they are:
- Deliver WOW through Service
- Embrace and Drive Change
- Create Fun and a Little Weirdness
- Be Adventurous, Creative, and Open-Minded
- Pursue Growth and Learning
- Build Open and Honest Relationships with Communication
- Build a Positive Team and Family Spirit
- Do More with Less
- Be Passionate and Determined
- Be Humble.
Today, according to Hsieh, if you Google search any one of these core values by themselves, Zappos is among the in first results. The company has interview questions for each one of these core values.
Other interview questions:
#3 Create Fun and a Little Weirdness. On a scale of 1 to 10, How are Weird are you? With 1 being not weird and 10 being very weird? If you are 1 – 2, you may not be too weird. If a 10, maybe too weird. The answer is not the issue, but everyone is different, and what Zappos is looking for work-life integration so that the person is the same at the office as at home. If they can be who they are at all times, then creativity comes out, and true friendships are made.
#4 Be Adventurous, Creative, and Open-Minded. On a scale of 1 to 10 how lucky are you in life? 1 is “I don’t know bad things always happen to me,” and 10 is “I don’t know why good things always happen to me.” Zappos doesn’t want the 1, not because they are unlucky, but that luck is about being open to opportunities so looking for people who are open beyond just the task.
#6 Build Open and Honest Relationships with Communication. Zappos is about Transparency and its beliefs are, “Be real and you have nothing to fear. Your culture is your brand. Don’t try to be someone you are not.” Zappos when they have reports come by, they allow them to go around and talk to anyone because they are comfortable with that. This is because every employee is living the brand, have the same cultural views as the company, and they are authentic
#10 Be Humble. This value causes the most problems in the hiring process because many smart people are egotistical and if you accommodate them, you lose the corporate culture. To look for humility, Zappos had would question the shuttle driver who picked up the applicant up from the airport and drove them around to see how they were treated. If the candidate did not treat the shuttle driver well, they were not offered an offer regardless of how the other interviews went.
Tony Hsieh’s legacy will live on, but I challenge those among you to consider how your corporate culture stands up to Zappos and do you really live it. If not, why not? It could revolutionize your business.
(c) Copyright 2020, Marc A Borrelli
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