In my last Exploring Dimensions of Personal Leadership session, we engaged in an interesting conversation. It was triggered by some video clips I played featuring the internet shoe company, Zappos.
Zappos is a company that seeks to make company culture development an element of strategy. This is mainly a call-center business that does not measure call times or calls per hour. Instead, they concentrate on building a strong corporate culture around 10 core values. They believe that if they get the culture right, employees on their own can generally make the best decisions about how they should act during the customer interaction. Here is what puts the “Zap” in Zappos:
1) A phone call is not an expense to be minimized but their best branding opportunity (to create a positive lasting impression if they manage the interaction well.)
2) To be hired, employees must pass two separate interviews – one for technical skills, and the other for culture fit. You must pass BOTH to be hired.
3) The core values are foundational to their culture. They must be committable (This means you will hire and fire because of them.)
4) There is a belief that great culture drives superb customer service, and that drives repeat business and word-of-mouth advertising. All of these lead to improved financial results. (Note the causal chain. The focus is not primarily financial – even though they do care about financial metrics.)
5) Every employee (regardless of job role) must go through the same call-center/culture training program that lasts five weeks and includes two weeks in the call center handling customer calls.
6) At the end of the first two weeks, the company offers every trainee $2,000 cash to quit. (About 2-3% of them accept the offer and the company helps insure that the people they keep are truly passionate about the company and its way of doing business.)
These are six pretty big ideas that run counter to how most organizations operate. All this led to a discussion on whether or not these things lead to success. Here again the consensus view was that these concepts seemed logical, but when you ask the next question whether they felt the ideas would work in their organization, people were much less optimistic. Here seems to be the main impediments:
a) The market is challenging and there is a very heavy focus on budgets, cost cutting, and financial metrics. If this is pressed too hard, the notion of not tracking call times and calls per hour seems as though it would lead (in the short run) to higher costs.
b) HR has invested heavily in a hiring system that does not allow for the concept of screening people based on culture fit. Pushing against this infrastructure seems daunting. Most people felt that while their company has a definite culture, it varied by unit, and did not seem to be deliberate. So screening for culture seems infeasible. I suppose some of us do not believe culture matters – hence the time-honored tradition of interviewing people for their technical skills. But the question is . . . what is your success rate? I have seen some studies that suggest even the best companies hire successfully only 60% of the time. If that is so for you, shouldn’t you be considering a major process change?
c) The conflict between short-term financial performance and long-term strategic goals seems to lean in favor of the short-term. When you are operating quarter by quarter, seeking to meet stock analyst expectations, this can definitely lead to a short-term “financial engineering” mentality. In my view, that seldom leads to strategic thinking. The Zappos focus on culture is based on a BELIEF that culture is what drives financial performance. It is really a matter of faith. The exercise of mapping the causal factors that you believe drive financial results in your company is well worth doing. I acknowledge that it is hard to act on this if your conclude that the shifting your focus won’t yield benefits in the short run. It takes leadership courage.
d) Few can imagine such an extensive on-boarding experience (due, I suppose, to cost concerns). This seems illogical to me, since we all know that the cost of letting “bad” employees into the organization has high cost consequences. If you want people to live in alignment with your organizational culture, then don’t you have to teach it? Zappos’ program is 4 weeks long. Disney’s is two weeks, and the Marines is 12 weeks. What I find interesting, is that the Marines and Disney have about the same dropout rate – about 30%. If someone is not a good fit within your organization, wouldn’t it be better to discover this up front?
e) Paying money to quit? Unthinkable! What an amazing symbolic gesture to offer $2K to employees to drop out. Paying people who fail? Why on earth? Arguably the cost of letting a bad employee in is far more than $2K – so why then are we so quick to dismiss this idea? (It could be due to the fear of excess spending. I’m not sure.)
Here is a brief video on Zappos – so you can judge for yourself.
So if you think Tony Hsieh and his Zappos colleagues have it right, then maybe it is time to challenge how your organization thinks about its culture, and about how to attract people who fit well within it.