Tag Archives: Zappos

Lessons From The Front Line: Part 2 – Rethinking the Hiring Process

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.


Leave a comment

Filed under Leading, Strategy

Be a Better Leader Today: Some Easy Things to do That Don’t Cost a Thing

In our Dimensions of Leadership program, we like to expose people to video examples from other companies like Google, Zappos, IDEO, Mayo Clinic, Dominos, and Quicken – to mention a few.  Google, of course is an amazing example from Fortune Magazine’s list of Best Places to Work.  It’s no wonder they have achieved this status with their campus environment, empowering management style and lavish perks like free gourmet food and company massages.

A common reaction to this by participants is to say that their company could never be like that because (and you can fill in the blank____________).  Usually, it centers on the notion that it must cost a lot of money to treat employees the way Google or these other companies do.   They go on to comment about their being budget-constrained, having been through cut backs, or on a hiring freeze.

I think some people feel that such company behaviors are simply so far outside of their current corporate culture, we can’t imagine being more Google- or Zappos-like.   (I imagine most mid-level managers would be afraid to bring up this conversation for fear of being chastised or laughed at.)

I remember listening to a talk by Quicken Loans CEO Bill Emerson.  He presented their approach to this topic, and during the Q&A session one of the CEOs in the room said to him — “you can afford to do all these things for your employees because you are an internet company and have healthy profit margins. . . most of us here are in markets where our margins are being squeezed every day.  We just can’t afford to be like you.”

Emerson thought for a moment, and then replied “Sir. . . I certainly don’t pretend to understand your business or market . . . but from where I sit, I just don’t see how you can afford NOT to do things more like we do.”    In Emerson’s view it is a matter of FAITH, and going to great lengths to show employees that you value and appreciate them is the key to unleashing unparalleled loyalty, which will lead to better engagement, more productivity, and more innovation – thus improving business performance.

(Note, I certainly know some smart executives who do not think the companies I mentioned have a solution that would work for them, and I do respect that.)

However, it seems to me that a lot of what drives success has little to do with lavish perks.  In fact, here are a number of tips that cost nothing.   All they require is a mind-set on your part that they are important.   (See also a related article by Amy Levin-Epstein, “Become a Better Manager: 14 Simple Tips to Try Today”.)

Say Thank You.  When someone goes the extra mile, or simply does something you think embodies what you feel your culture and values should reflect, you should say something.   Our people pay attention to what we seem to reward and celebrate.

Lavish Praise Often.  US World Cup winning soccer coach Tony DiCicco put it this way: “[Our] job [as leaders] is to try to catch them (our employees) in the act of doing something right, and then make a big deal out of it.”  DiCicco learned along the way that some lavish praise works far better than “constructive criticism,” which is often not received as constructive at all.  If you can, do this publicly.

Get Over Yourself.  Sure, you got where you are by being good at analyzing problems and making decisions.  You probably take pride in it, and see this as the key way you offer value to your enterprise.  So you have a tendency to want to be involved in all decisions.  You feel you will do it faster and better than all others.  While this might actually true, your team will never develop unless you let go of the reins and you give then the chance to exercise their decision-making skills.  Think of yourself more as the person who creates environments within which your people can make better decisions by themselves.   Schedule brainstorming sessions, set up off-sites, assign problems to teams.  It IS NOT ABOUT YOU.  Your role is more that of cheerleader, coach, and facilitator.

Invest in Knowing Your People.  Allocate some time to speak to your team members about anything BUT work.   Ask them about their weekend, their kids, their hobbies etc.   As long as your interest in them is genuine, most people will appreciate that you see them as multidimensional and more than what their job title says.

Serve them.   Mabel Crawford, one of the best leaders I think I have ever observed, was a simple elementary school principal in urban Detroit.   Her school lacked resources, and her kids came from neighborhoods where the deck was stacked against them.   Yet her school performed as well as did schools in the wealthy suburbs.   She led with passion, caring and unfathomable energy.  One of her habits was to visit EVERY teacher in her building each day, and ask them what she could do that day that would help them.  One of the teachers remarked to me privately “We hardly ever ask her for things – since we know how hard her job is.  But we really appreciate that she is sincere when she asks us, and would go to the ends of the earth for us if we asked.   That knowledge is more than enough for me.”


Filed under Leading, Managing Teams

Life is lived forward, but thought of backwards.

This is an edited version of a thought often attributed to philosopher Soren Kierkegaard.  It presents a kind of interesting dichotomy that most of us cannot escape.  To me, it suggests that the only data we have to work with when learning, is based on our accumulated life history.  It is certainly true that we can learn from past experiences, successes, and failures.  In fact, I have previously written about ideas contained in John Shuster’s new book, The Power of Your Past.

While we need to learn from it, we should never permit ourselves to be bound by it.  Applying past history to develop approaches to future situations presupposes that most environmental forces in front of us are sufficiently like those situations from which our experiential data is drawn.   Is that always a correct assumption?  Increasingly (I think) it is not.  The world is moving faster, we have more information access than ever before (and digesting it correctly is increasingly difficult), and complexity seems to be growing.

I don’t know about you, but I am increasingly drawn to the idea that the economic and stock market situation we see today may be completely unlike anything we have seen before.  It seems stunning to me, that now when I see only a 150 point swing in the DOW, I think nothing of it. Ten years ago, many of us would have been looking for a ledge to jump off.   As the Government considers fiscal and monetary policies to deal with our economic situation I question if we have we ever before faced the complexities of interlocked global economies, plunging confidence in political leaders, slow growth prospects in our most developed and largest economies, political instability across the planet (information about) which we are bombarded with at light speed, etc?  How different must these be before they are considered unconventional problems?   That, of course is hard to say.  But, it seems evident that conventional wisdom cannot always solve unconventional problems?

Business executives face the same challenges.  We all make decisions based on past proven methods and ideas that have formed the basis of our prior successes.  I was at a conference once where Microsoft’s Steve Ballmer was a speaker.  In the audience were hundreds of CEOs from all across our country.   Ballmer chastised us all for trying to plan our future courses but standing on the back of the caboose on an aging train, looking backward at the scenery as it receded from our view, while trying to imagine what was approaching the locomotive engine at the front.   (Pretty appropriate metaphor, don’t you think?  A pre-industrial age technology, in (more or less) 2-dimensional space as the platform we use to plan for an uncertain and dynamic multi-dimensional future.)

After arguing that such a decision-making strategy could not likely succeed, he challenged us to look to our children for guidance.   He said we should carefully observe our kids and consider, how they interact, learn, communicate, seek information, play, purchase things, and behave.  “Ask them”, he said, “what kind of company they would like to work for some day.” Ask them about their dreams, beliefs, and values.  Think about that . . . and then design your businesses around those things.       “Because”, he finished, “in only the blink of an eye, those kids will be your employees and your customers.”

Doesn’t that make sense?

Every young college student today in no matter what discipline, is aware of the amazing culture of companies like Zappos, Google, Apple, or Netflix.   Won’t they (in just a few short years) be imagining that all companies have similarities with them?   What will happen to your ability to attract tomorrows brightest most passionate talent if your business environment looks vastly different?

If you are unfamiliar with these new century workplaces, check out this clip on Zappos.

Yes, we need to learn from our past. But we have to become a lot better at “thinking forward”.

1 Comment

Filed under Innovation, Leading, Strategy