Reasons for Change
I believe that the fundamental reason for changing the extant organizational system at Zappos was the disconnect between tactics for handling administrative situations and the company culture. Chatman & Cha (2003) state that organizational culture can explicitly define the priorities and coordinate employees’ actions “without the costs and inefficiencies of close supervision” (p. 31). Therefore, Hsieh’s decision to dissolve the former system was likely bifold: on the one hand, it embraced the informal culture of the corporation; on the other, it was guided by the considerations of efficiency.
The self-organization of work processes may help ensure that an employee determines an individual approach and timeline for performing tasks. Chatman & Cha (2003) discuss that a successful organizational culture emphasizes a strategy’s effective and full execution over its sophisticated but not fully achievable design. Effective execution is especially important now, with a tightly interconnected business world, and Zappo executive leaders are required to solve multi-faceted and unconventional problems. Chatman & Cha (2003) discuss how executing a strategy often takes less formal leadership since it allows the employees to control the process and perform better. This idea rings true through Zappos’s flexible self-management organizational structure, also known as “holacracy,” which has no fixed positions but rather temporary roles structured in “circles” around tasks (Askin & Petriglieri, 2016, p. 9). Chatman & Cha’s (2003) argument that reliance on formal regulations and procedures does not foster excellence supports Hsieh’s decision. I believe that Hsieh’s approach would allow the company to tackle any emerging challenges with great flexibility, leading to outstanding service.
My initial reaction was the feeling of surprise that only 14% had left. The total of 210 employees, including 20% of the tech department, leaving shortly after the announcement deadline approached is not the worst-case scenario, in my opinion (Askin & Petriglieri, 2016). I think that it is an expected phenomenon, given that the email from Hsieh stressed the need to face direct responsibility for “problems, hard decisions, or difficult calls” (Askin & Petriglieri, 2016, p. 10). Self-management is difficult, and facing the news about fluid responsibility may seem like reaching beyond someone’s competency. While the company culture has already stressed the importance of commitment and willingness to learn, the lack of explicitly defined responsibilities may overwork certain members while some enjoy more rest. Chatman & Cha (2003) argue that there are three leadership levers for forming, strengthening, and changing the culture, how organizations: “recruit and select; socialize, orient, and train; and reward and lead people” (p.32). The overly flexible leadership tactic may have undermined the rewarding and leading component, thus creating the incentive to leave.
The change process for those employees who stayed felt intimidating at first; however, once the initial shock wore off, some employees rose to the occasion and embraced the change. The reason for that would be the carefully crafted culture of the company. Chatman & Cha (2003) argue that a company’s success depends not on a miracle strategy but on the fit between that strategy and the culture. Specifically, success hinges on the employees’ understanding and commitment to the culture (Chatman & Cha, 2003). This idea applies to Hsieh’s belief that entrusting a degree of autonomy and independence to each employee allows the creation of more trusting and committed corporate relationships (Askin & Petriglieri, 2016). He embraced personal connections, openness, and honesty between workers, which, in turn, led to a commitment to superb service (Askin & Petriglieri, 2016). However, there were also some challenges related to this executive decision. One of the issues employees may have felt was discouragement from the need to research their salary range, as there was no more human resource department (Askin & Petriglieri, 2016). Further, Hsieh faced criticism regarding his “obsession with happiness, collisions, and tight-knit community” and giving no concrete guidance (Askin & Petriglieri, 2016, p. 8). This criticism partially reflects the issue of the lack of clarity in businesses that Chatman & Cha (2003) rebuke. Feelings of confusion among employees may arise due to this change.
Askin, N., & Petriglieri, G. (2016). Tony Hsieh at Zappos: Structure, Culture and Radical Change. INSEAD.
Chatman, J. A., & Cha, S. E. (2003). Leading by Leveraging Culture. California Management Review, 45(4).