CASE STUDY: THE RIGHT FIT AT ZAPPOS

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ENVIRONMENTAL INFLUENCE ON ZAPPOS

Environmental scanning enables top tier management formulate company strategy. This strategy in turn provides guidelines on conducting future operations to other departments in the company. Identifying the threats and opportunities present in a firm`s environment are key to this process. Chuck Williams (2011) asserts that Environmental Scanning helps managers more accurately interpret their environments and take action that improves company performance. Through scanning, managers keep tabs on what competitors are doing, identify market trends and stay alert to current events that affect their company`s operations (51).

Internal and External Environment

Relationships between employees and management are crucial in the internal environment. The Zappos management thus formulated strategy based on a strong culture. Another internal angle looked at is the management style which is best described as open. Knowledge of brand values in the organisation was also a necessity as it showed the level to which employees identified with the firm.

As an online retail business, Zappos externally operates in a competitive industry in which technology is of paramount importance. As a strategy, executive management adopted a focus on the customer to gain a competitive edge. Information technology also plays a crucial part in the business. Another external factor influencing Zappos is the current market trends.

The Zappos HR team used The firm` s strategy in guiding their planning. This is evidenced by their use of the ten core cultural values in making decisions. The management style also helped the HR team come up with an open communication channel that gives all the chance to be heard. The Zappos training team undertook the importance of brand awareness into consideration hence the incorporation of culture and core values in the training program. Customer focus influenced HR in implementing the customer services training program for all levels of employees. In this economic period of workers being laid off en masse, the reputation of Zappos as a good employer has increased their profitability via loyal clientele.

Importance of Human Resource Planning

Organizations that fail to plan for all operational aspects including Human Resource have less chances of outperforming competing businesses. HR planning helps practitioners to align organizational needs to employees’ career goals and objectives. It also eases the functions of selection, training, compensation and motivation by providing clear guidelines. There is also the financial aspect whereby good planning directly saves the organization money by improving work performance. For example, good planning ensures employees do not work unnecessary overtime that may stretch them to the limit. The Zappos HR team takes planning seriously, as they take the time to incorporate the organizational values into their program. They have enabled employees plan for the future by facilitating training thus enabling them to gain new skills. The creation of the “80:20” rule at the organization to prevent employee burnout prevents losses firm usually incur when overstretched employees reduce productivity.

Human Resource Practices at Zappos

Michael Armstrong (2008) describes Human Resource practice as a system consisting of the informal approaches used in managing people (8). Zappos HR delivery practices include an Approachable Management style, which enables workers get feedback to their questions from all managers. Another practice is the happy working climate resulting from the efforts of personalized employee welfare team. Rewarding excellent workers is a practice that has management award great effort with gifts. It also enables other employees have a say on deserving candidates by having them nominate each other. The practice of open communication channels prevents resentments from festering by providing employees with an outlet. The results Zappos weekly newsletter is an open channel as it features questions and answers from all employees. Knowledge sharing is a best practice that makes employees feel empowered. The Zfrogs progamme allows employees pitch their ideas to an executive team for a reward. According to David Newlands and Michael Hooper (2009) Companies need to create knowledge sharing criteria for using in promotions and allocating rewards, and organize training sessions for employees to become comfortable with knowledge sharing (185).

PESTLE Analysis

Zappos has cultivated an environment conducive to the growth of its employees. Social factors such as the open culture foster creativity and honesty. This in turn enables employees to pitch their ideas and use their talents with out fear of repercussion. The strong culture that refers to the Zappos community as “family” is the driving force that has resulted in the success the company is experiencing. Another social factor in the Zappos environment is respect. This is evidenced by how the CEO gave the rest of the company the chance to have a say on the ideal core values. The “Ask Anything” newsletter where by employees get their questions answered by department heads and the culture book also attests to this culture of openness. Another social factor taken into account by the company is Career Attitudes. Zappos has encouraged ambition and the drive to succeed by consistently rewarding employees who out do them selves.

Economically, Zappos HR has used the career attitudes of employees to encourage new hires stay with them on a long-term basis by paying them above the market during training. This is also related to the economic factor of financial growth which when correctly addressed like Zappos has improves employee motivation to excel. Robert Greene (2010) is also of this opinion citing that “few professionals are independently wealthy, making compensation unnecessary. Since professionals are inclined to keep score, using their grade level and their salary as metrics for determining how they are doing and how the organization values them, it is important to pay attention that the human resource management programs are appropriate” (104).

The technological factors in the Zappos business are of primary importance. The fact that the business is an online retailer shows the important of Information technology expertise. The HR department inputs this aspect into their policy by ensuring all employees are trained to use the Hi-tech call centre. The inclusion Microsoft office programmes into the employee training package also increases their technical literacy.

The political factors operating in Zappos include the Open style of management that enables management of all level to be approachable to all employees. This avoids the bureaucracy that is found in cases of a more directive management style. According to Charles McConnell (2009), bureaucratic managers tend to be buck-passers who take little or no responsibility for directives and who often experience near paralysis of thought and action when encountering a situation for which no rule exists (176). There is also the political stability angle in the Zappos hierarchy. The content employees are satisfied with how the company is run thus there has been no experience of workforce strikes or other destabilizing internal factors.

Zappos operates in awareness of Legal Factors operating in their environment the main one in this case being Employment Laws. The presence of P.E.A.C.E.(programs, Events, Activites, Charity and Engagement)team which deals exclusively with employee welfare surpasses set legal standards for employee rights and increases contentment thus reducing chances of facing lawsuits.

Strategic Use of Human Resources

This indicates that Human capital can help an organization meet its overall objectives when used in a strategic manner. Zappos uses human capital to gain competitive advantage through excellent customer care. Equipping all employees with call centre customer care literacy improves the chances of success as it makes online retailing-a rather impersonal business more trustworthy. Customers thus tend to prefer organizations with great service that also enable them to contact them at all stages of a transaction to confirm an order.

Top tier management should also make decisions with their human capital in mind to ensure they are aligned to the firm’s vision. Zappos’ CEO Tony Hsieh demonstrated how this affects an organization by successfully creating employee-guiding principles. The chances of failure had he imposed the values on them are high Paul Aitken and Malcom Higgs (2009) note that the directive approach to management may lead to valuable information being missed and strong resentment from employees when changes are imposed rather than discussed and agreed (33). Zappos reputation as a good employer also contributes to its competitiveness as it fosters customer loyalty. HR team input in the overall organizational strategy enables them adequately respond to future growth. In summary, HR programs should include a firm’s core capabilities, external environment and competitiveness.

Strengths And Weaknesses Of Zappos HR

The primary strength of Zappos is the strong culture enshrined in the 10 core values. They guide decision making by helping employees differentiate acceptable and unacceptable behaviour. The values also form a sense of community that enables them to do their best. Another positive aspect is the excellent communication partially facilitated by the Zappos culture review that enables employees and managers to give each other honest feedback thus improving the overall work performance. The great welfare program is also strength as employees have fun and enjoy their jobs more thus retaining them and providing the motivation to perform well. The personal recognition of employees who excel by both managers and their colleagues is also another motivating factor.

A major weakness in the Zappos HR program is the recruitment process due to its focus on the culture based screening. This increases the chances of hiring someone who though adept socially possesses poor professional job performance skills. It also potential locks out shy but technically knowledgeable people who may have a lot to contribute towards the organization. People from other cultures which consider outgoing people as rude may also be locked out as noted by P. D. and Mukesh Chaturvedi (2011) who observe that some cultures, such as British culture, have a sense of reserve. Americans are more outgoing in general (206).This is also threat to the future growth of the company which is global and needs a diversity image. In spite of having a positive aspect, the culture review also has negative connotations. Due to its focus on the firm’s core values, it compromises the ability of managers to identify occupational weaknesses thus efficiency. It also makes it hard for the HR training department to update the curriculum with consideration to relevance.

Threats and Opportunities To Improve Human Resource Practices

The firm has the chance to get more out their human capital by ensuring that their new hire screening process does not leave out people with reserved personalities who are unlikely to have the “Fun loving” core value presently required. A more technical performance review would also give the chance to identify occupational weakness. A major main reason many firms avoid the traditional appraisals is to avoid employee the dishonest feedback caused by the fear of bad ratings. Zappos can counter this by incorporating the technical appraisal feedback into training programs. They can then reward employees who improve their performance after taking part in the training.

REFERENCES

Armstrong, Michael. 2008. Strategic Human Resource Management: A Guide to Action. London: Kogan Page.

Newlands, David and Hooper, Mark. 2009. The Global Business Handbook: The Eight Dimensions of International Management. London: Gower Publishing.

Williams, Chuck. 2011. Effective Management: A multimedia approach. 5th Edition. Mason, Ohio: Cengage Learning.

Caruth, Donald, Caruth, Gail and Pane, Stephanie. 2009. Staffing the Contemporary Organization: A Guide to Planning, Recruiting, and Selecting for human Resource Professionals .Westport, Conn. : Praeger Publisher.

McConnell, Charles. 2009. Umiker’s Management Skills for the New Healthcare Supervisor. Burlington, MA: Jones & Bartlett Learning.

Daft, Richard and Mason, Dorothy. 2011. Understanding Management. Mason, OH: Southwestern Cengage Learning.

Benedicktus, Ray. 2011. Psychological Distance Perceptions and Trust Beliefs for Internet-only and Hybrid Retailers: Implications for Marketers. Cambridge: ProQuest Dissertation Publishing

Aitken, Paul and Higgs, Malcom. 2009. Developing Change Leaders: the Principles and Practices of Change Leadership Development. Oxford: Butterworth- Heinemann.

Greene, Robert. Rewarding performance: guiding principles, custom strategies. London : Routledge, 2010.

Chaturvedi, P.D. and Chaturvedi, Mukesh. 2011. Business communications: Cases, concepts and applications.NewDelhi, India: Dorling Kindersly.

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