While the Zappos culture is enviably strong today, the journey to its well-defined values was not exactly linear. The way the leaders at Zappos developed their culture and defined their values should offer hope, insight, and encouragement to those who lack a written set of values or feel there is a gap between their purported corporate values and the actual culture of their business.
Most businesses already have a set of written values that sound as if they could apply at any and every business. In many cases, employees are not able to recite those values, let alone act in accordance with them, and have no idea where the guiding principles came from. Staff members may not see the values as being relevant to their day-to-day lives and may even view them as being out of step with current business conditions. And in cases where the corporate values do capture the core qualities of a business, the actions of employees may not demonstrate the values in a way that allows consumers to differentiate the business from its competition. Ultimately, many company leaders just don’t know what makes them different from rival businesses or what is at the core of their identity. They are “doing” business, but internal guiding or defining principles do not drive them.
“Serving a perfect fit” implies that you fully understand your business so that you can determine such things as whether a new hire will blend in well or even whether the signage throughout your building fits with the essence of your brand. We will examine how Zappos came to know who it is and how it determined what cultural characteristics were needed for success. This exploration will offer a valuable template that will let you identify, evolve, and gain input into the relevance and uniqueness of your corporate values. You will also see how the leaders at Zappos take their core values and use them to select employees who fit their unique culture. This should serve to guide your processes for creating multiple filters to ensure that you select those who truly will “serve a perfect fit” for you.
While a positive corporate culture was always on the radar of the leaders at Zappos (given their prior experiences in less-than-positive work environments), as in so many other start-ups, these leaders did not explicitly define their core values when they launched their business. However, even without writing their values down, the Zappos leaders implicitly demonstrated what they believed by the actions they took in establishing the business. For example, from the beginning, the Zappos leadership aspired to create a work environment that was fun and communal. These leaders understood that people who play together stay together and that a team and family spirit was essential for their brand’s survival. To give their company the best chance of success with the limited human and early financial capital they had at their disposal, the Zappos leadership believed members of their small team would be heavily reliant on one another and would be spending an inordinate number of hours together. If the work wasn’t fun and the team wasn’t tightly connected, the heavy lifting required at start-up would not have been possible.
While concepts like “fun” or creating a “family spirit” were considerations from the outset, the Zappos current value to “deliver wow through service” was not a significant consideration at the company’s launch. Originally, the leaders at Zappos merely sought to develop a user-friendly website with a vast shoe selection that would attract the $2 billion market of people who buy shoes from catalogs. Specifically, Zappos was envisioned to be the “premier destination for online shoes.”
As the Zappos juggernaut began to pick up speed and as its online inventory expanded, its leaders began to clearly see that product selection alone would not be sufficient to sustain long-term success. As a result, those leaders began to widen their strategic focus and appreciate the importance of delivering service excellence. Former COO and CFO Alfred Lin comments, “When we launched, we weren’t as aware of the importance of service delivery to the success of Zappos. That’s why we started with a drop-ship model—letting vendors send out shoes from their warehouses to the Zappos customers. Early on, when we heard from customers or potential customers or sought their input directly, it became very obvious that to buy any product online, particularly a pair of shoes, customers had to have faith that the shoes would show up as promised in a timely fashion after their credit card payment was processed.” In essence, the customers valued not only selection and ease of use, but also service reliability.
When the leaders at Zappos identified service excellence as being central to the future of their business, the young company was functionally, albeit not formally, making a commitment to adopt the same value that its customers were placing on service delivery. Actions like the discontinuance of drop shipping demonstrated that Zappos was beginning to see service as a priority. When CEO Tony Hsieh stated, “We want to be the best in customer service,” in essence, he formally declared that Zappos would place a high value on service and that its leaders would act accordingly. As a result, decisions were required to support that declared value. The actions that followed, many of which involved extensive capitalization and disruptions for the young company, were completely consistent with Tony’s declaration. These challenges included the leasing of the Zappos Fulfillment Center operation in Kentucky, technological solutions to help vendors see exactly how their products were selling on the Zappos.com website, and a move of the Zappos corporate Headquarters and call center from San Francisco to Las Vegas. The latter move, for example, was predicated on leaders appreciating that Las Vegas had a rich service-based workforce that was accustomed to working around the clock and that such a talent pool would be essential to meet the needs of a growing call center.
While the company still lacked a formal statement of values, the Zappos cultural identity was evolving in the direction of service. It’s been said that if you want to know what someone values, watch where he places his feet and what he does with his wallet. Customers vote their values with their wallets. Leaders demonstrate their values through their decisions about priorities and resources. For example, when companies talk about corporate social responsibility but act solely for profits and short-term gains, it is the implicit value (the unstated one) of seeking money that trumps the explicit value (the formally expressed one) of social good. At Zappos, values were becoming clearer based on both what was beginning to be stated and what leaders were actually doing.
Early on, although some aspects of the Zappos key business values were being articulated publicly, none had been codified into a “core values” document. Like many entrepreneurs, the early leaders at Zappos were doers. They saw opportunity and seized it. By nature, they sought to be nimble and adaptive and did not wish to be encumbered by policies and practices associated with corporate behemoths. In fact, the Zappos leadership resisted producing a set of written company values because they viewed the document production process as a fundamentally “corporate” exercise. However, in the end, scalability and the unsettling nature of growth pushed the company to translate its unique culture into words.
When Zappos was in its early start-up phase, the small band of Zapponians shared many common traits, including a strong willingness to embrace change, a determined work ethic, and the capacity to develop tight social bonds from fun activities that emerged in the midst of long hours dedicated to the business. In those days, when the company needed talent in a given area, this group often turned to friends or friends of friends to fill the demands of the growing business. As a result of these informal hiring processes, new hires tended to be fairly similar to the individuals who were already on board at Zappos. Layoffs and lean economic times also helped trim out those who were least committed to the Zappos concept. So the Zappos zealots rolled on!
For a considerable portion of Zappos history, Tony and Fred were a part of all hiring decisions to make sure that new hires would “fit” into Zappos unique culture. As the business grew, leaders at Zappos increasingly began to rely on outside firms to recruit and select talent. However, it became alarmingly clear that this outsourced talent selection process was threatening the Zappos culture and the brand’s future.
Rachael Brown, manager of Pipeline, the Zappos department that is responsible for training and development, notes, “When we were hiring straight from employment agencies, we weren’t serving a good fit, let alone a perfect Zappos fit. We’d hold orientation classes for 30 new hires and immediately realize that few of these individuals were likely to be successful here. These people weren’t going to be happy in our environment, and I was concerned about their impact on a culture I loved. I didn’t like seeing people get hired by agencies who didn’t understand us.” Loren Becker, supervisor of Pipeline, adds, “While we had a strong culture when we started training, we didn’t have our values articulated. Fortunately, Tony stepped up by simply sending out an e-mail asking, ‘Who in our company do you think is really successful and what do they do? What are their attributes?’ Tony got all those attributes compiled and asked us to look at a list of about 37 descriptors. In essence, he was surveying us on what we thought our culture was and what it should be.” Tony started a process to put into words what had previously been a strong but unstated culture. It was hoped that those words would essentially describe Zappos, so that the right people could find their way to the company and be selected.
Where else but Zappos does the CEO uncover the values of the organization by starting with a companywide e-mail? There is no way that could work. It’s absurd! Right?
Wrong! Rather than taking the more traditional approach of bringing senior leaders to a facilitated off-site retreat and generating a list of values that sound more like platitudes and less like cultural descriptors or realistic road maps for action, Tony Hsieh turned directly to the Zappos family. In keeping with the spirit of collaboration discussed in Chapter 1, Tony sought the diverse strengths of the entire employee base. His inquiry went to the heart of what key factors had been fueling and directing Zappos all along. By asking for and listening to the input of his staff, Tony received broad and unusual descriptors that weren’t limited to the insights of only a few senior leaders.
What an odd yet refreshing way to define the essence of a culture—by listening to the collective voices of those who live and create it every day. By drawing upon the insights of the entire employee base, Tony gained instant ownership of and buy-in for the final written set of values. Tony and other Zappos leaders did not need to create a communication plan to educate and “sell” the values internally. Moreover, as shown in the table on page 35, Tony’s approach resulted in values unlike those that typically emerge from leadership retreats.
Comparative List of Traditional Corporate Values vs. the Zappos 10 Core Values
Given the challenges that came to Zappos with growth and relocation, articulating and preserving its culture rose to and remains a substantial business priority. By extending the process of defining core values to the entire organization, Zappos leaders signified that culture is everyone’s domain and responsibility. The core values that emerged from enterprisewide involvement essentially differentiated Zappos from any other e-commerce competitor.
The Zappos process of defining values provides tools that all of us can use to clarify our personal and corporate values. To fully capture the unique dynamic forces that are at play in a given culture, all stakeholders must participate in answering questions like: Who are we? What brings us together? What do we collectively value? Leaders need to listen to the consensus of their people and weave their teams’ voices into a defining document that serves the overall well-being and sustainability of the business. If this values identification process is handled well, as was the case at Zappos, the resulting values will be credible, relevant, unique, and durable (easily and lovingly remembered by the acronym CRUD).
Some business owners with long-standing written values might accept the lessons of the Zappos core value creation but feel incapable of changing their existing values structure. Those leaders might even concede that some of their values are a little stale, are a bit out of sync with reality, or lack demonstrated acceptance by their people. But those executives may liken values to children: you can’t send them back for new ones. While change simply for the sake of change is a flawed business approach, so too is an unwillingness to reevaluate or change aspects of your business when those components lack relevance or ring hollow. Refining values is a big deal, but not refining them may be a deal breaker.
Realizing that his business might benefit from an injection of new ideas, Dave Brautigan, COO of Atlanta Refrigeration, a commercial HVAC, refrigeration, and cooking equipment sales and service company in Atlanta, Georgia, took part in an initial Zappos Insights group training. Dave was one of 10 people selected from a group who applied on the Zappos website to participate in this new project, which became the launch pad for a corporate training arm of Zappos formally referred to as Zappos Insights (much more on Zappos Insights in Chapter 9). Dave and other group members traveled to the Zappos Headquarters in Nevada and spent two days engaging in sessions about the culture at Zappos and participating in conversations with members of the Zappos staff, including considerable time with senior leadership.
Dave reported that his interest in Zappos was sparked by what he had researched about the company. Approximately nine years before participating in the Zappos Insights group, Dave and his brother had assumed management of his father’s company. According to Dave, “When my father ran the business, he had 8 employees and about $800,000 in annual revenue during those 30 years of business operation. When my brother and I took over, we grew the business to more than 100 employees and $15 million in annual revenue. But we were having problems from a culture standpoint, and I couldn’t figure out why. I knew that Zappos was operating in a very different industry, as our workforce was composed of fairly introverted people doing highly technical work in the field, but we still wanted to deliver the same customer service for which Zappos is known.”
Among the many practical tips Dave took away from that first extended encounter with Zappos was a realization that the leverage point for elevating service execution was a reconsideration of the “habits” or “values” that had long since been defined at Atlanta Refrigeration. Dave notes, “The Zappos customer service agents are like our technicians. Those jobs can attract less than fully motivated, ‘let’s go take over the world’–type people. Worse yet, people are often selected primarily based on their technical skills, not on how they will serve others or whether their values will allow them to fit in with others on the team. In a nutshell, we realized we had work to do to better clarify who we really were and what we really valued. That was a huge launching point for us.”
No matter what developmental stage your business is in, it is not too late to recheck and reset your culture. If your business is not operating maximally, it is probably time for you to rethink the types of people you will need to select to make the journey ahead. If your culture is functional, it may be time to determine its essence and start making selection choices that are consistent with the values that drive your uniqueness. A willingness to take a hard stand in the selection process and hold out for people who align with your values represents a quintessential discipline needed to “serve a perfect fit.”
If you have any contact with Zappos, you are likely to be exposed to the company’s 10 core values. When you visit the Zappos.com website, you will see one of the 10 core values on a revolving banner prominently located on the landing page. Customers will also see the values printed on the delivery boxes. If you are seeking employment at Zappos, you better have a keen awareness of the company’s values. Frankly, it would be difficult for applicants to miss the core values, even as they begin to contemplate employment. For example, as you click to the Zappos job listing page, you will see a message in a Zappos playful voice emphasizing the importance of checking out the Zappos core values before you consider employment. Here is an example of a typical Zappos job page:
The Zappos Family currently has career opportunities in 2 fabulous locations. One location is in the “City of Sin.” Yep, Las Vegas, Nevada. Our other location is home to the Jim Beam Distillery and the Zappos Fulfillment Centers. You got it, Shepherdsville, Kentucky. We do not currently have any work-from-home opportunities. (Sorry!)
Please check out the Zappos Family’s 10 Core Values before applying! They are the heart and soul of our culture and central to how we do business. If you are “fun and a little weird”—and think the other 9 Core Values fit you too—please take a look at our openings, and find the one or two that best fit your skills, experience, and interest!
Why consider opportunities with us? In February 2011, Zappos.com, Inc. and its affiliates were named #6 on the 2010 Fortune: 100 Best Companies to Work For List.
And … we’re hiring like crazy right now and looking for smart, forward-thinking problem solvers to join our world-class and fairly wacky team.
Zappos unashamedly puts its values right up front. The employment page, with its written emphasis on values, is enriched by videos showing what it’s like to work at Zappos and other videos made by Zapponians who talk about and, yes, sing about the relationship of values to the Zappos Experience. It takes extra clicks to get to pages where a list of jobs is posted and where the technical requirements of a job can be found.
In the spirit of being a little weird and embracing change, Zappos also encourages applicants to break the mold of ordinary applications by noting, “Cover letters are soooo old-fashioned, don’t you think? Show us who you are with a cover letter VIDEO! You will be able to upload one when applying for a position.”
To see an example of the types of cover letters that Zappos receives, go to zappified.com/appl or point your mobile phone to the QR given here.
Social media messages from prospective applicants speak to the energy invested in these videos, with people tweeting about spending the better part of a week shooting the video that will accompany their application. Hmmm, I wonder which form of cover letter would give an employer a better sense of how passionate, determined, adventurous, creative, open-minded, and humble an applicant is—a typed narrative or a free-form video submission.
Let’s assume a prospective employee sends her application and video cover letter to Zappos, believing she is a culture fit. Let’s further assume this applicant may or may not have the technical skills that are optimal for a listed job. What happens next? According to Rebecca Henry Ratner, HR director at Zappos, “That’s when the fun begins for us. Because we are lucky enough to have a distinct and desirable brand, we get huge volumes of applicants. After an initial screening with unusual questions that are specifically crafted to gauge an applicant’s alignment with our values, those who appear to fit best with our culture will go through an involved process of ‘getting to know you.’ We want to make sure those applicants really are right for us and, equally important, that we are right for them.” (For more specific information on culture fit questions asked at Zappos, a downloadable “Zappos Family Core Values Interview Assessment Guide” is available to Zappos Insights members.)
Rebecca makes it clear that Zappos is not right for everyone and that a lot of people who visit the corporate Headquarters near Las Vegas conclude that they will not be happy in a playful, energized environment. Rebecca shares, “Zappos would drive some people nuts. Being here would cause them to feel that they’ve entered an overgrown fraternity house. To thrive here, whether as a shoe buyer or as an accountant, you have to be able to switch gears in and out of work and play. One minute you may be focused on your work; the next you may be participating in or supporting colleagues in a Ping-Pong challenge.” Rebecca notes, “The one thing that’s essential for every employee at Zappos is to be a defender of our culture. I see my job in HR not as a regulator or a policing agent, which is the role I was asked to play when I worked in the gaming industry, but instead, I am both a facilitator and a protector of culture.” To achieve the goal of serving a perfect fit that preserves the Zappos culture, recruiters in the HR department are given the task of providing the first major test of culture fit.
Brandis Paden, recruiting supervisor at Zappos, describes her cultural vigilance duties by noting, “It really starts from the first interaction with a prospect. You’d be surprised how much you can tell about the likelihood of fit from the start of a phone conversation or by the nature of e-mail correspondence. Since we know our values and our culture, it becomes even clearer as the process progresses. Does the journey suggest a person who is high maintenance? Are they more about what the company can do for them versus achieving a good partnership for everyone?”
As an extra bonus for you, please enjoy a 30-day trial membership to Zappos Insights. While a great deal of information about Zappos Insights will be provided throughout the book, suffice it to say the Zappos Insights team has put together a rich, continually refreshed, resource of practical information to build, sustain, and drive a dynamic service culture. To get your complimentary membership code, go to www.zappified.com/code or point your mobile QR reader at the QR given here.
Brandis suggests that a simple telephone conversation between promising candidates and a recruiter can assess such things as whether the applicant is just trying to find any job or possibly hoping to leave an unpleasant job rather than being genuinely drawn to what makes Zappos unique. Brandis relates, “An important question at Zappos is how the applicant feels about socializing with people they work with outside of the office. That’s especially huge for managerial positions, since managers are asked to spend at least 10 to 20 percent of their time outside the office with their employees. You’d be surprised how many people make it clear that they don’t socialize with subordinates. While that works elsewhere, it’s not going to fly in an environment where humility and family spirit reign supreme. You may be a great person, but you aren’t going to fit here.”
Zappos understands that not all managerial candidates feel comfortable forging friendship relationships with their team. As a result, Zappos has created questions to determine whether those applicants will be able to handle the unique aspects of the Zappos culture. It behooves every business leader to clearly delineate the idiosyncrasies of working in that culture, so applicants can be assessed in relation to those company-specific needs. It is worthwhile to think about how you do business differently from your competitors. What separates the people who thrive in your environment from those who flounder? What might be new or unusual about the things you value when compared to the environments your new hires typically leave?
Once recruiters identify individuals who are likely to fit the Zappos culture, those individuals are sent to the next level of screening with a hiring manager. That hiring manager is tasked with making certain the applicant can meet the technical demands of a job (for example, that an HR benefits coordinator candidate has experience working with specific payroll and human resource information systems used at Zappos) and also makes additional assessments of the applicant’s all-important alignment with the Zappos values. This is way too important to be missed:
Falling in love with an applicant’s skills can predispose some companies to settle for a less-than-desirable or even toxic personality. That hiring manager must also consider how likely the applicant would be to fit with the specific characteristics and dynamics of the team with which he would be working.
Jeanne Markel, director of casual lifestyle at Zappos, is actively involved in hiring employees for her team and notes, “Depending upon the position, I’ll bring in an applicant to meet the team even if the applicant has no predetermined skill set. I know Zappos has a well-defined technical education curriculum, and if the person fits our values regarding learning and growth, we can teach the technical aspects of the job. For some positions, I’d obviously be looking for a specific set of skills. But in both cases, I am building on the recruiter’s assessment and looking for someone who has a great attitude and passion. Both of those characteristics can’t be taught, and they are necessary to fit with the Zappos culture and to get that person to the next levels of our organization.” (The “well-defined technical education curriculum” that Jeanne refers to, known at Zappos as “Pipeline,” is discussed in detail in Chapter 8.)
As if the HR and leadership screening for applicant values and personality are not enough, the screening, like the Energizer bunny, keeps going and going. After the hiring manager narrows the field of applicants, members of the prospective Zappos teams further assess the remaining candidates for “fit.” Galen Hardy, who carries the Zappos title of “clothing czar,” shares, “My team consists of about 20 people. It would be impractical for the applicant and the entire team to engage in an interview during an eight-hour day, so we rotate 4 members of our team to do the culture fit/team fit interviews. But those team members have to do more than interview; they have to really get to know that applicant on behalf of the team.”
Galen notes that applicants often fly to Las Vegas for their full-day interviews and are picked up at the airport by Zappos shuttle drivers. Those drivers are asked for input as to whether the applicants demonstrated Zappos-like values during their rides to the interviews. Galen continues, “Most applicants are here for an evening, and we will go off-site to enjoy cocktails and appetizers with the applicant. That way, our entire team can come and get to know the applicant. You can learn a lot more about a person at a happy hour than you can learn in an interview room.” After applicants visit, Zappos teams typically engage in a series of discussions to determine which applicant will provide the most perfect culture fit.
So how does all this relate to you and your business? Zappos offers a panoply of ideas that you can use to uncover your core values or to help you select the applicants who match your values. But what tools will you apply to increase the likelihood you will select staff members who are a culture fit? Will you create questions that explore whether your applicants align with your core values? (For example, at Zappos, interviewees might be asked to rate themselves on a scale of 1 to 10 as to how weird they are. This is followed by a more important question: Why did you give yourself the rating you did? Augusta Scott, Zappos coach, remembers being asked to draw a pig. “I was somewhat shocked, but I made him rainbow-colored. He still sits next to me on the wall of my cubicle.”) Maybe it’s off to happy hour with your team and your job finalists? Whatever it is, great leaders define, screen, and select for culture.
In spite of all this evaluation of fit, Tony Hsieh believes that bad hiring has cost Zappos more than $100 million. He notes, “This cost is a result of not only the bad hires we’ve made, but the decisions those people have made and how they have contributed to additional poor selections.” Ultimately, Tony views errant choices as the biggest of the company’s leadership mistakes. Chapter 3 will help you understand why Tony would make such a statement. It will also help you appreciate how an invitation for employment at Zappos is just the beginning of a very involved process of further exploring whether a new hire truly belongs at Zappos.
Chapter 2 Ideas to Run With
The course of business is not static and seldom is fully defined at launch.
Many corporate values are present in the actions of the early leaders of a business; others emerge in response to what customers value.
Values are both explicitly stated and implicitly present in action.
Explicit values can be codified or simply articulated by the leadership.
As social units mature, capturing values in written form is essential to alignment and growth.
Values creation should not be relegated to a “special few.”
The more you involve people in giving input, the less you have to sell them on the product of that input.
Define your core values now or refresh your already defined values.
Measure your values against the CRUD test.
Let applicants know about your values before they can find your job postings.
Create interview questions that get at the applicant’s core values.
Build multiple levels of values screening.
Assess applicants in both formal and casual settings.
Maximize the number of people who can give input on applicant selection.