Introduction
Decision-making is a critical process that defines a company’s success or failure. According to Bang et al. (2017), it refers to the practice of making choices through identifying pertinent decisions, gathering data, and appraising alternative resolutions. In this regard, Nick Swinmurn’s executive decision to resign from his job and starts an entrepreneurial endeavor led to the establishment of Shoesite.com, which later became Zappos. The Chief Executive Officer (CEO), Tony Hsieh, has led Zappos to become a renowned brand in the shoes and apparel industry, although he became the leader at a tender age of 26 years (Bierman et al., 2014). Hsieh’s success can be attributed to his willingness to take risks in making decisions he believes will be profitable to the company in the future. Therefore, a harmonized and inclusive decision-making process has been the primary driver of creating a relaxed business environment at Zappos, thus strengthening customer experience and employee satisfaction.
Zappos’ Organizational Culture
CEO Hsieh strives to make the employees and other internal stakeholders comfortable at Zappos. He understands that workers are essential instruments in improving the consumer experience. Accordingly, Hsieh uses a holacracy management system that promotes flexibility among the staff (Yugendhar & Ali, 2017). He distributes authority throughout the organizational structure, thus allowing employees and teams to have freedom in executing their obligations while focusing on the organization’s purpose. For instance, employees at Zappos have access to a nap room, an open mic in the cafeteria, and a wellness center (Bierman et al., 2014). These facilities help create a unique and relaxed atmosphere that promotes job satisfaction. Instead of investing in marketing, Hsieh prefers to allocate more resources to customer care, thus nurturing a consumer-oriented business model. Adopting the holacracy approach of management has led to empowering workers and enabling them to offer the best customer care, thus wining consumers’ loyalty and trust.
Decision-Making at Zappos: Major Decisions and Their Associated Risks
Hsieh has made four critical and risky decisions since the establishment of the Zappos. Firstly, he sold his loft to finance the purchase of a new warehouse and set his annual salary at $24 (Bierman et al., 2014). He took the risk of living a struggling life characterized by stress and emotional imbalance to pursue his goal in business. As a result, the company recorded annual sales of $840 million in 2007. Secondly, Hsieh had to make another vital decision regarding the expansion of the call center. He initially considered outsourcing the service from India but realized that company must rely on its call representatives to adhere to the consumer-oriented model. Hsieh decided to relocate the company’s headquarters from San Francisco to Las Vegas (Golden et al., 2017). The argument that Las Vegas had invested substantially in the hospitality industry and employees had exceptional skills in dealing with clients informed this choice. The company faced the risk of a high turnover rate; however, about 80% of the workers were willing to relocate. The company had to use substantial money to fund relocation expenses.
Another critical decision involved dismissing some employees due to the economic downturn caused by the Great Depression of 2008. Although the company was registering high sales, there was a dire need to reduce its expenses. In this decision, Hsieh was ready to undergo the costs of compensating the 8% of the dismissed workers (Golden et al., 2017). The final decision involved selling Zappos to Amazon in 2009. Although Hsieh understood that selling the company would result in relinquishing ownership rights to the buyer, he projected that Zappos would have a profitable future by utilizing the high-technological systems used by Amazon. He also negotiated favorable terms that ensured Zappos operated independently despite the acquisition, thus retaining its brand name. Hsieh utilized the classical model to make these risky yet crucial decisions. He relied on the existing information and facts to achieve his primary objective of maximizing rewards.
The Role of Zappos’ Core Values in Decision Making
The company has several core values that shape and guide its organizational culture and decision-making process. They include building a positive family and team spirit, embracing and driving change, being adventurous, humble, creating fun, little weirdness, and doing more with less (Bierman et al., 2014). These values help the leadership and employees make rational planned and unplanned decisions daily. For example, humility assists call representatives in responding professionally to the clients’ inquiries, thus building long-term relationships. Allowing a little weirdness and creating fun enable workers to enjoy working at the company, increasing job satisfaction. This value significance was evident when 80% of employees agreed to relocate to Las Vegas from San Francisco to continue working in the firm (Golden et al., 2017). Zappos’ core values strengthen teamwork and autonomous decision-making practices that empower workers to embrace customer-focused business models. Therefore, Hsieh utilizes the core values to reinforce his behavioral decision-making style, which supports followers and motivate them to lure customers.
Group Decision-Making Process
Hsieh also believes that the group decision-making process remains critical in promoting teamwork. According to Bang et al. (2017), group decision-making refers to a participatory initiative that enables people to participate jointly in making choices. Accordingly, Hsieh consents his juniors to have autonomy over their behaviors and actions, thus uniting them and creating robust teams. The leadership motivates employees to generate ideas among each other and embrace an inclusive decision-making process. For instance, Hsieh encourages staff to identify challenges together, examine different solutions, appraise alternatives, and finally choose decisions that best fit the firm (Golden et al., 2017). This group decision-making procedure inspires creative ideas and helps workers feel valued in the organization, thus improving their productivity and overall company performance.
Critical Decision-Making Areas Spurring the Company’s Growth
Hsieh focuses on three primary areas in his decision-making process, including company culture, customer service, and employee training. For example, the firm uses substantial resources to train employees to develop ethical principles and other business skills that help them complete their duties successfully and create an exception working rapport with consumers. According to Golden et al. (2017), the investment in customer service has enabled the company to allow clients to order different types of shoes and return those that do not appeal to them. In this way, customers have developed loyalty and trust in the company. Training also enables the staff to remain aligned to the organizational culture and strive to offer customer-oriented service. Consequently, the decision to invest in the three aspects emanates from recognizing that employees are the essential marketers because they interact with consumers every day.
Conclusion
Zappos is an excellent example of a company that has started from an online website to a renowned brand globally. This growth trajectory demonstrates that leadership plays an indispensable role in business success. Despite his age, Hsieh introduced the holacracy organization culture that empowers workers in making decisions relating to their daily operations. Unlike other firms that limit the talk time of their call representatives, Zappos encourages its employees to exceed the customers’ expectations. With this customer-focused business model, Hsieh has adopted risky yet practical decisions that have increased sales. Indeed, the acquisition by Amazon was an unprecedented decision that has helped the company to tap the high-technological systems in its business, thus augmenting productivity and expanding market share. Therefore, selfless and inclusive managers create an excellent working rapport that enhances job satisfaction, leading to increased productivity and overall firm growth.
References
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Bierman, L., Ferrell, O., & Ferrell, L. (2014). Management: Principles and applications (3rd ed.). Academic Media Solutions.
Golden, B., Pandey, A., & O’Rourke, J. S. (2017). Zappos: An experiment in holacracy. University of Notre Dame.
Yugendhar, A., & Ali, S. M. (2017). Evaluation of implementing holacracy, a comprehensive study on Zappos. International Journal of Engineering and Management Research (IJEMR), 7(5), 163-171. Web.