Inspired Employees Make A Billion Dollar Business /w Zappos

shoes shop

Employee motivation has always been a major challenge for any business owner and has never been more at the forefront of managing a business than it is today. As companies struggle to increase production, or to, at least, keep them level, with fewer employees the challenge of keeping the workforce motivated can seem an insurmountable obstacle.

As many employees are forced to do the job of three people, burnout, depression, and an absence of motivation can cause a serious drop in production as well as with the overall health of a business. While many business owners believe that money is the major motivating factor, time and time again research and polls have indicated that this just isn’t so. For most employees, money comes in around fourth or fifth. What, generally, tops the lists is engagement. Employees want their company to care about them and they want to feel that they are doing something meaningful with their eight hours a day. Basically, they want to be involved and appreciated. They want to make a difference.

A future visionary begins to make his mark

One of the modern innovators regarding the importance of employee engagement is Tony Hsieh (pronounced SHAY) and he carried out this new vision while CEO at online retailer Zappos. He took the untested idea of selling shoes online to a whole new level and under his leadership Zappos became a billion dollar company with employees so loyal that they cannot even be paid to quit.

Hsieh’s parents came to America from Taiwan and young Hsieh, who was born in 1973, grew up in Greater San Francisco. He received a degree in computer science from Harvard and went to work for Oracle. His first business venture was selling pizza to his dorm mates while he managed a local pizzeria.

He became unhappy with the corporate culture at Oracle and left after five months to found an internet advertising company called LinkExchange. It was an advertising membership model as members were given the opportunity to advertise their companies at the site with banner ads that would constantly rotate and display new ones. He launched the company 1996 and he attracted his first clients by tracking down webmasters and emailing them with his vision for the site. In just 90 days, Hsieh grew the website to over 20,000 members and increased it to over 400,000 in just two years. At the end of that two year period, Hsieh sold his venture to Microsoft for $265 million.

So, come early 1999, the 24 year old multi-millionaire was searching for a new challenge. He founded a venture capital firm along with an old college friend Alfred Lin and invested in such startups as Ask Jeeves and, in 1999, online shoe retailer Zappos.

Transforming a humble, and struggling, upstart into an online giant

In 1999, Nick Swinmurn founded his online company he called Zappos (a reinvention of the Spanish word zapatos which means shoes). The inspiration came to Swinmurn after a truly fruitless day of wandering the city and the malls in search of a simple pair of brown Airwalks shoes. He decided to approach Hsieh and Lin with regard to investing in the new endeavor. Hsieh recalls that he erased Swinmurn’s original voice mail and was close to deleting a follow-up email from him. However, what Hsieh remembers changed his mind was when Swinmurn mentioned that selling shoes was a $40 billion dollar endeavor and that over 5% of shoes, at that time, were being sold through mail order catalogues.

Hsieh and Lin decided to invest $2 million in the new venture and a couple of months after the investment, Hsieh signed on to be Swinmurn’s CEO. Sales up to that time had been disappointing, only several thousand dollars or so, but Hsieh turned things around in less than a year as Zappos posted $1.6 million in sales in 2000.

By 2001, Hsieh had taken Zappos to $8.6 million and that was when he began to develop and implement his visionary ideas regarding customer service and employee motivation. He, along with other Zappos management, decided that they needed to have a ten year plan. By 2010, Hsieh declared, Zappos will generate over a billion dollars AND, more importantly, he wanted Zappos to be recognized by Fortune magazine as one of the best companies in America to work for. By 2007, Zappos generated $70 million and in 2008, two years ahead of schedule, the company topped one billion in sales and in 2009, Fortune ranked them at number 23 in their annual Best Companies to Work For issue. Also in 2009, Zappos was sold to for $1.2 billion.

The vision of delivering happiness becomes the employees

Hsieh says that he really wasn’t all that interested in selling shoes. What is of interest to him, what truly ignites him, is unmatched customer service and a corporate culture that actually inspires employees. Hsieh is far more interested in inspiration than motivation. Hsieh had continually declared that employee satisfaction and company culture is the most important reason for success. Hsieh describes his vision as a movement of sorts that he calls Delivering Happiness.

For Hsieh, the hiring process is the most important part as potential employees face two rounds of interviews. Following the initial rounds of interviews, everyone, including management, must go through a training course in “customer loyalty” that lasts four weeks with a solid two weeks of that spent working the phones and talking to customers. After the four weeks, each person is offered $2000 to quit. Hsieh thinks it a great way to eliminate those who were not really suited to the culture and his vision. Unbelievably, over 97% refuse the money incentive to quit.

There are no separate offices, only open space and tiny cubes. Each department may decorate their department as they see fit and managers are required, under job description, to spend at least 20% of their working week hanging out and socializing with Zappos employees away from the office environment.

Hsieh’s ten core values that he put into place at Zappos includes unmatched service; being creative, innovative, independent, and open minded; build a family through communication and a participation in the company and everyone’s lives; do more with less; and be passionate and humble. For Hsieh, you must inspire your employees with a vision higher purpose. It just can’t be all about the profit. It’s all about the customer and delivering happiness.

The company operates 24 hours a day and offers a one year return policy on all merchandise. Employees do not have deadlines with regard to calls and never work from a script. It is that personal connection that is most important. They do what they need to do to make the customer happy no matter how long it takes. Zappos offers a full 24 hour cafeteria as well as free vending machines, a room where one can take a nap, and free health insurance.

Employees are encouraged to walk around while they work, chatting up their co-workers and managers who work right alongside them in their own little cubes. They can also feel free to send along cookies or a card to their customers in a continuing effort to make that connection with the customer and to get them to feel the culture of family.

For Hsieh, there should be no distinction between work time and personal time. Employees are encouraged to integrate the brand into their lives so that their entire living experience is a positive blend. The must want to come to work, love to come to work, and that dedication shows in their customer contact. Over 75% of Zappos customers come back and bring friends with them.
Hsieh also believes that employees should always be learning new things and they are offered the opportunity for personal and professional growth. A family partnership, with equal responsibilities to one another, is a strong part of Hsieh’s vision.

The Zappos culture, that feeling of family, and the independent ability to take care of a customer no matter what is never more revealing than a Zappos employee who was once talking with a woman who wanted to return a pair of boots that she had purchased for her husband. She explained that she had to return them because her husband had been recently killed in an automobile accident.

The following day the woman received a delivery of flowers. The Zappos employee had billed the flowers to the company and sent them off right away. The employee did not even consider taking the time to check with a manager to see if that would be the right thing to do.

Article by Kevin Sawyer


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