Dealing With Management Challenges, A Case Study Of Zappos

Organizational Challenges at Zappos

Topic- Dealing with Management challenges, a case study of Zappos

The management of every organization faces certain challenges with managing different aspects of the organization. In order to become one of the most effective management department, the problem solving skills have to be stronger and top notch. Few of the problems that the HR department of any organization faces are with evolving technologies, cross –cultural difficulties, business politics and many others (Ivancevich, Matteson & Konopaske, 1990). Organizational behavior management is a set of psychological principles of organizational behavior applied to advance individual or group performance (Gist, 1987). Zappos is a successful online shoe retailer company which focuses on customer comfort and best customer services. However, it faces some ethical challenges in the course of its business. This paper will focus on some organizational challenges of Zappos and in the light of organizational behavior theories recommend some solutions to the issues.

The Zappos online company was founded by Nick Swinmurn in the year 1999 under the name ShoeSite.com. At the beginning the company worked as the transferor of orders from the customers to suppliers and vice versa. The company renamed itself as Zappos (Spanish ‘Zapatos’ means ‘shoes’) after few years. Mr.  Tony Hsieh is the CEO of the company. The company focuses on few core values which helps to form the center of the business culture of the company (danielsethics ,2018). They embrace and drive change. They prefer adventure, creativity and open-mindedness. They also build honest and clear relationships with the customers and the employees. They are passionate, humble, determined and positive.

Some organizations prefer to keep all the company information close to their hearts and never disclose it to others which can encourage wrong assumptions and rumors from the employees as well as from the customers. Transparency and honesty about all aspects of the business can bring in numerous advantages for the company (Schnackenberg & Tomlinson, 2016). It also enables the company to look in the controversy (if any arises) and respond quickly according to that. Transparency in business increases the respect of the outsiders when they get the opportunity to see the business operations of the company.  It builds positive public perception regarding the company. Some companies start being transparent only after some scandal occurs. They try to defend themselves after the involvement. Transparency also includes open and straightforward communication. On the other hand, if the staff members are unable to know what is going on in their business, they might step down to gossiping, spreading rumors. Hence a company should stay known to the staffs for building staff loyalty. The customer service of the company can also be advanced by staying transparent to business operations (Johansson & Malmstrom, 2013). For example, the confession of a manufacturing defect in a particular product and the promise for its repair publicly is more attractive to the customers than concealing the defect from public. High media connections are built by staying transparent. Though releasing information about the company in a time frame, a company can be benefitted fashion the business operations and manage even the most challenging conditions.

Transparency and its Advantages

Although Transparency is one of the most important organizational behavior management strategy by which the maximum organizational challenges can be eradicated, sometimes transparency can create extremely deep rooted challenges. There is always a risk of the information being misunderstood or misinterpreted (Christensen & Langer, 2009). Those organizations which prefer to stay fully transparent are more prone to be attacked, bullied or disrespected. It becomes difficult for the organizations to practice transparency by keeping some information private such as trade secrets or other important information (Meijer, 2013).

Zappos is one of those companies which gives special importance to transparency. It is an essential part of Zappos’ business model. The employees of this company receive in-depth information about the company’s activities and operations and are much enthusiastic in sharing those in sharing those information (danielsethics, 2018). The company believes that the employees should keep an honest and clear relationship with it stakeholders which will assist in preserving the company reputation (danielsethics, 2018). Mr. Hsieh makes best use of Facebook, Twitter to share and spread important information with the employees as well as with the customers (danielsethics, 2018). Zappos believes that there is nothing to hide about and they can publicly blog about any operation within the company whereas some companies literally refuse to do that. It can be perceived from the social media sites of Zappos that maximum posts are praises from then customers (danielsethics, 2018).

However, besides the huge benefits that the company experiences, the transparency of Zappos poses some ethical complications which the company tries hard to resolve. Although the company is famous for its commitment to the employees, hard conditions are also faced by the company which demanded strict decisions.

In the year 2008, the company went through a hard financial recession. At that time Sequoia Capital, a venture capital firm which controlled the investment department of the company suggested Zappos to cut down expenses as much as possible to balance the economic position (danielsethics, 2018). The company was bound to lay off 8 percent of the employees of Zappos. One point should be taken into considerations that whatever Zappos did, was done in a kind and respectful manner keeping the transparency intact. The CEO of the company notified all the employees about the condition and confronted everything including the decision that was about to take place. The issue was also discussed on Twitter. The employees were supported with paid COBRA health insurance which delighted the employees and they supported the company at that poor time (danielsethics, 2018). The employees displayed sensitivity towards the decisions made by the company driven by the honesty and transparency of the company.

Transparency and its Disadvantages

Another incident occurred in the year 2009, where the transparency policy adopted by the company proved its effectiveness. The Zappos company got acquired by Amazon.com, the e-commerce goliath. This sudden incident confused many Zappos customers. Most of the organization do not feel the necessity to address the customer concerns regarding such issues but Zappos’ CEO issued a statement disclosing to then customers about why this decision was made by the company (danielsethics ,2018). Mr. Hsieh also asserted the customers that Amazon is a trusted company which will do what is best for Zappos only in a different way than Zappos itself used to do. This step enabled the consumers to understand the entire issue and eradicated confusion and misinterpretations.

Turning from the advantages of transparency policy of Zappos which contributed a good deal to its business development, there are instances where Zappos should have displayed a little concern regarding what to disclose and what not. In the year 2011, October, some technical difficulties occurred in Zappos site which ended up in delaying and complicating the customer orders (danielsethics, 2018). It occurred due to some processing system up gradation which deleted important customer information. The company also faced pricing mistake due to some technical problems which incurred almost $1.6 million loss on the part of the company (danielsethics, 2018). It also created unrest among the customers and the company faced difficulty in handling the issue.

In The year 2012, the computer system of Zappos was hacked by unethical hackers. As a result of the hack, more than 24 million customer information was at high stake. The stolen data consisted of emails, phone numbers, home addresses, purchase order details and the last four digits of credit cards (danielsethics, 2018). The company assured the customers that their card information has not been hacked and then disconnected all of its call centers fearing that the amount of calls from the customers would overload and subsequently crash the system (danielsethics ,2018). Most of the customers were disappointed with how the company handled the condition. The customer service record of the company got hampered a little.

In order to avoid confusion and consequences of transparency policy, first of all trusted employees need to be hired who would show the qualities of transparency in their activities. An ethical leadership would also accelerate the implantation of transparency (Esmer & Dayi, 2016).Communication is the most essential vehicle to maintain transparency in the business and the workplace. Specific tools should be given to the employees by which they can ask questions and raise voice against any problem (Albu & Flyverbom,2016). Social media can be used as a communicating tool among the company, the staffs and the customers but there should be some limits on the release of information (Roberts, 2009). Transparency does not by any way means easy availability of all data. As evident from the case of Zappos, transparency might put the safety in danger. Therefore, in order to build a smart organization of trust and cooperation, the companies are supposed to execute the transparency level with much care. More advanced technologies need to be applied to keep the important information safe.

Conclusion

Therefore, from the above discussion it can be well perceived that transparency is an essential organizational management theory by which specific organizational problems can be resolved. However, excessive transparency sometimes results in disturbance among the workforce and the customers. It can also lead to stain the reputation of a particular organization. A strategic application of the transparency policy in the organization might assist in dealing with the confusions. A famous company like Zappos will see the height of success build on their core values to give most importance to the employees and the customers if the transparency policies are handled with a little more care.

References

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