Tony Hsieh led a culture shift at Zappos that implemented Holacracy, which removed managers and defined flexible, temporary roles. This led to issues with unclear responsibilities and job roles. 14% of employees left Zappos during this transition period. Implementing strong corporate governance is proposed as the best solution, as it would establish internal controls, transparency, accountability, and strategic planning to address the organizational challenges created by the culture shift to Holacracy.
Tony Hsieh led a culture shift at Zappos that implemented Holacracy, which removed managers and defined flexible, temporary roles. This led to issues with unclear responsibilities and job roles. 14% of employees left Zappos during this transition period. Implementing strong corporate governance is proposed as the best solution, as it would establish internal controls, transparency, accountability, and strategic planning to address the organizational challenges created by the culture shift to Holacracy.
Tony Hsieh led a culture shift at Zappos that implemented Holacracy, which removed managers and defined flexible, temporary roles. This led to issues with unclear responsibilities and job roles. 14% of employees left Zappos during this transition period. Implementing strong corporate governance is proposed as the best solution, as it would establish internal controls, transparency, accountability, and strategic planning to address the organizational challenges created by the culture shift to Holacracy.
Tony Hsieh led a culture shift at Zappos that implemented Holacracy, which removed managers and defined flexible, temporary roles. This led to issues with unclear responsibilities and job roles. 14% of employees left Zappos during this transition period. Implementing strong corporate governance is proposed as the best solution, as it would establish internal controls, transparency, accountability, and strategic planning to address the organizational challenges created by the culture shift to Holacracy.
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Jaypee Business School
Jaypee Institute Of Information Technology
ORGANIZATION DEVELOPMENT AND CHANGE REPORT ON-
TONY HSIEH AT ZAPPOS:
Structure, Culture and Change
Project report submitted for partial completion of course respect to:
Masters of Business Administration 2021-2023
SUBMITTED BY-
PIYUSH KANDWAL (21609012)
ANKIT SHARMA (21609001) YASHIKA GARG (21609002)
SUBMITTED TO-
PROF. RUBY SANGAR
DATE OF SUBMISSION-
25th March,2023 ANALYSIS OF CASE
This case is simply showing how “CULTURE” plays an important role in
shaping an environment. Leader of an organization plays an important part in creating and maintaining the environment of the organization. Tony Hsieh’s was a son of typical Asian American parents with having amazing academic background and always having a zeel to start his new venture . At his initials days he started various small businesses like- breeding and selling earthworms, garage sales, etc. In his early life he met his business partner who was Alferd Lin and started their first venture which was Link Exchange ( a network of banner ads on websites which later was unsuccessful and after that Venture Frogs came into the picture , here Tony along with his closed ones which he called his tribe invested in the company around $5,00,000 in order to be no 1 company of customised shoes and personalised services. Customer centric strategies were adopted in order to provide high customer satisfaction but culture in Zappos was little weird and focused on employee happiness, customer satisfaction, While the results were impressive until Tony started following “Holacracy”. Eventually the company lost its value and employees part ways, a need of structure arises. Lets find out what went wrong and how it can be resolved. CHARACTERS AND THEIR RESPECTIVE DESIGNATIONS IN THIS CASE
1. Tony Hsieh ( CEO OF ZAPPOS)
2. Alfred Lin ( Business Partner & CFO of Link Exchange) 3. Sanjay Madan (Co-founder of Link Exchange) 4. Nick Swimmurn (Chairman at Zappos) 5. Fred Mossler ( NordstromSales Associate)
PROBLEMS IN THE CASE
1. Holacracy can be considered to be one of the major problem in this case.
Zappos was leading towards Holacracy, let us understand what it is-
What Is Holacracy ? - Self managed organization - Flexible self- governing structure, no fixed jobs instead temporary functional roles. - Decision- making no pushed upward - Conflict resolution is responsibility of employees.
2. Second problem was at Zappos there were no clear lines of who does what. 3. At Zappos this shift cause 14% loss of employees 4. At Zappos the management offer compensation to leave. 5. Question raised on THE FORTUNE BEST CMPANIES TO WORK 6. System was depicted in small cells of people called “CIRCLES” 7. People step in and out of roles continuously. 8. Meetings start running under strict guidelines 9. Problems were not directly reported to the top but with the peers first. 10.Salary structure was not defined. ALTERNATIVE SOLUTIONS TO THE PROBLEM
1. FORM A STONG COHESSIVENESS :- Unity between the departments should
be there and everyone should be clear about their roles that they are performing.
2. Create MISSION & VISION :- A company should know “where they
are heading up to”, Zappos can also create small missions and vision and on achieving them Missions & Visions can be changed.
3. DEVELOP MECHANISM TO IMPROVE COMMUNICATION :-
Communication should be from Top to Bottom, it can be via mail, whatsaap groups , so that there is complete transparencey and if an employee have something to say to the management, then proper communication mechanism should also be there.
4. EMPOWERING OTHERS TO WORK ON THE VISION :- When everyone is
clear on their job roles and about the company vision, it becomes easier to achieve organization roles.
5. PROPER CORPORATE GOVERNANCE SHOULD BE THERE:- Corporate
governance govern the strategy formulation, organizations functions and it acts as a body that govern company instead of going Haywire. Like proper salary structures, reporting authorities, feedback mechanism etc. BEST SOLUTION
According to this case study as per my understanding the best solution to this problem is “CORPORATE GOVERNANCE”. Organisations with strong corporate governance may be more successful than those without it. Effective corporate governance offers many benefits to organisations. It plays a significant role in ensuring that any corporation has strong internal controls, which increases the consistency of the decisions that key figures within that organisation make and improve the company's external brand. Corporate governance offers important benefits, including increased transparency, accountability and strategic planning, which are essential for most organisations operating in competitive markets. As the things are going haywire in Zappos , as we can see that the employees have to research by themselves about their salary pay and Tony has also removed the managerial line responsibility and converted to three roles – lead link, mentor and compensation appraiser. Corporate Governance will help Zappos by- 1. Mitigates Risk 2. Encourages positive behavior 3. Boosts corporate reputation 4. Improves decision making 5. Improves reporting 6. Assures internal control 7. Attracts talented employees
