Zappos Strategy and the Effect This Has on the Company's HR Planning - Assignment Example

The Right Fit at Zappos Name of the Student: Name of the Instructor: Name of the course: Code of the course: Submission date: The Right Fit at Zappos Question 1 Discuss the environment that influences Zappos strategy and the effect this has on the company's HR Planning and implementation PESTLE Analysis The environment which influences the Zappos strategy will be analyzed using the PESTLE analysis. In addition, its effect on the company's HR Planning and implementation will be explored. According to Johnson et. al (2008, p 2), the PESTLE framework is a tool of analysis which is basically put into utility in the identification of principle change drivers in the strategic environment. In this regard, PESTLE analysis entails political, economic, social, technological, legal and environmental factors. All these factors have been key in shaping the external operating environment of Zappos as explored in the subsequent section. Political factors This mostly based on the fact that Zappos has to understand the rules and regulations in the countries they are doing business in. This is based on the fact that this company has expanded into diverse countries around the globe and they have to understand the rules and regulations in these countries. This is based on the background that Google was banned from China after governmental decision that Google threatens the community and the market at the national level by posting inappropriate contents in the databases. Consequently, Google lost the market in China due to a political decision, and thus, Zappos has to be wary of these factors. Economic factors Perhaps the most detrimental factor that has affected Zappos is the 2008 economic recession. This saw the shift of consumers’ preference from buying online to doing their purchases in the stores in the neighborhoods. This is based on the fact that most of the consumers have been preferring going to the stores, paying for products and having them immediately rather than giving bank details and waiting for several days for the product to be delivered. Nonetheless, the low pricing strategy has been efficiently used by Zappos to counter this challenge. Social factors These factors shape and influence the attitude, perceptionand opinions among consumers. This social factor has been propagated mostly by the influence of the media. It is an apparent fact that in the contemporary world, social networks have played an integral role in influencing which products that the consumers will purchase. At Zappos, there has been extensive use of the social network, mostly Twitter and Facebook to attract more consumers, mostly the young people in the site. In this regard, they have been making extensive efforts to create awareness to their brand using the social networking sites. Technological factors It is an evident fact that advances in the technological knowhow have been key shapers of how business is conducted, gaining increased momentum in the recent decades. This is mostly on the convenience and efficiency in passing information from one person to another, for instance, the stakeholders. With advance in technological knowhow, these stakeholders are able to swiftly pass information amongst themselves. In addition, the efficient passing of information from one party to another in the management system of the organization means quicker and more effective response to challenges facing the working environment. On the other hand, the consumers are now endowed with an ideal opportunity of doing their purchases anytime of the day from the convenience of their homes as a result of the instigation of online marketing. At Zappos, there has been extensive embracing of technological capital, mostly based on the fact that their existence is primarily founded on technological stability. This company has been in the forefront in technological utility since its establishment in 1999 albeit challenges with the high speed of the internet increasing the level of competition. Nonetheless, Zappos has managed to cope with these challenges through extensive innovation and creativity and has somehow managed to survive this competition. Legal factors Some of the legal factors affecting the operation environment of Zappos, both in the local and international realms include but not limited to minimum wage or anti-discrimination laws. Non-compliance to these legal obligations can have detrimental effects on the company based on the fact that it can culminate in penalties like massive fines, negative publicity or even imprisonment. Environmental factors These factors are mostly related to the concepts of corporate social responsibility (CSR) and even some aspects of ethical marketing.Laroche et al. (2001) revealed in their US survey that the presumed severity of environmental problems has been significantly and positively related to paying more for the products which are considered as being environmentally friendly. Thus, the consumer behavior is directly influenced by the extent to which the company adheres to the environmental concerns, which is bound to affect the operations of Zappos in the market. Effects of these factors on Zappos’s HR Planning and implementation These factors have posed diverse effects on the company's HR Planning and implementation. Firstly, these factors have influenced the entrenchment of robust organizational culture at Zappos. In this case, Ehtesham, Muhammad and Muhammad (2011) defined organizational culture as patterns of shared beliefs and values over a period of time which chiefly function in generating behavioral norms which are primarily adopted in the problem-solving processes in diverse organizations. Lim (1995) determined that the concept of organizational culture was primarily utilized in explaining the economic successes of the Japanese firms over those in America, which was founded on the development of a workforce which is highly motivated and deeply committed to a common set of core values, assumptions and beliefs. Zappos has a deeply entrenched organizational culture which forms the foundation of diverse processes like recruitment of new employees as well as informing how the employees in the organization deal with consumers. The overtime development of culture at Zappos was based on the need for the company to define itself in the market as well as the employees who work there aimed at surmounting increased competition in the market. But perhaps the most robust representation of this fundamental organizational culture is the 10 core values which are the foundation and the guide for decision-making in the company, for instance, between the stakeholders. This has been advanced by technological advances which have enhanced the communications between the stakeholders and the employees. These values were not developed and disseminated in a ‘top-down’ model of management but rather, they entailed input and consensus by the employees, which has been key in their acceptability and sustainability. These values are so integral to the company’s work practices and culture that every new employee is obliged to sign a core values document to affirm that they have a comprehensive understanding of the values and that they would abide by them. This has not only been central to the smooth running of the corporate activities in the company but also in influencing its performance. This fact is supported by Abu-Jarad, Yusof and Nikbin (2010) who noted that organizational culture is not only an important factor in organizations but also a core propeller of robust performance in business. On the other hand, interplay between political, economic, social and technological factors have increased competition in the market which has necessitated excessive training of the employees aimed at the attainment of human resource competitive advantage by Zappos. Training for both the new employees as well as the old employees is central to the operations of Zappos. Training of employees is fundamental to any organization, a fact which is supported by Yawson (2009, 19) who determined that the quality of the human resource and their eventual development through training and education are principle factors which determine the profitability of the organization on the long-term basis. In this regard, companies which are committed to quality are usually linked with heavy investment on training and education. At Zappos, the training practice can be broadly be categorized into two; the new employees and the old employees. For the new employees, Richards (2010) noted that each new hire is committed to a four weeks training, a period in which the culture of the organization is entrenched in his/her memory. The second phase of training entails dealing with consumers by working the phones. This has been cited as being central to not only fostering the commitment of the employees but also reducing their turnover rate. The impact of training among new employees on turnover rates is evidenced by the fact that the company has been consistent in maintaining a low voluntary turnover rate of 7%. For the old employees, there is a comprehensive customer services training aimed at proper delivery of services to the consumers on phone. In this regard, all the employee in disregard of position usually go through four weeks of call center training, followed by another four weeks of warehouse training. On the other hand, based on the fact that being part of the consumer loyalty training (CLT) is taxing and challenging, the company has developed a ’80-20’ rule aimed at mitigating burnout among the employees. In this regard, the employees in CLT are on-call or available for 80% of their time while they attend technical seminars or training programs during the remaining work time. In addition, the CLTs spend approximately 50 minutes per day writing greeting noted destined for consumers. This has been central in molding a committed workforce which is endowed with excellent skills in handling the consumers to satisfaction as well as handling the day to day operations in the company. In addition, the trainings are integral in updating the employees with the upcoming and issues related to their fields of expertise which is central for the company keeping in touch with the market dynamics. Question 2 Evaluate how HR practices at Zappos fit within the HUMAN RESOURCE management model presented in Lecture 1 Zappos has strong HR practices aimed motivating, generating commitment as well as retaining the employees. Firstly, training of the employees as analyzed in the above section has been central in increasing the knowledge and skills among the employees. On the other hand, it is imperative to be cognizant of the fact that Zappos has a strong reward and recognition system aimed at motivating and generating commitment among the employees. This is based on the fact that majority of the companies has become cognizant of the necessity of rewarding and recognizing their employees, which has seen them initiate prudent formal and informal reward programs whose uses are gaining more prominence and increasing in prevalence among different companies. Daniel and Metcalf (2005, 1) supported this fact by citing that there is an understanding among high performing organizations of the importance of giving incentives and awards which validate, recognize and also value outstanding work by employees. This practices is highly embraced at Zappos whereby creating a personal emotional connection (generally referred to as PEC in the company) with the employees as well as the consumers is integral to the company. This is exemplified by the existence of a HR team in the company which is dedicated to the coordination of diverse functions and events aimed at motivating the employees, generally referred to as PEACE (Programs, Events, Activities, Charities, and Engagement) team. On the other hand, the managers in the company can give ‘Zollars’ to employees as a sign of recognition. These are generally fake monies that the employees can use to purchase diverse products like T-shirts among other products in the company stores. In addition, there is also a Master of WOW program which is basically founded on employees nominating another co-worker to win a free car wash and a prime parking spot. Lastly, Zappos has a strong performance management strategy which forms the foundation of its HR practices. According to Martinez (2000, 19), performance management is a strategy which relates to every activity of an institution which is structured in the context of its human resource policies, communication mechanisms, style and culture. The nature of this strategy is influenced by the organizational context and variance from one organization to the other is manifest. At Zappos, there is an interesting mechanism of keeping track of the development of all the employees which is best epitomized by a culture review which is conducted annually. This entails behavior-based questions which are directly related to the core values in the organization and is aimed at pointing out the strengths and weaknesses of the employees in the core values and how they can improve themselves in the areas that need enhancement. The practice of performance management at Zappos is primarily the responsibility of the managers who are expected to meet with the employees and provide regular feedback on performance. These meetings are often conducted weekly, biweekly or monthly depending on the preference and availability of the managers while the HR team works collaboratively with the managers in ensuring that the employees are provided with regular feedback on performance. Question 3 What do you see as the strengths and weaknesses of Zappos practices and do you think there are opportunities for the company to improve its human resource practices In regard to strengths, Zappos has an exemplary pricing strategy which ensures that the consumers get outstanding services at low prices. On the other hand, product diversification, for instance, products ranging from shoes to accessories are paramount in increasing the company’s consumer base. In addition, this company has strong distribution channels providing next day delivery service to its consumers. Lastly, good consumer relations (supported by training programs aforementioned) as well as robust IT systems support the business strategy of Zappos. Nonetheless, this company has several weaknesses. Firstly, the free shipping policy at Zappos is bound to pose negative effects on its profits in the long run. Secondly, this company has no region based sites and primarily relies on a central site which can be detrimental to consumer awareness mostly with internationalization. Lastly, by adding more products in its diversification strategy poses risks to Zappos since the company is primarily famous for online shoe selling. However, there are several opportunities for this company. The overall internet use has heightened around the globe, which will eventually increase the number of shoppers online. This fact is supported by Garrison (2003, p. 2) who cited a recent report which revealed that 34% of the overall households in the world have a web connection which translates to approximately above 1/3 and this trend is heightening every day. On a more imperative dimension, an even larger percentage of businesses are now online. On the other hand, the expansion of e-commerce, mostly in Asia will create new markets for the company which will pose business opportunities in these areas. References Abu-Jarad, I, Yusof, N.and Nikbin, D. 2010. A Review Paper on Organizational Culture and Organizational Management. International Journal of Business and Social Science 1(3): 26-46. Daniel, T. and Metcalf, G. 2005. The Fundamentals of Employee Recognition. http://147.126.1.230/hr/pdfs/eregSHRM.pdf (Accessed August 13, 2012). Ehtesham, U., Muhammad, T. and Muhammad, S. 2011. Relationship between Organizational Culture andPerformance Management Practices: A Case ofUniversity in Pakistan. Journal of Competitiveness 4: 78-86. Garrison, D., 2003. Internet Marketing and Other Techniques for taking advantage of the World Wide Web. http://www.moworkshops.org/marketing/Internet%20Marketing.pdf (Accessed August 13 2012). Lim B. 1995. Examining the Organizational Culture and Organizational Performance Link. Leadership & Organization Development Journal 16(5): 16-21. Laroche, M., Bergeron, J. &Barbaro- Forleo.2001. Targeting Consumers who are willing to Pay More for Environmentally Friendly Products. Journal of Consumer Marketing, 18(6): 503-520. Martinez, J. 2000. Assessing Quality, Outcome and Performance Management. London: The Institute for Health Sector Development. Johnson, G, Scholes, K., & Whittington, R., 2008.Exploring Corporate Strategy Text Cases. 8th Ed. London : Prentice Hall. Richards, D. 2010. At Zappos, Culture Pays. Strategy+Business 60: 1-5. Yawson, F. 2009. Training and Development of Human Resource in Custom Exercise and Preventive Service (CEPS) in Ghana. Masters Thesis, Kwame Nkrumah University of Science and Technology. http://dspace.knust.edu.gh:8080/jspui/bitstream/123456789/587/1/Frank%20Yawson.pdf(Accessed August 13, 2012). Read More