HNC Business Unit 3 Organisations Behaviour


The organisation used in this HNC Business Organisations Behaviour Assignment is Zappos (Zappos.Com), which is an online clothing and shoe retailer headquartered in Las Vegas, Nevada. It was founded by Nick Swinmurn, in 1999. The company is reportedly known as the largest online shoe retailer. The retailer was purchased by the e-commerce giant Amazon (Amazon.Com) in July 2009. After getting acquired by Amazon, the company started thinking about reorganizing its organizational structure. The new Holacracy structure will be introduced to the organisation, and the culture will also be impacted simultaneously. In this assignment, we will examine various facets of Holacracy and find out the applicability of the proposal to the company.

Task 1

a) Discuss the advantages and disadvantages to Zappos

(i) if they maintain a traditional hierarchical structure, and (ii) if they adopt a flatter structure.

The multi-level hierarchy structure in the organisational structure is a very traditional practise. This is also known as pyramid structure, which as the organisational hierarchy represents the top to bottom approach of the management and the organisation. As a result, the top portion of the pyramid is given with higher roles and more responsibilities. All the decisions are taken at the top of the pyramid, and then they are processed through the hierarchy down to low level workers. Right from its beginning, Zappos has been practising the hierarchical structure in its organisational framework. The hierarchy structure impacts on the colleague environment in the company’s organisational structure. People at the top are given more respect in the hierarchy, and most importantly the employees with higher roles were encouraged to treat their subordinates as juniors or subordinates. The process of proper guidance and task competition will be very much active in this structure. In terms of roles and responsibilities, the level of clarity among the employees across various hierarchies will be clearer. The managers will have better control over the employee, and they can delegate easily to complete the tasks in time. However, on the hindsight, the lower level employees will not always have the opportunity to participate in the decision making system. The skills and capability of certain employees may get shadowed by the higher level managers (Buchanan & Huczynski, 2004).

Zappos have started moving towards a flatter organisational structure. Flat structure is a radically different approach than the traditional hierarchical one. It is simpler in its structure and access to everyone. The simplistic organisational structure enables employees to interact with each other with more freedom and ease of access. The flat structure enables the company’s focus towards innovation and aggressive business steps. The flat structure is useful in making the quicker decisions which are necessary for a firm which goes through tougher times. The employees are given with clearer idea about their specialisations in the organisation, and the supervision is easier in the organisational structure. The result may give rise in the higher productivity and better commitment from the employees. The company culture is helpful to the innovative ways of thinking, and the employees are treated as generalists in the company, who can be given any task to perform depending upon the requirement of the company situation. However, flatter structure can create power struggle and people may not have clarity over their roles in the organisation. But compared to hierarchical structure, Zappos should follow the flatter one to suit its need (Blanchard et al, 1985).

b) Explain how the new organizational structure and culture may impact on both employee and organizational performance.

Organisational structure is decided by the companies based on their need of the operation. The business organisation needs to know their role in terms what are they going to do in which manner. The organisational structure is helpful in giving the company a clear picture of individual and group tasks. The task groups are provided with particular tasks in the organisational structure. Based on the business need and the suitability to the organisation, the companies choose their organisational structure. The structure decides the way employees are supposed to behave in terms of their duties and responsibilities. The effect of organisational structure is clearly visible on the organizational behaviour. The cultures can be observed in the employees through various values.

Various employees form the visible organisational culture in the organisation. Individual characteristics related to the employees represent their identity and hence their attitude. Clan organization culture, which is very common in the flatter organisations, is suitable for Zappos. The culture gives a family kind of impression to the employees. The mutually beneficial groups are created and the helpful environment gives the employees an extra mileage in terms of efficiency. On the other hand, there is another organisational culture which is not suitable for Zappos: adhocracy culture. This culture gives the managers more power over the employees and the relationship between the employees and managers is not mutual. The level of performance among the employees may increase, but the motivation level will definitely decrease because of the stringent managerial behaviour (Child, 1972).

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Task 2

Compare and contrast the leadership and management styles of Zappos with its parent company Amazon. Use appropriate management and leadership theories to underpin and justify your answer.

The need of a good leadership is very crucial both at the helm of its business operation and within the employee work force. The leadership style in any organisation decided the way subordinates behave in terms of their way of doing task and listening to the managers. There are various types of leadership styles which are applied in the organisations depending upon their need and suitability. The leaders are not only responsible to perform their given responsibilities, but also to make sure that other members in the team are adhering to requirements. With the new plan flatter organisational structure, Zappos has to change the leadership style. The company follows hierarchical structure, which makes the role of managers and supervisors wider and stronger. The company’s organisational strategy and the dependence on the power of the managers, and at the same time the leaders are supposed to show affirmation while dealing with the subordinates. In the new organisational structure, the company have to think about a new leadership style from the below mentioned styles. Let’s look at various leadership styles and then decide the appropriate leadership style:

  1. Authoritative Leadership: This is an apt kind of leadership exhibited in hierarchical organizations behaviour. The culture in the organisations is very much conducive for authoritative leadership style. In this type of leadership style, the managers are given much authority than other stakeholders, and they are responsible for setting up various organizational goals. The role of managers is to make the jobs done both by encouraging the employees and by putting pressures in them. The employees can be motivated by awards and rewards, or they can be controlled by authoritarian approach of managers.
  2. Directive Leadership: Leaders are given illogically high amount of control over the employees. Managers do not act as leaders; rather they follow one way approach of making the job done. This type of leadership is not recommended for business organisations, where employees must be given ample space to perform.
  3. Pace Setting Leadership: The organisations practising pace setting leadership are mostly focussed on the quality of products and services. The quality of the work is utmost important for the managers and the company irrespective of other aspects. The managers are encouraged to set examples for their subordinates and they lead by example.
  4. Participative Leadership: The organisations practising participative leadership believe in taking everyone together along the path of goal achievement. Employees and other stakeholders are encouraged to contribute towards the creativities of the tasks. Manages act as leaders and they give ample amount of freedom to everyone in a democratic way.
  5. Coaching:the leaders practising coaching style are often the coaches for their employees. The level of enthusiasm among the leaders and the followers must be equal in order to have a mutually beneficial and fruitful relationship. The employees are given the long term based training and development facilities.
  6. Affiliative Leadership: In the new proposed organisational structure, this kind of leadership is very much suitable. The new organizational culture and structure will have a friendlier business environment at Zappos. This type of leadership will result in positive relationships between the employees and the managers. The level of information sharing is at high, and the loyalty of the employees is also held at higher level. The affiliative leaders are focussed on giving timely positive feedbacks to the employees in order to keep their level of motivation at high level. However in few cases, the loyalty of employees may result in ignoring their inability to perform (Sell, 2011).

The new organisational structure proposed by Zappos also comes with an additional proposal of leadership, which is Holacracy. The following image explains the Holacracy structure in an organisation. It virtually abolishes the top down hierarchal structure in the organisation.

The initial news in the media about the Zappos’ new structure was saying that the organisation will not have any job title, any managers or any hierarchy. However the new structure is more of a social technology which decides the organisational structure, decision-making system, and power distribution style. According to the Zappos CEO, Tony Hsieh, then new structure will be implemented latest by the end of 2014. This is a radically different approach from the previous hierarchical structure, and people will be given the freedom of self-governance. In the proposed Holacracy structure, there will be hierarchy of circles in the place of structures. And they will be run in democratic measures.

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Amazon is led by its founder and CEO Jeff Bezos. The 50 year old billionaire leader of the e-commerce site is known for his remarkable leadership style. He practices participative leadership at Amazon, giving everyone their fair share of chance to voice the concerns and feedbacks. Mr Bezos reportedly leaves one seat open in meeting when he chairs the employees and managers at his office. He asks his managers to presume that they must consider that the seat is occupied by Amazon customer and the discussions must go keeping the customer in mind. He implemented participative leadership, keeping the number of employees in the organisation at lower level. Fewer employees give better control over the work force and the managerial tasks become easier. The customers are given more importance in the organisation, and the employee is given ample freedom to have their own way to make sure that customer is happy. Zappos can also implement the same in its organisational structure, and the leadership style. The main learning from Amazon should be to keep the employees happy, which will result in keeping the customers happy (Mullins, 2007; Denning, 2014).

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Task 3

a) Examine how Zappos leadership style may affect the motivation of their employees during the organizational re-structuring

The proposed changes at Zappos suggest that the company is going to implement participative leadership style and a flatter organizational structure. The decision making processes have to be spread across the system and the consultations need the opinion of every stakeholder in the organisation. The change in recruitment process and the development procedure will definitely help the organisation to be a more robust organisation. The change will also help the motivation level of the employees to go high. After the company was acquired by Amazon, the infusion of Amazon’s culture made the managers think in a different way than they used to be. As a result of which, the motivation level of the employees have also changed. The employee motivation comes from the way managers handle them. If the scope of doing task is ample for the employees, then they will show more interest in their job. Democratic way of management will also help the employees to express their views in the time of change. They can express the problems they are facing after the Amazon employees became their colleagues. They can also give suggestion to improve the processes in the new and revived organisation. The proposed Holacracy organizational style will be helpful in encouraging the employees. Everyone will be a stakeholder in the system, and performance will be measured fairly. The Amazon way of rewarding the employees will also go a long way in keeping the motivation level of the employees at high level. The equal distribution of power will be helpful in eradicating any issues of work place related discrimination. The transparency at workplace is also being another factor that will be radically different from the traditional approach of hierarchical structure. Overall reduction in conflicts, discriminations, and increase in perceptions will result in better employee motivation (Denning, 2014; Cosh et al, 2012).

b) Clearly defined job titles, responsibilities and authority have traditionally been used as a means of motiving employees. Under the new organization structure there are no job titles or managers. Critically discuss the alternative approaches Zippos can use to motivate the staff

In case of Zappos, which is a type of firm that practices management practices proactively to help both the employees and customer, the new structure will work. Although the clearly defined job titles, responsibilities and authority in hierarchical structure has been main driving factors of employee motivation, the Holacracy will also be effective. The democratic procedures involved in every stage and level of the organisation are very much internal focused. This might help the employees to concentrate more on the work than the hierarchy in order to add value to the customers. However, the factor of hierarchical motivation cannot be ignored. Roles, job titles and responsibilities matter a lot in terms of driving the employee to put more effort towards better goals in his or her career path. In this case, when there will no level or titles, the human resource management department at Zappos can think about empowering the employees through various mediums. The first step towards empowering the employees without titles or designations is by giving them ample amount of freedom to choose in their daily operation. This will make them feel like their own boss, and motivate them heavily. Besides empowering the employees with more power, the company can also provide them with heavy performance related bonus. It is important to make sure that the highest performers are getting the highest bonus preferences and the lower level performers are getting relatively lesser bonus. Although the entire hierarchical system will be reportedly abolished, the company needs to have a dedicated team of employees responsible for addressing the issues and concerns of the employees. The most effective and useful factor of employee motivation is awards and rewards system. In Holacracy, the absence of roles can be replaced with properly timed reward system to keep the morale of employees at higher level.

Motivators are the other factor, which give the employee recognition and rewards. The presence of motivators will definitely result in better performance. However the decision makers at Zappos should choose to follow the combination of both motivational factors to make sure that employee performance is at high level (Hofstede, 1980; Lovelock, 1995).

c) Evaluate the benefits of motivation to both Zappos and its employees

For companies like Zappos, the employees form the core of the business activities. The entire business productivity is directly linked with the employee satisfaction. The relationship between the satisfaction level of employees and the customers are very much linked together. Lower employee attrition significantly boosts the productivity and brand image in the market. At the same time, lower attrition helps the company in saving a lot of money by not spending heavily in recruitment and selection. As a result of which the overall practice will result in a win-win situation for employer and the employees (Latham, 2004).


a) Explain the behaviours and dynamics of groups, including the factors that may inhibit effective group formation and teamwork

Zappos may have changed the organisational structure, but certain employee related factors will be intact. The company will have a number of groups in the organisational workforce. The group formation needs time to be created. People who are recruited from outside go through induction phase, and the uncertainty among various type of personalities is present. Then the persons with different personal characteristics go through intra group conflict stage. With the passage of time, the tendency to mingle with each other comes in the work force. The retail company is known for giving equal opportunity to everyone in terms of recruitment and employee development. The variety in educational qualification, age, cultural belonging, ethnicity, and work experience will always be present in the work force employed by Zappos. Various departments in the company provide the scope for formal groups. For example, the employees who are given the task to help the customers on the shop floor are the salesmen or saleswomen. All the salesmen and saleswomen form a group, and the interaction is mandatory. On top of that, employees tend to interact with people from other departments. The social contact is obvious in a group of human being, which gives the scope for informal groups in the company’s employee force. For example, the employees in the administrative department (which will be Administrative circle in Halocracy) may have an informal connection with the people from human resources circle.

Apart from primary employee groups, there are also other natural groups present in organisations. The interaction scope among the employees will be provided by the company, which will attract similar minded people together. There are also friendship groups and interest groups present in the company’s work force. The transparent Holacracy will result in providing everyone a chance to put forward their opinions. The freedom of choosing a department will help in giving the employee the power to choose his desired group. Any circle from the proposed 400 circle can be selected by the employee. The ample freedom will result in fair and buzzing workplace (Lovelock, 1995; Mullins, 2007).

b) Discuss the strategies that Zappos can use to develop and promote effective teamwork. Examine the impact of technology on teamwork

The employees get attracted to the groups naturally, which helps them in achieving their personal goal as well the company gets its overall goal accomplished. If the company has a group of well organised employee force, who are working together harmoniously then the tasks will be smooth ride for everyone, and company will flourish. The most important factor that binds the employee force together is role of communication.

The employees and their respective teams must be communicated properly about the future plans developed by the deciding authorities, and everybody will feel involved in the decision making process. In most of the cases, the employees interact with the customers, and in some they need help of technology to get in touch with the customers. The usage of technology between the team is also very helpful in breaking the boundaries of communication. Usage of information technology in other areas of business will help in redundancy of human labour requirement. The redundant work force can be utilized in a better way, by engaging them at a different place of operation. The management can have a better control over the tem functioning and productivity, by being able to have access to scattered information at one place. Communication related electronic gadgets can help in creating a smoother operation. Usage of tablets and smart phones for employees will help in reducing the boundary of communication and build a closely knitted work group (Lovelock, 1995; Mullins, 2007).


Blanchard, K. H., Zigarmi, P., Zigarmi, D., & Blanchard, K. 1985. Leadership and the one minute manager: Increasing effectiveness through situational leadership. New York: Morrow. Buchanan, D. A., & Huczynski, A. 2004. Organizational behaviour: an introductory text (p. 28). Harlow: Prentice Hall. Child, J. 1972. Organization structure and strategies of control: A replication of the Aston study. Administrative Science Quarterly, 163-177. Cosh, A., Fu, X., & Hughes, A. 2012. Organisation structure and innovation performance in different environments. Small Business Economics39(2), 301-317.

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