This is solution of HND business organizations behaviour assignment, discussed approach of the zaapos.com.
(a) Discuss the advantages and disadvantages to Zappos
(i) if they maintain a traditional hierarchical structure, and
(ii) if they adopt a flatter structure.
- Zappos used to follow a hierarchical organizational structure earlier, which was characterized by more top to bottom layers with senior members also known as the bosses sitting at the top while the major workforce sits at the bottom layer. The main advantage of this kind of approach is that the top layer consists of highly skilled and senior members who are experts in taking instant decisions related to decision making about the company. Therefore, the main advantage which the company would have got if they had continued with the old traditional way of hierarchical structure, the company would have been quick in their decision making.
However, hierarchical structure is not suited especially in today’s time. There are some of the disadvantages associated with hierarchical structure because of which most companies including Zappos are undergoing a change in their approach. Some of the disadvantages are:
- Lack of motivation among employee: According to the Hertzberg Dual factor theory, it is important that employees are given more responsibilities and recognition to motivate them. However, in case of hierarchical structure, the power and responsibilities were given only to handful of people while major workforce was expected to work as per the goals and direction of their managers.
- Flexibility and innovative ideas: Hierarchical structure leads to stagnancy in the way the people think as it comprises of few people who thinks in the same way and thus cannot provide innovative ideas. With the involvement of more and diversified people, there is more scope to getting new ideas and implementing them, which might be better for company’s performance.
- Bureaucracy management style: These days’ people do not appreciate bureaucratic business management practices and autocratic leadership style. People wants equal recognition and want to share their opinions and suggestions.
Thus it can be seen that hierarchical structure suffered greatly and thus resulted in more flat organizational structure.
- The main advantage of a flatter organization is that it offers better communication; scope for new ideas, sharing responsibilities among employees, which help in the personal development of employee, which motivates him to work harder and eventually, is beneficial to the company. However, Zappos has gone one step ahead to have a super flat organizational structure, which is known as holacracy. Holacracy organizational structure means that the organization will be so flat there will be only one layer. In other words, there will be no bosses, no managers and titles (Dager, 2014). Every employee will be dealt on equal grounds. However, the major drawback of such an organization is mismanagement and lack of supervision. The idea of holacracy makes it difficult for new employees to start performing straight away and use the same forum of discussion used by senior and experience employees. New employee requires proper guidance and mentorship especially in the beginning, which is required for the initial development of any individual. Therefore, the company needs someone to holds higher authority and command over the employees.
(b) Explain how the new organizational structure and culture may impact on both employee and organizational performance.
It is often suggested by most of the researchers and analyst that the bigger the organization, the more level it should have to have a proper control over the proceedings. However, small companies like Zappos, which has around 1500 employees, it is better to have a flat structure and a work culture, which balances the structure. The culture of any company is known by the values followed inside the company, which makes it different from its competitors. Some of the values followed by the company are:
- To deliver excellent service to its customer.
- Brings change with the help of their work culture.
- Fun and creativity should be encouraged during work.
- Be open minded and adventurous in nature.
- Encourage communication and build good relationship among employees.
- Encourage working in teams and should consider the team as family.
- Be positive, focused and hard working.
- Be polite to not only customers but towards your colleagues (Fanning, Leadership and Corporate Culture).
Thus, it can be seen that the core values of the company, which are followed within the organization is such that it encourages having a flatter organizational structure. Both structure and culture of Zappos makes the employees feel more secure, interested, determined and committed to his or her work and yields greater results which boosts the performance of the company.
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Compare and contrast the leadership and management styles of Zappos with its parent company Amazon.
Though it has been seen that Amazon and Zappos are two companies, which share common interest, and thus it is said to be a match made in heaven by many people during the time of Zappos acquisition by Amazon. However the two companies differ at some places. The main difference between the objectives of the two companies is that Amazon looks to offer low prices, providing vast options to select from and to provide convenient service to its customers. However, Zappos tries to build their relation with their customer and are attached emotionally with their customer. The employees are very passionate about their customer service and therefore termed their service as WOW service, which is the one of the core values of the company (Kopelman, 2012).
The above difference in the culture of the two companies showed that there is a difference between the management styles of the two companies. The company also uses social networking sites to convey their messages publicly. On the other hand, Amazon likes to maintain secrecy, even with its employees. The same can be seen while the merger of the two companies. The CEO of Zappos, Tony Hsieh wanted to share the information of their merger with Amazon with its employees at an earlier stage. He even wanted to involve the employees to participate in the discussion regarding the same. However, he was not able to convey message because of the management practice in Amazon, which like to keep such decision secret and do not involve its employees to make decisions or participate in decision making for the company. Driven by the change, Tony Hsieh is encourages transformation in the company and hence Zappos follows transformational leadership style (Fanning, Leadership and Corporate Culture).
Thus, being a super flat organization following holacracy, Zappos completely follows a democratic leadership style also known as participative leadership style, which involves participation of each individual to take decision for the company. On the other hand, though Amazon also has much flatter organization, it still have more levels compared to Zappos and the decision still lies in the hands of the senior people. Democratic leadership thus can be classified into two categories based on the leadership style practiced in Zappos and Amazon:
- Persuasive democratic leadership style: Under this leadership style, the leaders or the senior members take the business decision and that persuades their employees and convinces them that the decision was taken for the betterment of the company. This style is followed in Amazon when everything is kept confidential and is disclosed just before making the news publicly.
- Consultative democratic leadership style: This leadership style is practiced in Zappos where the employees are consulted first and based on the opinions and suggestions, the company takes it decisions. A higher level of transparency is maintained while taking business decisions which make employees feel more secure and committed to their work.
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(a) Examine how Zappos leadership style may affect the motivation of their employees during the organizational re-structuring.
Zappos leadership style is based on Hertzberg Dual Factor theory. According to the theory, there are two factors namely hygiene factors and motivational factors. The hygiene factors however make sure that the employees are not demotivated because of the absence of these factors; while motivators are those whose presence brings motivation among the employee. Some of the key motivational factors are sharing decision-making power among employees, giving recognition and responsibilities, etc. (Boverie, 2013). Thus, motivational factors suit flatter type of organizational structure where employees can have more power to run the company and are not just passive members as it is the case in a hierarchical type of organization where employees are just expected to carry out their tasks. Zappos initially started with few layers in its structure and followed autocratic leadership style in the beginning, which was essential, as the power to take decisions should lie with more skilled employees. However, with passage of time, and with their main objective to provide better customer service, develop a good bonding, the company realized that the company needs to share the decision making power among its employees. The customer demands are huge and diverse, therefore it becomes difficult for any service based company to set up fixed and rigid rules and regulations on which the company employees should follow because meeting customer requirements may require doing unconventional things and out the box thinking which might not be in accordance with company’s rules. Therefore, to make sure that the employees can have the liberty of taking instant decisions based on the customer request, the company went to a much flatter organizational style and changed its leadership style from autocratic type to democratic leadership style.
Zappos has gone one step ahead while implementing its organizational structure. Holacracy organizational structure means there will be no titles; no owner, no manager and every employee will be the same. In this modern world, the approach may be useful as an employee now-a-days is not expected to carry out just one work, but is expected to do multi-tasking. Holacracy does not mean that there won’t be any leader. Based on the various roles assigned to people, the people will still have distributed powers with them; however, holacracy demands the employees to manage themselves. The company believes in delivering quality service and believes in hard work. Making the company leader free also helps in solving the problems of politics and blame game which is generally played when the employees does not aim for better results, but the goal of employees is to impress their managers and senior subordinates. With this leadership style, company will only have the best employees intact with them, delivering the best service to the customers, while the slow and weak performers can be picked up easily so that efforts can be made to help them develop and improve their skills.
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(b) Critically discuss the alternative approaches Zappos can use to motivate their staff.
Holacracy is something very new and is not followed in most of the organization. Since, the number of employees working inside Zappos is still less i.e. 1,500 employees, the company’s dynamic core values and vision can still be followed with this new organizational structure. Zappos follows agile methodology to motivate its employees in this agile environment (Medinilla, 2012). However, with an increase in the population of the company, the company will need to add job titles as the unique management style of Holacracy will not work with more number of employees. Though, at present moment, this type of organizational structure may sounds advantageous, but in the long run, the company will have to look for alternative ways to motivate its employees.
The company should follow McGregor’s theory of X and Y. According to the theory X, the employees are considered to be lazy and needs motivation from their superior and managers (McGregor, 1960). Thus, with increase in employee population, the company would need to implement some governing bodies which would make sure that work is carried out properly. Some important ways include the following:
- A proper management team should be hired which looks after the welfare of the employees and make sure that a proper work culture is provided, so that employee can work with full interest and are motivated to work hard.
- New employees should undergo proper training programs, which would help them to develop themselves and learn the core values about the company. They should also have a proper mentor who would set goals for the employees as guide them in the initial phase of their career.
- Performance system should be based on Vroom’s expectancy model according to which the performance of any employee is directly proportional to the effort put in by the employee, which ultimately yields better rewards. Better rewards motivate the employee to work harder in future (Nelson, 2012). Therefore, before the beginning of a financial year, targets should be set for each employee, whose performance should be calculated at the end of the year based on the targets. Better performers should be paid better rewards. The two most important benefits of such an evaluation system is that it is transparent and easy to understand and thus is acceptable among all the employees. Secondly, it will motivate the employees to work hard so as to increase their performance and thus the employees will be able to meet their targets which will eventually help the company in meeting its targets.
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(c) Evaluate the benefits of motivation to both Zappos and its employees.
Most of the companies aim to provide better work conditions to their employees. The companies have realized the importance of human resource management over personnel management and hence try their best to make sure that each and every employee is satisfied with their job. The companies spend a lot in hiring and recruitment processes and also in organizing various trainings related programs for the new employees. After making huge investment on its employees, the company likes to make full use of the resource who has developed his skills and has gain market knowledge and experience. Therefore, each company aims to make sure maximum employees are retained within the organization. One employee leaving the company means one vacancy or void created. The two ways to fill the place is to either look for experienced person or a new fresher. However the company in both the occasions has to spend a lot in order to teach the work culture and core values of their company. Thus, the companies tries their best to motivate their employees so that maximum employees can be retained and deliver quality service which will yield better results for the company.
Another reason, why motivation is important is because by performing redundant work, employees tend to become saturated and bored. The efficiency of employees is affected when an employee loses his or her interest from the work he or she is performing. Here, too motivation plays a vital role. The manager or the mentor should understand the importance of personal development of each employee. The management should introduce concept of job rotation or role rotations, or even start various training programs to offer new job skills to the employees. This helps the employees to learn other jobs and thus redundancy of work is avoided. Employee enjoys the work as each day he has something new to do and apply him, which increases the efficiency and performance of the employees.
(a) Explain the behaviours and dynamics of groups, including the factors that may inhibit effective group formation and teamwork.
Teamwork and groups are one of key aspect of human resource management. Companies understand the importance of working in teams. The teams inside an organization are of two types:
- Formal teams are formed by the management of the organization based on the skills, knowledge and experience of the employees which complement each other and helps for better functioning of the team.
- Informal teams are those which are formed by the employees themselves for personal motives like formation of unions inside the organization.
Teamwork is something which is always encouraged inside an organization. Some of the key benefits arising from teamwork are:
- New and innovative ideas: An individual has limitation to his or her thoughts and therefore, does not provide wide scope of new ideas, however when many people comes together and sit down for discussions, brainstorming and questionnaire during team meetings, it increases the chance of getting better and new ideas which might benefit the company greatly. Hence, teams are important.
- Maintain competition level: An individual performing a certain task will have no one to compete with and slowly it might decrease his or her performance. Teamwork on the other hand make sure that each individual working in a team is looking to outperform the rest of the team members,
- Synergy: It has been researched and found that the output of a team is more than the summation of output delivered by each team member when working individually. This means that working in a team certainly benefits the employees as well as company’s performance and therefore, the HR team should know how to form and manage a team.
Some of factors which promote teamwork and whose absence may result in improper functioning of teamwork are:
- An effective communication: Communication is the best way of building trust and improving relationship. Discussing not only professional knowledge but knowing each individual personally helps in generating an emotional bond among team members which helps in maintaining harmony among the team (Dionne, 2004).
- Mixing diversified people: One of the key points to promote teamwork is to build a team which contains diversified people with difference age group, gender, race, caste and culture. A mixture of people from all parts helps in giving new and innovative ideas to the team. However, any diversified population has more chances of creating conflicts if the team is not managed well.
- Leadership: Leader is one of prime factor to promote teamwork. Lack of leader in a team may result in conflicts, disharmony among team members and ultimately decreases the performance of the team. A leader should be able to define the common goals of the team and should be the key member to lead during team meetings. A leader should know how to bind the team and motivate them so that the team works together to deliver high quality product and services.
(b) Discuss the strategies that Zappos can use to develop and promote effective teamwork. Examine the impact of technology on teamwork.
Zappos should not completely follow their approach of holacracy as it will not have any higher authority to make sure that the company is performing well. Zappos has now been divided into circles based on different products sold by them. The company needs to appoint a manager or leader who knows each employee in the circle personally and interacts with the team on regular basis. The manager will be the one who will define the goals of each member in that circle as well as describe the common motive of the team, so that each member works together and harmony is maintained among the employees.
Making use of email functionality is the best way of asynchronous communication. This facility is highly used whenever to people who are working in shifts or are posted in two different locations. The task performed by one can be reported to other through email, so that the next person can carry on from where the first has left. The communication will take place without disturbing the personal space of both the individual.
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Thus, it can be seen that Zappos has quickly responded to their internal environment to match with the rapidly changing external environment to maintain their quality service for which it is known for years now. By applying the concept of Holacracy, the company has proved that they are determined to work hard and are completely task oriented company which does not distinguish its employees by giving them titles and thus communication is much easier and information can flow faster among the employees within the company and hence decision and actions can be taken much quickly. This might be helpful for the company’s success in the upcoming years.