It has been said that Tony Hsieh, CEO of Zappo’s, runs arguably the most innovative start-up of this last decade. He co-founded the company in 1999, and since 2006, the company has been profitable.  This is due in large part to the fact that the company has invested in cutting edge technology to completely automate the ordering process – it takes only eight minutes for an order to be processed and shipped. What is more impressive, however, is Hseih’s focus on his employees’ happiness at work. He has developed (though not completely settled on) a Unified Happiness Theory that involves four basic human needs: perceived progress, perceived control, relatedness and connection to a larger vision. And who better to test his theory on than his employees? In fact, Hsieh’s focus on happiness means Zappo’s routinely scores high on the lists of the best places to work. In an article published in Inc. magazine a few years ago, the author says if you talk to employees about their work life at Zappo’s, any conversation about “core values can prompt emotional soliloquies and the CEO is held with a regard typically afforded to rock stars.”

So just how does Hsieh foster a positive company culture within Zappo’s?

  • Hseih asks every employee to write a short essay on the company’s culture, and without editing them, publishes them in a book that he then distributes to all the staff. The book is a living, growing thing – every year he asks old and new employees to contribute a new essay to the book, which forces the employees to think about the meaning of their work on a regular basis.
  • There is an in-house life coach designated just for the staff, to talk to whenever they may need it.
  • One the company’s values is personal growth, and so employees are encouraged to help themselves to any of the business and self-help books in the company’s library – Hsieh believes this encourages employees to grow with the company.
  • Prospective employees must pass an hour-long “culture interview,” where they are asked questions like “On a scale from 1-10, how weird are you?”
  • Managers are told to spend 10-20% of their time goofing off with the people they manage, and are encouraged to spend time together off-campus doing team-building exercises.
  • Call-center employees don’t work from a script and are encouraged to engage in light conversation with customers. They are to send out a dozen or so personal emails a day to develop what the company calls the PEC, or the Perceived Emotional Connection.

A consistent focus on core values lies at the center of creating and maintaining a positive work culture, and our research at Denison has shown there are a few ways to achieve this:

  • Identify your core values and live by them. Create a dialogue throughout the organization that will identify what you stand for and how it is linked to creating value for your customers. You will know you have succeeded when employees stop carrying their plastic laminated “Mission and values” cards around in their shirt pockets, and start carrying them around in their heads instead.
  • Actively work to create alignment of behavior and core values. Put the spotlight on activities that exemplify the core values. Tolerate honest mistakes that are keeping with the values, but do not tolerate actions that conflict with core values. You will know you have succeeded when employees can make the right decision on their own by simply comparing the demands of the situation with the key values of the organization.

According to Hsieh, Zappo’s culture allows it to do extraordinary things. He sums it up nicely when he says,

“if you get the culture right, then most of the other stuff follows”

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