Tony Hsieh at Zappos: Structure, Culture, and Change


Zappos is commonly known as an online market for clothing, shoes, boots, dresses and athletic shoes. It was started in 1999 and has been under the leadership of Tony Hsieh as the CEO and a number of people among them Swinmurn and Hsieh. The profit was little and therefore more effort was needed to ensure company prosperity (Menipaz & Menipaz, 2011).

Would you want to work at a place like Zappos before the transition to Holacracy? How about after? Why/why not?

According to Menipaz and Menipaz (2011), opulence is obtained if holacracy exists in most of the companies and institutions. Upon emergence of Zappos, working together was unrecognized. Therefore, every employee worked as instructed by seniors to ensure high sales and good delivery of products. Tony Hsieh wanted to change the employee-to-employee relationship as well as employee to client relationship to ensure higher profits. Hsieh approved self-management rather than hierarchy management. In addition, he believed that self-management would increase transparency, obligations and organizational agility resulting to higher chances of maximizing profits. As a result, every employee was free to make decisions and the authority were employee based (Hanson, Kenney & Rourke, 2012).

Working in a place like Zappos before transitioning from hierarchy management to self-management seems to impose more pressure on the employee. Therefore, poor services are rendered to the customer. Online services involve both the client and the seller if an agreement is made (Hanson et al., 2012). The seller is therefore free to deliver the goods and services. By contrast, if the employee must consult the manager or the seniors to inquire whether that is right, it wastes time and the client may fail to continue following up with the conversation because of the delay. The scenario makes the employee give up and exit the labor force (Hanson et al., 2012). Simultaneously, if after embracing holacracy by the company, working with Zappos would be quite easy since every employee is permitted to make decisions, which are favorable to the company. In doing so, the employees feel free and are willing to work together for the prosperity of the company at large.

Why do you think Tony Hsieh is making this change? Why is he doing it now?

Checking the company progress proves that Hsieh is determined to maximize the profits. He says that free interaction with the client is pivotal since it attracts more customers. The office bureaucracy disassembles the employees rather than keeping them together for quality work.  Some years back, Zappos was comfortable with its position after making $1.2 billion to the Amazon. The undertaking put the company in a static state (Pelletier & Mujtaba, 2015). The firm hired employees from the nearest college to distribute goods to the customers. In 2012, Hsieh had a conversation with Brian Robertson. That is where he got the idea of holacracy. He started campaigning for change in their company. According to wall street journal, it is clear that the environment of Zappos was playful and this had to be transformed into a serious business (Pelletier & Mujtaba, 2015). It was arduous for Hsieh to make all the decisions and follow every employee in the company. The scenario triggered his mind to transform the structure and culture of the company where authority was handed over to the employees (Pelletier & Mujtaba, 2015). Upon implementation of the undertaking, Hsieh had to send a memo to every employee informing them of the same. Not all the employees were conversant with his decision. Therefore, they exited the job. Ironically, the Holarctic management was supposed to eliminate bureaucracy but it followed that employees continued to attend formal meetings with a procedural formality (Gerrick, 2015). Although many problems emerged, this was done for the betterment of the company.

What do you make of the fact that 14% of the employees took Hsieh up on his offer?

In the Hsieh memo, it was clear to every worker that he was advocating for the change of the company structure. The undertaking was painful and slow since workers were not ready to embrace the change (Gerrick, 2015). According to the research done, an employee who has worked with Zappos for the last ten years told the “Times” that only 14% of the employees responded to the move. Most of the employees gave up on Zappos and ceaseless meetings, which were part of holacracy acquaintance (Menipaz & Menipaz, 2011). Later on, Hsieh was convinced by the Zipponians who worked in outsourcing information in technology infrastructure in Amazon to adjust the deadline to 4th January 2016. Ultimately, Hsieh agreed and upon the deadline in January 2016. The employees who were acquainted were about 18%. The scenario indicated that quite a large number hesitated to change and therefore took the severance package. On a recent trip made by the Hsieh to the Zappos headquarters in Las Vegas, he was interviewed regarding his decisions. He said that it is the right decision since he wanted to ensure that the employees are not there just for a paycheck but believe that it is the right place for the workers. He added and said that he has gone through transition for a number of times to make the company a giant (Menipaz & Menipaz, 2011). For instance, in 2004 he offered new employment for $2000 to exit after undergoing the training practices if the staff decided that the company is too harsh or if it is not the right place.

What do you think this process feels like as an employee?

Before isomerization, every worker was used to their norms and way of doing things. Imposition of new rules to the company was not in employees favor. According to Pelletier and Mujtaba (2015), the company transition was painful. Employees were unprepared for any change enacted. Initially, the staff used to follow traditional management. Therefore, everything was done following the orders from their seniors. Courtesy of the holacracy management, it implied that every employee must be responsible and active in the office (Menipaz & Menipaz, 2011). Everybody’s decision is considered and every employee is responsible for his or her actions in the office. Only 18% employee accepted the transition. The scenario showed that most of the workers were not pleased and therefore the opted to quit the work. As a result, the company suffered a shortage of employee. More employees were therefore needed in the company (Menipaz & Menipaz, 2011). Although the transition did not favor employees, the company flourished to higher levels and the profits augmented.

How would you assess Tony Hsieh as a leader? As a boss?

Hsieh is a good example of a leader or a boss (Menipaz & Menipaz, 2011). Despite the high turnover of the employees, Hsieh is unmindful as long as there was a number of employees who embraced the change. He is determined on improving the company’s condition rather than focusing on individual interests such as just getting a paycheck (Robertson, 2015). Some of the employees who worked for money stepped down since the workers could not persevere the changes in the company. Hsieh focused and worked closely with the 18% of the employees and showed the staff importance of being proud of the company they are working with (Menipaz & Menipaz, 2011). According to the research, after Hsieh was interviewed, he boldly answered the questions relating to the reasons why he decided to implement self-management mechanism. Hsieh outlined that the clients’ need to be convinced to purchase their shoes and clothes online (Pelletier & Mujtaba, 2015). Also, he said that it is prudent if the customer can communicate to the employer through a phone call for clarity of the available goods.

What, if anything, should Tony do now?

Tony is a CEO of a big company, which is not in its comfort level (Pelletier & Mujtaba, 2015). Zappos is still developing and more profit is needed. Zappos was developing at a slower rate and the shareholders were forced to sell their property. For example, swinmurn sold his property to invest in Zappos when the profit was low and wanted the firm to progress (Hanson et al., 2012). As a result, Hsieh looked for an initiative, which helped the organization to maximize profit. Currently, the company is doing well though it needs more workers to enhance quality of services to the clients. The firm should hire more workers to mitigate the employee’s workload. The undertaking would enable the company rise to higher levels. Also, Zappos will be of great help to the society since it offers goods, as well as employment thereby eradicating poverty.

Conclusively, Tony Hsieh has played a tremendous role in transforming Zappos to a better level. Self-management is imperative and surpasses traditional management since the element encourages Zappo’s rapid growth.


Robertson, B. J. (2015). Holacracy: The new management system for a rapidly changing world.

Hanson, A., Kenney, K., & O’Rourke, J. S. (2012)., Inc.: The Zappos Data Crisis. doi:10.4135/9781526403049

Menipaz, E., & Menipaz, A. (2011). Zappos – “Powered by Service”. doi:10.4135/9781473928060

Pelletier, R. A., & Mujtaba, B. G. (2015). Maximizing Employee Happiness and Well-being: An Examination of Value Creation and Competitive Advantage at Zappos. Advances in Social Sciences Research Journal, 2(4). doi:10.14738/assrj.24.1164

Qa-zappos-and-holacracy. (n.d.). SAGE Business Researcher. doi:10.1177/2374556814565102

Gerrick, H., (2015). Zappos: “Your Culture is Your Brand”. Branded!, 77-95. doi:10.1002/981119200567.ch5

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