Authors:

Tinatin Bakashvili
Gigi Nikoleishvili
Mariam Ujmajuridze
Lali Chugoshvili

More Than Shoes- Caucasus School of Business

Organizational Behavior
Zappos 12/22/2020
Table of Contents
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................2
Individual Mechanisms................................................................................................................................3
Job Satisfaction........................................................................................................................................3
Stress.......................................................................................................................................................4
Motivation...............................................................................................................................................6
Importance of motivation at Zappos...................................................................................................7
Trust, Justice & ethics..............................................................................................................................8
Justice..................................................................................................................................................9
Ethics...................................................................................................................................................9
Learning & decision making...................................................................................................................10
How does Zappos use learning and decision-making?.......................................................................11
Organizational Mechanisms......................................................................................................................12
Organizational Culture...........................................................................................................................12
Organizational culture at Zappos.......................................................................................................12
Summary...................................................................................................................................................14
References.................................................................................................................................................15

Figure 1........................................................................................................................................................5
Figure 2........................................................................................................................................................5

Picture 1- Amanda R. about pet adoption...................................................................................................6

1
Executive Summary

In the ongoing course “Organizational Behavior” we, as students of Caucasus University,

School of Business, have been introduced to various management concepts and theories such
as job satisfaction, stress, motivation and etc. These individual mechanisms with the impact
of other factors result in two primary outcomes- job performance and organizational
commitment. Undoubtedly the link between all abovementioned is crucial to an
organization’s development, goal accomplishment and management effectiveness. When we
take the performance of a business into consideration, it cannot be discussed in isolation
from its employees because they are arguably the biggest assets the company owns. It is often
said that employees bring their own backgrounds to the workplace, where they must learn
how to maximize their job performance and to ensure that they should stay within the
organization for a long time. Realizing the fact that organizational behavior really matters in
today’s dynamic business environment, we decided to elaborate the selected topic
comprehensively and to formulate it for one of the successful organizations- Zappos. Zappos,
indeed, is the company where its corporate effectiveness is based on two individual
outcomes- high job performance and high organizational commitment. While the
individuals and groups bring here their own skills, knowledge, values and attitudes, Zappos,
on the other hand, restructures the individuals and groups through its structure, culture and
the roles expected to be played by the people within the organization.

Introduction

An organization is not simply a building or a piece of machinery. Organizations are, indeed,

people, groups and a system as a whole that interacts to accomplish shared objectives,
therefore the study of organizational behavior (OB) helps managers and leaders understand
human behavior in order to meet the organizations overall goal. Having discussed all of the
individual mechanisms in relations to individual outcomes, we have consolidated our
positions that it would be interesting for the audience to represent the topic on the example
of Zappos in practical terms. Zappos which purpose is simple: to live and deliver WOW,
began as a small online shoe retailer 20 years ago. But nowadays with its unique management
approaches and insights, the small retailer turned into the giant customer service company
providing the world with best selection of brands, styles, colors, sizes, and even widths of
shoes. Just like every person has their own personality, Zappos has its own characteristics
and what makes this organization distinct from others is that its culture is based on its

2
employees from all levels and the firm has ability to manage OB and to keep its workforce
happy, motivated and committed.

Individual Mechanisms
Job Satisfaction
B

efore we start discussing how Zappos creates job satisfaction to its employees, we would like to
define, what job satisfaction itself is.
Job satisfaction is one of the several individual mechanisms that directly affects job performance and
organizational commitment. If employees are very satisfied with their jobs and experience positive
emotions while working, they may perform their jobs better and choose to remain with the
company for a longer period of time.

What are the main values for employees that create their job satisfaction at Zappos? Below is the list
of factors:

 For new employees the CEO, Tony Hsieh, hosts company pajama parties and obsessively blogs
about a variety of subjects, from how Twitter can make you a happier person to whether mashed
potatoes smell good. By this way, he starts building supervisory satisfaction.
 The company hires a full-time life coach. Employees can talk about personal issues, chat off-the-
record about their workgroup, or get advice on advancing at the company.
 The company also lives up to the “fun” part of its core value by taking steps to keep employees
satisfied with their jobs. Everybody gets a free lunch and access to a nap room and concierge
service.
 Zappos covers 100% of employees’ health insurance premiums.
 Employees can even give another employee a $50 bonus for a job well done.

Zappos also believes that satisfied employees will ultimately result in satisfied customers. The
company finished seventh in BusinessWeek’s annual ranking of customer service quality with
around 70 percent of surveyed customers reporting they would “definitely recommend” Zappos to
others.
One likely reason for these high marks is that Zappos doesn’t outsource its call center duties.
Employees understand that their job is to delight customers, and they’re encouraged to use their
imaginations—rather than some predetermined script—during calls. Zappos employees even have

3
been known to send handwritten notes or flowers in cases in which customers complained about a
tough workday. Such gestures build satisfaction with work itself to its employess and make
customers satisfied too.

Stress

Nowadays problems caused by stress have become a major concern to both employers and
employees. What is stress and why is it important in relations to job performance and
organizational commitment?
Stress is defined as a physical and physiological effect on an individual in response to
demands that possess certain stakes and that exceed a person’s abilities or resources. Zappos is
the company where work environment is designed in a way that stress is reduced. Firstly, at
Zappos hindrance stressors such as role conflicts and role ambiguity are on the minimal
levels. For example, to decrease role conflict, instead of dealing with customer problems, call
center employees were empowered to help customers find deals on shoes. Employees
therefore win big time and so do customers. For minimal role ambiguity, HR department
provides new recruiters with a series of training. New recruiters have adequate information
and know exactly what should be done under their roles. As Zappos is a customer service
company, employees here face daily hassles such as getting a lot of emails.  On average, they
receives at least 379 emails a day. To handle that volume, the CEO developed a technique
called “Yesterbox” to efficiently manage the inflow and time pressure for the staff. To use

“Yesterbox” effectively, the goal is to clear your emails and eventually get to inbox zero.

Zappos very well realizes that time pressure creates a stressful environment to employees,
therefore there is flexible work schedules. It offers flexible work opportunities, alternative
schedule options and seasonal or temporary employment. Zappos workers are able to use 10
percent or four hours of their 40-hour work schedule any way they like without needing a
manager’s permission. The advantage of such flexible work schedule system would let
workers accommodate things going on in their personal lives. Below is shown the statistical
information toward this topic.

4
Are you s ati sfi ed with your wor k /lif e balance?
Satisifed Not satisfied

80%

60%

40%

20%

0%

Figure 1

On aver age, how many hour s do you wor k a

day?
7 or less 8 10 12 ore than 12

Category 1

0% 10% 20% 30% 40% 50% 60%

Figure 2

5
Non-work challenge stressors such as positive life events-marriage, pregnancy also have an
effect on employees. For example, Peter one of the employees of Zappos in the interview
remarks that he took two weeks off when his daughter Evie was born in March. The Paid
Parental Leave benefit enabled him to assist his wife, Candace, and bond with their baby.
When Candace returned to work, Peter utilized his remaining four weeks so that his
daughter wouldn’t need daycare until she was 5 months old.

For Zappos stress management is important therefore the company often conducts
assessments such as stress audits. Managers and supervisors periodically ask questions to
employees what they think about their job and if there is any kind of stressors they try to
eliminate it. One of the ways for elimination is to offer employee sabbaticals- an opportunity
to engage in alternative activities even for non-profit organizations. For example, 172
employees have adopted a pet from local shelters under the companywide program.

Picture 1- Amanda R. about pet adoption

Moreover Zappos began

campaign for its employees-
Destination Wellness began in
2017 where Zapponians can
participate in activities
involving the mind, body and
soul. There are three challenges
a day, including money-saving,
mental fitness and physical
fitness exercises. There are also
many relaxation areas for a
short nap.

Motivation

6
A general definition of motivation is the psychological force that generates complex
processes of goal-directed thoughts and behaviors. A motivated individual will have greater
job satisfaction, heightened performance and a willingness to succeed.

Motivation has a strong positive effect on Job Performance. People who experience higher
levels of motivation tend to have higher levels of Task Performance. Those effects are
strongest for self-efficacy/competence, followed by goal difficulty, the valence-
instrumentality-expectancy combination, and equity.

Motivation also increases employees' organizational commitment. People who experience

higher levels of equity tend to feel higher levels of Affective Commitment and higher levels
of Normative Commitment. Employees who feel a sense of equity on the job are more likely
to engage in citizenship behaviors, particularly when those behaviors aid the organization.
The same employees are less likely to engage in counterproductive behaviors, because such
behaviors often serve as a retaliation against perceived inequities.

  Importance of motivation at Zappos

Z
appos is a good example of how motivation can increase these two variables.
CEO Tony Hsieh’s secret to keeping employees motivated is making them
happy. This is done by making employees feel nurtured, installing trust in them
and creating incentive plans.

Zappos prides itself in providing different services to better the quality of life of Zappos
employees. First off, Zappos requires weeks of training when they are initially hired. Then
employees are required to attend specific classes to constantly be growing. They also have
reading expectations to learn more about subjects that Hsieh believes are important for all of
his employees to know. Employees also have access to an on-site life coach that they can use
for personal or career goals.

Zappos has an employee Grant-a-Wish program, Coworker Bonus program, Zollars and more
to keep the employees motivated. Grant-a-Wish program allows its employees to submit and
grant wishes and is a great way to build a team and family spirit in the company (e.g.
learning how to play guitar, ride a motorcycle, etc.). In addition to employees granting
wishes, Zappos as a company grants wishes. One of the most inspiring wishes granted was for

7
an employee, who wanted to become an American citizen, but was unable to afford the
citizenship program, the company granted his wish and he went on to become a US citizen. 

At Zappos they offer a coworker bonus program that allows employees to award an extra $50
to a coworker each month for really WOWing their socks off (e.g. if one coworker helped
another one getting her work done, etc.).

Employees give each other “Zollars” to reward everything from performance to holding a
door open for someone. This Monopoly-esque money can be redeemed in its Zollar Store, a
place filled with swag, raffles, and the newest tech toys. Not only does this allow employees
to reward one another, but it provides one more incentive for your coworkers to do their
best. They never know who may be watching and ready to reward them with some
“company cash.”

As a great way to build relationships across the company Zappos allows employees to
“shadow” an employee for a few hours to gain an understanding of what they do on a day-to-
day basis. Not only does this allow employees to learn the ins and outs of the company, but it
also builds working relationships with people in other departments.

Zappos prides itself in promoting and hiring within the company as well. One way the
company encourages growth and learning is through its apprenticeship program. Employees
can apply to become a Z’apprentice even in an area where they may not have previous
experience/skills. It allows the employee to check out a new career path and a hiring
manager to see if the employee has the right potential to fit the role and team. If they are not
the right fit for the position, they are able to return to their previous position and
department. Company wants the focus to be on employee happiness and not just income. Of
course it pays its employees but the other perks are what really makes the day-to-day feel
less like something that they have to do but something they want to do.

To sum up these motivational practices at Zappos increase employees' task performance and
create a friendly environment, where employees are more likely to engage in citizenship
behaviors. Moreover, employees become attached to the company, their affective
commitment increases and they realize that they will not find another place like Zappos, so
their continuance commitment raises as well.

Trust, Justice & ethics

8
Reputation is an intangible asset that can take a long time to build and surprisingly small
things can easily ruin it. For Zappos, for the customer service oriented company, reputation
is critical because while in a face-to-face interaction, it comes down to listening, in the
online world, the landscape changes a bit. Zappos very well realizes that reputation depends

on many things and one of the most important factors is trust. Trust at Zappos begins on
the organization levels at first. Employees here truly feel trusted and safe, because they
understand that it’s okay to fail. Leaders often remark that, it’s important to show that good
results come from failure.

Trust from customers at Zappos is based on cognitive-based trust which means customers
rely on this company because of their positive past experience and knowledge. From offering
free shipping to even offering to replace a pair of shoes at no cost to the customers, Zappos
trusts its customer service reps to make good decisions. It has also calculated the lifetime
value of a customer and determined that keeping them trusted for years far exceeds the cost
of some shipping or a free pair of shoes. The way Zappos has anchored trust is achievable by
any sized businesses.

All of these abovementioned increases the affect based trust as well among customers. They
have positive attitudes toward Zappos and willingness to buy products because they are
deemed as trustworthy.

Justice

At Zappos justice and its rules play an important role. Employees have a strong sense that
they are treated fairly by their authorities. Moreover here are the examples of procedural
justice rules where employees have the chances to freely express their own ideas and take
part in decision making processes. For example, if most companies are not willing to offer the
freedom, employees at Zappos can come up with ideas any time and they are fostered to
creative thinking. Zappos wants crazy, fun ideas, so the company provides a safe space for
employees to share and explore their creativity even though sometimes the best, most
creative ideas sound stupid at first.  

Ethics

Ethics really matters at Zappos. An example from the past very well depicts why ethics and
integrity is critical for an organization Zappos is. By providing and encouraging complete

9
transparency and trust to their employees and customers, the company gain more trust. In
2008 Zappos had to lay off 8% of their employees due to expense cuts. Employees were sent
an email explaining the situation in detail and those that were let go from the company
received generous severance packages. The layoffs were also discussed on social media but in
the end because of the company’s honesty the employees and customers were more
understanding of the situation.

The concepts of integrity, honesty and commitment is very well illustrated below as an
example of Code of Business Conduct and Ethics (the “Code of Conduct”) at Zappos. Those
are:

1. Deliver WOW Through Service

2. Embrace and Drive Change
3. Create Fun and A Little Weirdness
4. Be Adventurous, Creative, and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships With Communication
7. Build a Positive Team and Family Spirit
8. Do More With Less
9. Be Passionate and Determined
10. Be Humble

Learning & decision making

Decision making refers to the process of generating and choosing from a set of alternatives to
solve a problem. The more knowledge and skills employees possess, the more likely they are
to make accurate and sound decisions.

In complex social environments such as workplace organizations, decision-making has been

considered an important factor (along with commitment, work engagement, etc.)

10
contributing to organizational efficiency and workplace satisfaction. We know that learning
has a moderate positive effect on Performance. Employees who gain more knowledge and
skill tend to have higher levels of Task Performance.

Learning also has a weak positive effect on Commitment. Employees who gain more
knowledge and skill tend to have slightly higher levels of Affective Commitment.

How does Zappos use learning and decision-making?

At Zappos, everybody is given the keys to drive the company forward.

In most companies, new ideas have to be approved by a manager or a chain of managers. As a

company that uses a self-managed organizational structure, Zappos encourages Zapponians to
identify areas of opportunity within the organization and propose solutions. At its core, self-
management means knowing exactly what you are responsible for and having the freedom to
meet those expectations however you think is best.

Since adopting Holacracy in 2014, Zappos evolved how they use self-organization to find
ways to layer their culture, core values, and focus of people into the system in a way that
works for them. 
Over the years, Zappos has taken strides to eliminate the common fates that most companies
of our age and size contend with: slowing innovation and evolution, too many management
levels, bottle-necked decision making, and disengaged employees.

In March 2017, they began adapting our internal systems to more closely resemble real-
world markets, benefitting the efficiency and productivity of employees and company. By
decentralizing organization, teams are empowered to work quickly and in the best interest of
their customer.

In short, Zappos wants to create a system that enables every team to not only think like a
small, autonomous business but also to act like one. While they have built a good foundation,
this is yet another stepping stone in the journey for ultimate self-organization and long-term
sustainability.

11
Organizational Mechanisms
Organizational Culture

O rganizational culture is defined as the underlying beliefs, assumptions, values and

ways of interacting that contribute to the unique social and psychological
environment of an organization Studies show that organizational culture has a
direct impact on performance and, more importantly, employees’ wellbeing. A healthy
culture addresses both of these areas by finding an appropriate balance based on company
values.
Organizational cultures can have varying impacts on employee performance and motivation
levels.
Commitment of workers is important to increase employees’ accomplishment. When
employees feel they are part of the organization, such identification immediately contributes
to fostering a high level of commitment and innovation. Therefore, organizational culture is
expected to enhance commitment of employees. Person-organization fit has a weak positive
effect on Performance. Employees who fit with their organization tend to have slightly
higher levels of Task Performance, with effects on Citizenship Behavior slightly stronger.
Person-organization fit has a strong positive effect on Commitment as well. Employees who
fit with their organization tend to have higher levels of Affective Commitment. 

Organizational culture at Zappos

Zappos’ organizational culture is a broad term used to describe the psychology, attitudes,
experience, beliefs and values of its organization. Zappos’ organizational culture can be
theoretically mapped as the Work/Play hard culture, Brand Congruent culture, Constructive
culture.

Zappos organizational culture is made up by:

 Stories: The past events and customer satisfaction stories mentioned both in and out
the company. Zappos places immense value on these and portrays this as examples of
target behavior.
 Rituals and Routines: Zappos has outlined expected behavior in given situations and
lets staff know what is valued by the management.
 Symbols: Zappos uses whacky visuals, funny logos, and humorous pictures to
represent its culture visually.

12
  Organizational Structure: Zappos tries to retain a highly informative and fun filled
organizational structure and attempts to indicate what contributions are most valued.
 Control Systems: Zappos has controls to monitor the way the organization functions.
These include financial systems, quality systems and rewards.
 Power Structures: Zappos tries to instill a varied power structure where each staff
member has some amount of influence on decisions, operations and strategic
direction.

The company defined its corporate culture with its ten core values. The HR and management
systems developed, employee job descriptions, the hiring process, on-the-job training, and
the day-to-day work environment remind and reinforce these values with employees,
visitors, customers, and partners:

In order to maintain the organizational culture Zappos also pays attention to the person–
organization fit, this is why the company hires employees for the specific qualities—
weirdness, humor, humility, and even luck. The job interview includes a technical
assessment and personality/fit questions as well as funny quizzes or even crossword puzzles
that focused on Zappos’ business.

Zappos is interested in how potential employees see themselves. One of the interview
questions there is a question: “On a scale of one to ten, how lucky are you?” According to a
study, people who report themselves as being lucky are more likely to pick up on clues to
help solve a task they are given, even outperforming a group of people who perceive
themselves as unlucky. Zappos’ goal is to “hire the lucky people that bring more good luck to
Zappos.” Cultural fit is so important, that it supersedes talent: “We have passed on a lot of
smart and talented people that we know can make an immediate impact on our top or
bottom line, but if they are not a culture fit we won't hire them.”- says the CEO Tony Hsieh. 

Once new employees are hired, they need to be socialized in order to adapt to the
organization’s culture. Zappos does this by training and creating emotional connections. 

Every employee starts with Customer Loyalty Team (CLT) training, regardless of the
employee’s future role. New hires learn about the kinds of things CLT members do to
“WOW” or surprise customers with fantastic service. The new hires even spent two weeks
taking phone calls from customers. Once new hire training ends, Zappos employees have the
opportunity to continue to learn. The company offers courses on communication, finance,
and time management.

13
Zappos organizational culture is ultimately what makes it more than a company and creates a
place that feels like home for the employees. As a result, employees are more likely to
perform better at their job and become more committed to the company.

Summary

To sum up, organizational behavior directly influence organizational performance. Moreover

it is interested in an individual’s unique behavior, because human behavior is critical to
performance and corporate effectiveness. Zappos is a very good example of how an
organization could be successful in terms of using all above mentioned managerial
perspectives, also it very well realizes that in order to have high individual outcomes- either
high job performance or high organizational commitment, individual and organizational
mechanisms are critical. While working on this topic our attention was drawn mostly to
practical terms that Zappos use and because of these rational approaches, a small shoes
retailer managed to turn into a giant organization- into a dynamic system. Undoubtedly
Zappos is the place where every individual wish to work, contribute to and to remain a
member of it for a long period of time. The reason for this is simple- employees embrace
diversity and each person’s individuality. They strongly believe that right culture delivers
great customer service and builds a long-term enduring brand. And everything starts from
bottom- employees identify company’s core values at first, onboard team members by them,
and then they truly live by the values; That is how Zappos and its business is operating on a
long-term path.

References

14
(n.d.). Retrieved from • https://www.nataliecook.com/blog/how-does-job-motivation-affect-
performance#:~:text=Motivation%20is%20important%20to%20a,team%20and%20the
%20overall%20organisation

(n.d.). Retrieved from • https://www.linkedin.com/pulse/impact-employee-motivation-performance-

productivity-anar-nesibov/

(n.d.). Retrieved from • https://nursinganswers.net/essays/literature-review-of-relationship-between-

motivation-and-performance-nursing-essay.php#:~:text=Motivation%20is%20expected%20to
%20have,motivation%20might%20affect%20employees%20negatively.

(n.d.). Retrieved from • https://www.businessballs.com/organisational-culture/organisational-culture-

and-employee-performance/

[Robert Lussier, C. A. (n.d.). Leadership.

(2010, July 27). Retrieved from • “On Leadership: Zappos.com CEO Tony Hsieh on Who He Won’t Hire,”
(On Leadership interview with Tom Heath), The Washington Post,
http://views.washingtonpost.com/leadership/panelists/2010/07/tony-hsiehtranscript.html

COLQUITT, J. A. (n.d.). Organizational Behavior. Mc Graw Hill.

(n.d.). https://gradesfixer.com/free-essay-examples/leadership-skills-and-qualities-of-bill-gates/.

Maria P. Aristigueta, A. N. (1998). Organizational Behavior.

(n.d.). the-corporate-zappos-culture-in-business-commerce-essay. Retrieved from •

https://www.ukessays.com/essays/commerce/the-corporate-zappos-culture-in-business-
commerce-essay.php

Yellowley, P. E. (2012). Organizational Behavior.

15