Nick Swinmurn quitted his job to start Zappos in 1999 after he spends an entire day searching for shoes with no success. He identified a niche as a broker to link suppliers with customers through a website known as ShoeSite.com (Ferrell, Fraedrich, & Ferrell, 2017). Since the company started, it cultivated a culture of ethicalness, which significantly contributed to its growth and expansion. The two primary things that enable Zappos to maintain an ethical organizational culture are innovation and effective communication. Zappos fosters a family spirit and positive team by making almost all activities adventurous and fun for its employees. The company welcomes open-mindedness where workers are allowed to share their knowledge with a little weirdness. For example, Zappos has a donut eating competition that features employees only. Such activities promote togetherness, unity, and teamwork (Bakar, Hashim, Jayasingam, Omar, & Mustamil, 2018). Zappos culture enhances proper relationships among workers and employee engagement at every level. Other companies can learn two important things from Zappos, which are innovativeness and understanding the needs of workers. Due to Zappos transparency, the firm considers employees as the most significant resources. The organization offers extensive training to ensure that workers understand their roles well. Moreover, Zappos has an open communication where leaders communicate on social media about new changes that the company is planning to implement. The firm enhances innovation by involving employees at all stages of decision making and valuing their opinions. Furthermore, the conducive working environment provided by Zappos fosters creativity.
Zappos' ethical practices and effective leadership have significant impacts on the firm's stakeholders. Employees are among the stakeholders that the company values highly. They are allowed to share their problems and communicate freely. By doing so, the firm enhances a culture of togetherness and innovation, which has steered the firm in the right direction. When it comes to customers, Zappos prioritize their needs to improve satisfaction. In reality, the company welcomes any question from clients and even encourages them to call any time they experience a problem. That is the reason why Zappos put its contact information on every page of its website. Through extensive research, the management of the firm realized that the only way to handle customers is by dealing with their complaints. Therefore, clients are likely to buy more products from the company and attract other people. Zappos’s culture, ethicalness, and leadership practices enabled it to develop trust and loyalty with its stakeholders. Besides, when anything arises, Zappos does not hesitate to inform the public about it on social media regardless of whether it is a positive or negative thing. For example, when the company fired 124 workers in 2008, Tony Hsieh, the chief executive officer (CEO) of Zappos, announced his decision on Twitter. Zappos does not hide from public critics (Ferrell, Fraedrich, & Ferrell, 2017).
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The three primary ethical challenges that Zappos encounter include laying off employees, theft of clients’ information, and technical difficulties. Although the company values contributions from its employees, in 2008 it fired 8% of its workers, a decision that was made by its major investor, Sequoia Capital (Ferrell, Fraedrich, & Ferrell, 2017). During that time, Zappos faced an economic downturn that leads to poor cash flow. For this reason, the only thing the company would have done to promote the flow of money is by cutting its expenses. For Zappos to address this problem in the future, it needs to collect receivables and involve all stakeholders when making decisions. Moreover, the company can handle such a challenge by giving a detailed explanation. The other ethical issue occurred in 2011 when Zappos delayed customers’ orders after deleting their data. The problem made the company to ship products to wrong locations. However, Zappos solved this problem and assured its clients that such a thing would not happen again in the future. In addition, it provided different perks for customers depending on their experience. The third ethical challenge took place in 2012, when hackers obtained 24 million clients personal information. It included names, few credit card digits, shipping addresses, phone numbers, and email addresses. Zappos addressed the problem by first notifying customers by sending them an email and confirming to them that hackers were unable to get the details of their payment methods.
Zappos core values contribute to the development of the culture of ethicalness. For instance, to deliver WOW via services fosters stakeholder’s perspective where the customers are satisfied by the products from the company. For that reason, the firm generates more profit. In addition, embrace and drive change enables the firm to acquire good practices that promote a good relationship between the management and employees. Creating fun and a little weirdness bring workers together where they feel a sense of belongingness to the company. Being creative, open-minded, and adventurous cultivate innovativeness since employees are relaxed and share ideas to implement the most effective strategy (Enyinna, 2013). Moreover, pursuing career growth and development entitles workers to obtain relevant knowledge, which is why they serve customers well. At this juncture, it is evident that the two primary stakeholders, employees, and clients, are satisfied with their contributions to the firm. Specifically, customers get quality products and services, while employees have a conducive working environment. The other core value that supports stakeholder’s perspective is effective communication, which leads to honest and open relationships. On that note, employees become more passionate and are determined to achieve greater things. They work as a team and have a family spirit where they help one another when a problem arises. Overall, Zappos primary values fosters the stakeholder’s perspectives.
One of the most significant ethical issue that Zappos encountered is the breach of twenty-four million customers’ information. In 2012, hackers penetrated the computer systems of the company where they obtained clients’ data, such as email, names, last few credit card digits, phone numbers, and billing and shipping addresses (Ferrell, Fraedrich, & Ferrell, 2017). The information breach was a big blow to the company since it revealed that Zappos was vulnerable to cyber-attacks. Nevertheless, the firm responded by informing its clients about the breach and affirming that cybercriminals did not get the full digits of their credit cards. Zappos’ issue deteriorated when it disconnected its call center since the experts perceived as if it was the one overloading the system. For this reason, many customers became angry since they did not reach the call center to confirm what the information that was spreading on social media. Zappos did not solve the hacking problem appropriately, and that is why some clients were unhappy. The company did a good job of informing its customers about the breach of personal information. Second, it should have opened a hotline number for clients to reach customer care after shutting down the call center. That way, people would have been happy since they would have perceived Zappos as their friend since it was available when needed (Kumar & Mukherjee, 2018). Lastly, the firm would have called cyber experts to know the damage caused by hackers and to close the loophole once and for all. Most importantly, it should keep its system up-to-date to prevent cases of the data breach.
References
Bakar, R., Hashim, R., Jayasingam, S., Omar, S., & Mustamil, N. (2018). Positivity and happiness in the workplace. A Meaningful Life at Work.
Enyinna, O. (2013). Is stakeholder theory really ethical? African Journal of Business Ethics , 7 (2), 79-86.
Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2017). Business ethics: Ethical decision making and cases (11th ed.). Stamford, CT: Cengage Learning.
Kumar, S. V., & Mukherjee, S. (2018). Holacracy – the future of organizing? The case of Zappos. Human Resource Management International Digest, 26 (7), 12-15.
