July 17, 2015
Why Zappos thinks employee happiness ‘shouldn’t be about the dollar’
Through a special arrangement, what follows is an excerpt of an article from Retail Dive, an e-newsletter and website providing a 60-second bird’s eye view of the latest retail news and trends.
While it’s easy to think of raising wages as a blanket solution to solving workforce motivation and retention problems, employee engagement may be the best strategy to foster productive and happy workforces, says Christa Foley, head of corporate culture consultancy Zappos Insights.
"While I applaud those employers for bumping people above minimum wage … it shouldn’t be about the dollar," said Ms. Foley in an interview with Retail Dive.
Zappos Insights helps other companies create the same level of culture and employee engagement found in Zappos.
"[Zappos Insights’] goal is to not make clones of Zappos," Ms. Foley said. "What we want to impress upon these companies is that you can be a successful business and pay attention to your people, and pay attention to culture."
Photo: Zappos Insights
Engaging the employee from the first day on the job is key, according to Ms. Foley. All new full-time employees at Zappos go through four weeks of onboarding. Half of the time is devoted to learning the company’s core values and what they look like while on the job. The other half is spent in the department that put Zappos on the map — its call center.
Once on-boarded, businesses should give associates the freedom to utilize their talents to get the job done.
"Don’t just throw people out on the floor and hope they get it right. Make sure you give some thought on how they are trained, then treat them like adults," said Ms. Foley, Zappos’ former HR head.
Zappos also has a team dedicated to employee engagement. Its mission is to "provide fun and engaging opportunities for employees that speak to their individual passions." The team builds programs that foster recognition and mentorship in the company, as well as team-building activities.
"If you [encourage employees to bring their full selves to work], you don’t have work-life balance — you just have life," Ms. Foley said. "People don’t feel like they’re cutting off a piece of themselves at the workforce. They’ll feel happier and engaged, they’ll feel appreciated because they won’t feel siloed into a certain box that they have to be in at work."
While Zappos compensates their employees for a job well done, "if your priority and focus is money, that’s probably not going to fall in line with our core culture."
Discussion Questions
Are raising wages the best chance larger stores have at creating more engaged employees? What hurdles may larger retailers face in creating the same level of culture and employee engagement as Zappos?
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Paula Rosenblum
Co-founder, RSR Research
Nikki Baird
VP of Strategy, Aptos
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These comparisons aren’t really fair. Zappos’ base pay is higher than most retailers to start with.
I’m going to cite something frequently cited by my partner Brian Kilcourse: Maslow’s hierarchy of needs. If you are focused on feeding your family, there’s no doubt wages matter. Good heavens, a large part of our in-store workforce is at or below the poverty line.
But numerous studies of white collar workers, for as long as I can remember, have shown that money is not a primary driver. Once you start working your way up that hierarchy you care more about belonging, recognition and fulfillment.
So the hurdle is clear: can a traditional retailer afford to pay the wages necessary to “make money less of an issue?” I don’t think so. And that’s the core problem. I don’t know how to solve it, but it’s a problem for sure.
Raising wages may remove or lessen dissatisfaction but does not guarantee employee engagement. Someone working for a company that receives a wage increase who works for a jerk who treats them poorly may enjoy the raise but doesn’t instantly turn into an engaged employee.
Everyone wants to feel valued. Compensation is a component of this but it is not the only factor.
Zappos is doing terrific stuff and employee engagement and happiness should be big priorities. Programs like this certainly can reduce turnover and increase productivity, which are big issues in retail. BUT, the bottom line is, employees need a living wage unless they are still living at home or maybe have two or three roommates. Once they are really trying to be independent, have kids, etc., a decent wage is key. Most of retail isn’t even close to paying a decent wage yet, so big retailers boosting wages for store-level employees is still a big deal.
Excellent article. We still don’t understand much about “corporate culture” and almost nothing about the human heart.
First, let’s be clear that “happiness” and “engagement” aren’t the same thing. I’m not sure the metaphor totally works, but happiness is the fruit of the tree while engagement is the root system.
As we all know from Gallup reports, engagement percentages are pathetic and dropping. There’s just not a lot of engaged happy people out there. And let me point out the situation is just as sad in the c-suite.
So why do people line up to work in some developing world social venture or happily intern at certain companies? And all for little or no money? Why does Zappos have people lined up to work there? The answer is two-fold: PURPOSE and ENERGY.
ONLY when an organization knows its highest purpose (its “logos,” how it’s making the world a better, safer, more joyful, healthier, more beautiful place) and is willing to align all of its varied energies (human and otherwise) toward that purpose does it create the environment we all dream about. Zappos and many others prove it can be done.
Well, I think the point of the article is that money alone is not going to get retailers the employees they want. But if you don’t pay a decent wage, you’re not going to get a chance to create engagement with employees because they won’t be all that keen to engage with you. And if all you do is pay a decent wage but don’t train, don’t ask for feedback, don’t invest any time in understanding the work they do and obstacles to that work, then you’re not going to have engaged employees either.
I see wages as the credibility starter. After that, retailers need to build on it by training their people, by demonstrating that they’re willing to invest in their people over time, and by helping their people overcome obstacles to be good at their jobs.
While I salute Zappos for their efforts to engage employees, I still believe that a living wage is necessary for all employees. That said, Ms. Foley make many salient points; points which retailers should heed. Engaging employees can benefit retailers in many ways: higher morale, lower shrink, better customer service — the list goes on.
And another thought …
I was thinking this but forgot to write it in my previous submission. There are some foolish enough to think that if you can make people feel good you can get away with paying them less. Sorry, it doesn’t work that way. With rare exceptions, people need to be paid enough to live before there’s any hope of them coming fully “alive.”
Let’s try and make it simple. For most people money is not the number one motivator. But the lack of money is the number one de-motivater and stress creator. Raising wages is not really going to motivate most of your workers but it will help to relieve some stress.
When it comes to motivation the Zappos method will work for some people and not for others. The key is to define your culture and hire to that culture.
What Ian said (indeed his follow-up thought would have been my first): asking “what would make this a great place to work?” is NOT the same thing as asking “other than (more) money, what would make this a great place to work?” Oh, sure, there are some people who really don’t care about money—they’re often called “volunteers”—but there aren’t enough of them for most companies to build a strategy around.
Company culture is the ultimate strategy, but it’s difficult for transient/seasonal staff. In these cases, satisfaction is closely correlated to pay.
I am a big admirer of Zappos and the culture they have built over the years. But I have to agree with Paula and her partner about the importance of wages to the typical retail type employee. Darn right it matters whether you are a front line employee or the stock clerk.
It is easy to say wages are not important when the base wage of the company you represent is well above the minimum and working conditions are excellent. I am surprised the Zappos Insights comments were not thought out better.
Money is important to a point. Employee fulfillment is as important, if not more so, to get full engagement. Herb Kelleher of Southwest Airlines made a big deal about, for lack of a better term, employee happiness. Paraphrasing, he said to make employees happy, who will then make the passengers so they fly again, and then the shareholders will be happy. Zappos.com figured it out too.
Pay employees fairly and treat them the way you want your customers treated, if not better.
Employees go to work to make money. Employees like to buy things and need to pay their bills. Zappos and other companies who adopt this nonsensical belief are just BSing themselves.
First, not all retailers want to be like Zappos. You can eliminate the hurdles by eliminating the goal. We could write the same article and reverse the situation. Maybe Zappos could be more profitable if they went to a Walmart style labor model of paying people low wages and turning them over every 8 months.
It’s quite obvious how to engage employees, compensate them, and have them around for the long haul. Thats great and if I were in retail, I’d want to work for a company like that. But not so sure I’d want to be a stockholder. Sometimes it works out like with Costco. But they are they exception and not the rule. Otherwise all retailers would be switching to the engaged employee business model.