When Traditional Management Creeps Back In: What is Happening at Zappos?
Last month, I wrote a short piece about how Southwest Airlines was failing its once world-famous status as a progressive firm. Unfortunately, we have another: Zappos, once the American poster child of a pioneering organization, seems to have reverted to the traditional management practices of its mother company, Amazon. And it’s a shame.
Last month, Zappos laid off 300 employees—almost 20% of its workforce. This seems to be the next step in Amazon breaking up Zappos’ unique workplace system that was carefully built up by the late Tony Hsieh, an early investor in Zappos and its long-term CEO.
Although such rounds of massive layoffs are sadly not a unique feature within the tech industry, it is a symbolic and dramatic action for a company that was once famous for its pioneering “paid-to-quit” concept.
The paid-to-quit concept was as bold as it was brilliant. During his time as CEO, Hsieh institutionalized this practice by offering new hires a bonus of $5,000 if they decided to leave the company after their initial one-month trial period.
In this way, Zappos hoped to provide new recruits with a “safe” exit if they didn’t feel like a good cultural fit with the company and simultaneously hoped to ensure that only the people that really wanted to stay at the company would decline the “leaving incentive.”
Research has since shown that offering such an exit bonus is a smart move because it “promotes self-selection of unmotivated workers out of employment.”
Abandoning progressive practices
Although Amazon had initially copied the concept from Zappos, this recent move of ruthlessly laying off 300 employees indicates that many of the company’s progressive practices were abandoned long ago. And it seems primed to continue.
Such a shame. A big shame.