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On Leadership publishes a weekly video series with prominent national and international leaders. Complete archives available here.

On Leadership: Zappos.com CEO Tony Hsieh on who he won't hire

WATCH THE VIDEO: On Leadership: Zappos.com CEO Tony Hsieh on who he won't hire

READ: 'Customer service is battleground in highly competitive market' by Tom Heath

Video transcript:

Tony Hsieh: I think maybe 50 years ago you had to choose between maximizing profits and making employees and customers happy. I think we are at the beginning of a very special time where, because everyone is so hyper connected, and because information travels so quickly through Twitter, blogs and so on, it is actually possible to have it all -- to make employees happy, to make customers happy, drive profits and growth, and ultimately make the shareholders, the investors happy.

Tom Heath: I'm Tom Heath, this is On Leadership, and today we have Tony Hsieh, CEO of Zappos.com and author of the new book, Delivering Happiness.

Tony Hsieh: For us, the whole belief is that our culture should be our number one priority, and if we get the culture right then most of the other stuff -- like great customer service, building a long term enduring brand -- will just happen naturally on its own.

We actually have ten core values, essentially a formalized definition of our culture. A lot of companies have what they call core values or guiding principles and so on. The problem is that they are usually very lofty sounding and they read like a press release the marketing department put out, and maybe you learn about it on day one of orientation but then it becomes just a plaque on the lobby wall.

For us we wanted to come up with 'committable' core values, and by committable I mean we are willing to hire and fire people based on whether they are living up to those core values, independent of their actual job performance.

When managers from other companies join us, we tell them we expect them to be spending 10 to 20 percent of their time outside the office, hanging out with their team, getting to know the people they work with. They are initially surprised and ask us, "That sounds fun, but is it really working?" Then we ask the people who have actually done it, 'How much more productive and effective is your team because of the higher levels of trust?' Communication is better; people are willing to do favors for each other because they are doing favors for friends not just co-workers. The answers we get back as far as increased productivity is anywhere from 20 percent to 100 percent.

Tom Heath: So, as a leader, happy employees translate into healthy bottom lines?

Tony Hsieh:
It is necessary but not sufficient. There are so many companies where the company culture goes downhill as the company gets bigger, and not only do we not want that to happen, we actually want it to scale, and to get stronger and stronger as the company grows.

Every employee understands that part of their job description is actually to live and inspire the culture in others. A lot of it is done on the front end; during the hiring process we do two sets of interviews. The first set is kind of the standard -- the hiring manager and his or her team will look for someone to a fit within the team, relevant experience, technical ability and so on, but then we do a separate, second set of interviews with our HR team, and they look purely for a culture fit, and they have to pass both in order to be hired. 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.

Tom Heath: What do you ask them, when you want to know if they can fit in the culture, and whether they will or not?

Tony Hsieh: We offer tours to the public, and our headquarters are in Las Vegas. We will pick you up at the airport, ride in the Zappos shuttle, take an hour long tour and then drop you off at the hotel.

For candidates we do the same thing: We pick them up, give them a tour, and then they spend the day interviewing. But at the end of the interview process, our head of recruiting goes back to the shuttle driver and asks them how they were treated. If they were not treated well when they thought they were off the clock then we won't hire them, it's not even a question.

Tom Heath: What does your office look like? Is your office down with the people, you have a big corner office, what's it like?

Tony Hsieh: Almost nobody at Zappos, except for legal and a few other people, have offices, so I have a cube just like anyone else.

I think of myself less as a leader and more of a protector, and I guess an analogy I would use is this: If you imagine a greenhouse with lots and lots of plants, then at other companies the leader would be the tallest, strongest plant that all of the other plants aspire one day to become.

I view myself less as a plant but let's say as the architect that designs the greenhouse, that enables the plants to flourish and how they grow and their ability to grow is already innately within them, they just need to be put in the right environment, so that creativity, in the case of our company, comes out.

By On Leadership video transcripts

 |  July 14, 2010; 5:31 AM ET
Category:  Video transcript Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Comments

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Based on what I read, I took it to mean that the 10-20% of the time spent out of the office was while they were at work to walk around the office vs holed up in office/cubicle & create relationships w/workers.

Posted by: AndreicaM | July 22, 2010 9:45 PM
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What a load of corporate B.S.!

Q: Why do departments such as legal get their own offices?

A: The highly paid, harder-to-retain talent would walk, otherwise.

Q: Why are the rest made to inhabit cubicles in an open floor plan?

A: The owner does not trust them to have private offices. He is a control freak, like many American CEOs.

Now, go tack to the Zappos wall another corporate-fodder "inspirational" poster, tell us another P.R. whopper about how you are all "family," and show us the financials that prove you pay your staff as richly as you do yourself.

Ha!

Posted by: fakedude1 | July 20, 2010 2:57 AM
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While Mr. Hsieh's pronouncements contain some (not entirely original) germs of wisdom, one does wonder how many shoe salesmen feel compelled to join a cult, even in this job market.

Most grownups already have, or will have, real families (to say nothing of real family responsibilities), and don't particularly need or want an ersatz one.

Posted by: thebump | July 19, 2010 3:41 AM
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"So, basically he is forcing his employees to spend an extra 4 to 8 hours per week (on average), going out with the boys after work."

I think you misread the statement. I read it as 10 to 20% of their work time...meaning go to lunch or have breakfast or a team outing, etc.

I'm a highly satisfied customer of Zappos. I have never experienced such extraordinary customer service from any company, including those selling me items for tens of thousands of dollars. Selling shoes online is a hard sell...few items are so dependent on fit...yet they have been successful without being a discounter for one reason only: customer service.

The odds of my buying shoes from any other retailer are slim.

Posted by: bannerscwt | July 15, 2010 5:50 PM
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I think the requirements for outside of work are unrealistic and unreasonable if you have a family - especially with small children. However, I do love the criteria about how well you treated the shuttle driver. I too believe it is important to be respectful to everyone from the cleaning person to the higher ups. You never know who might be watching or how it might come back to haunt you if you don't.

Posted by: mosere | July 15, 2010 1:25 PM
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For 26 years I have helped companies grow. Some took the Golden rule to heart and some put it in their values and mission statements but failed to walk the talk. The teams that walked the talk experienced explosive sales and profit growth.

I read this Delivering Happiness and it confirmed what I knew; Customer service by the golden rule is profitable and leads to sustainable growth as I shared in my blog : Delivering Happiness; Proof …the “Golden Rule” is Profitable ! http://tinyurl.com/3ag5j8v .

I have been challenged over the years, called a heretic at times, for my desire to serve my market and not sell them. This book is more than a business book it is a movement.

Mark Allen Roberts

Posted by: markallenroberts | July 15, 2010 12:28 PM
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In response to: "Ask yourself: Do I want to build my entire life around a company? "

In the past, people built their entire lives around single companies for many decades, and in a lot of cases it worked out just dandy. In this era of resource/staff fungibility, we forget that stable and steady can have huge benefits both for companies and their employees. If people stay because they like their jobs and the people with whom they work, where's the harm? We're not talking about a mining town with armed guards overseeing the workers, we're talking about Zappos.

Posted by: public-washingtonpost-com | July 15, 2010 11:37 AM
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Architect and Nurturer of Human Growth is a lot cooler job description than shoe salesman. "Yes ma'am... yes ma'am... size 6 in taupe. Yes ma'am."

Posted by: mr14sunshine | July 14, 2010 1:30 PM
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Won't this sound like ridiculous drivel 20 years from now.

Posted by: Itzajob | July 14, 2010 1:26 PM
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I take back my comment. Go look at their corporate values. It sounds like a religion. A cult, to be blunt. Ask yourself: Do I want to build my entire life around a company? And what happens to my life when that company gets bought out by a conglomerate, or when a new CEO comes in and decides to downsize and outsource in order to "provide better shareholder value?"

Posted by: dmm1 | July 14, 2010 12:56 PM
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So, basically he is forcing his employees to spend an extra 4 to 8 hours per week (on average), going out with the boys after work. Sounds like Japanese business culture. Yeah, that's worked great for Japan. Their society is thriving, isn't it? Let's emulate them, then we too can have an aging population full of singles who've never bothered marrying and having children (since they never had a life outside work).

Posted by: dmm1 | July 14, 2010 12:44 PM
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Smart guy.

Posted by: ObamasGulfResponseIsMuchWorseThanKatrina | July 14, 2010 11:34 AM
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Love the corporate philosophy! I'd work for this guy in a heartbeat if only Zappos HQ wasn't in Las Vegas.

Posted by: kbockl | July 14, 2010 11:03 AM
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