Zappos.Com, an online shoe and clothing shop based in Las Vegas, Nevada, offered employees three months’ severance pay to leave if they felt they could not get behind the company’s move to self-managed teams. The Washington Post reported that about 14% of Zappos 1,500 employees took the money and left.
The article reminded me of a similar story.
In the early 90’s, I was privileged to lead a business unit at the Star Tribune newspaper in Minneapolis, MN through a cultural transformation, which included the move to 15 self-managed teams in the Customer Service Center (we also added 15 self-managed teams in the Circulation department’s field operation spread throughout the newspapers Primary Market Area).
Our goals were to improve the quality of work life for employees, improve customer service, become faster moving and more creative and save millions of dollars. On top of that, we had to defeat a Teamster’s Union organizing effort in the Customer Service Center.
We wanted to downsize 100 positions without laying anyone off. We froze hiring in the Customer Service Center, the newspaper froze the hiring of outside candidates so our employees could apply for positions throughout the company and some employees accepted an early retirement incentive. And we offered an incentive similar to Zappos.Com for employees to leave if they wanted to do something else.
More people signed up for the incentive plan than we had anticipated. Nineteen employees who counted on the money had to be told they would not receive the severance pay. We scheduled a lunch and had pizza brought in.
The people were excited and filled with anticipation as they walked into the conference room. They thought they would get the severance pay. I welcomed everyone and invited them to dig into the pizza. I said I had good news and I had bad news. They looked at me expectantly. The good news was that we had achieved our downsizing goal through voluntary means. The bad news? They would have to stay.
The people were shocked, angry and disappointed. One married couple had booked a cruise. A man had bought a new car. They were critical of me. Some felt we were obligated to give them the money anyway. Some were critical of the process. I never thought I would be criticized for telling people they had a job.
We survived and went on to implement 15 self-managed teams, a skill-based pay system, reduced job descriptions from 25 to 12, eliminated most supervisors, reduced staff by 35%, improved customer service dramatically and saved millions of dollars. Employees told the Teamsters to go away.
The teams were engaged, empowered and morale was high.
I wrote the story of our transformation in my e-book, “Value-Driven Leadership: A Story of Personal & Organizational Transformation.”
The leadership experience changed me. I left the company after the transformation was finished. I completed a PhD in leadership and organizational change, wrote about life and leadership and consulted for 13 years before I retired.
What happened to the teams? Neglected by a mindless senior management, the teams faded away. A great opportunity was missed.
I believe in the vision of organizations filled with engaged and involved employees who produce phenomenal business results. I’ve lived the experience.
I also believe that at this time in history we lack the number of leaders, at all levels, who have the talents, skills, maturity and experience to understand the difficulty of such transformation and lead such change.
My prediction: Another transformation will prove unsustainable for lack of leadership.
Best wishes to Zappos.
I hope you prove me wrong.
P.S. to Zappos leaders: Knock off the jargon. It shows your lack of experience. It’s your job to learn the theory and explain it to employees in ways that they can understand. Realize that what you are doing is not new. Do your homework on self-management, employee involvement and past efforts to transform organizations.