Structural Frame Analysis of Zappos

Structural Frame of Zappos

Organizational Structure Case Study: Zappos

Structure is "a blueprint for formal expectations and exchanges among internal players," (Bolman & Deal 2003 p 46). An organization's structure can determine how it will succeed and change within an ever-evolving business environment. It is absolutely necessary to understand the complexities of organizational structures and how successful ones, like that of Zappos, is organized and executed within today's business matrix.

Zappos is an incredibly successful online retailer dealing with the sales of consumer goods, most notably shoes and other personal accessories. The company has seen great success within the context of its life span, and has grown to a massive organization. Zappos now boasts over 1,300 employees (Carpenter et al. 2010). It is essentially comprised within a flat organizational structure. Thus, it rests on "Amorphous roles, lateral coordination, and a flat hierarchy encouraged participation, creativity, and productive conflict," (Bolman & Deal 2003 p 94). Creativity and innovation clearly drive the company into new directions, and thus this flat structure keeps them alive within the internal environment.

This flat structure has also allowed for the creation of unique and outstanding Standard Operating Procedures. Zappos presents its core values based on caring, especially within the context of the customer relationship built within the business transaction. Thus, the company strives to provide the best customer service available, and does so primarily based on the flat organizational structure allowing individual customer care representatives to handle each situation autonomously. There is no limit on time spent on customer service calls. The research here states that "They are encouraged to make personal connections with the individuals on the other end, rather than trying to get rid of them," (Carpenter et al. 2010). This allows for greater, and more tailored customer attention. The flat structure of the company allows for each customer service representative to handle individual situations without the limitations of going to a higher source of power or being constrained by heavy operating procedures. Rather, they are allowed to work creatively and individually, thus ensuring the most amount of customer attention. Therefore, "Customer service reps are given plenty of freedom. They may chat for hours with customers, write thank-you notes, and send flowers and even direct shoppers to rival Web sites if an item is out of stock. In a tough year for retail, sales are up by double digits," (Palmeri 2009). These operation procedures have proven to be incredibly successful within the larger corporate structure as well.

The flat organizational structure and devotion to individual autonomy within operating structures therefore makes Zappos into a clear case of professional bureaucracy (Bolman & Deal 2003). It contains a flat organizational structure, where individuals within the company are not restricted by multi-layers of superiors before taking effective action within their individual work environments. Additionally, there is a heavy emphasis on training within the structure of Zappos in order to ensure that the employees can handle the immense freedom seen within the context of their work environments. Bolman and Deal (2003) states that "Control relies heavily on professional training and indoctrination. Professionals are insulated from formal interference, freeing them to apply their expertise," (82). This is exactly what Zappos is striving to achieve within its organizational structure. The company has a mandatory five-week training period in which group members can really get a feel for the organizational structure and policies. If one feels this is not a perfect fit, there is a pay out of $2,000 upon the decision to quit, yet only about 1% of new hires actually take it (Carpenter et el. 2010). Zappos focuses on finding success at the individual level, in order to reap success at the corporate level. Thus, there are great levels of individual freedom seen within the work environment there with competitive pay, attractive benefits, healthcare, and compressed work weeks.

Professional Bureaucracy organizational chart (Bolman & Deal 2003 p 82)

Management organizational chart from Zappos (CogMap 2011).

The group and team structures at Zappos then augment the professional bureaucratic style seen within it. Zappos, as a company, believes that "Happiness is the driving force behind almost any action an individual takes," (Carpenter et el. 2010 p 355). The company strives to meet individual needs and desires internally within the employee workforce as a way to motivate employees for the best possible performance in the work place. The company takes great effort in producing the most enjoyable workplace environment for its team members in order to then acquire their greatest level of productivity and effort. Zappos even has an on-site life coach and chiropractor to ensure their team members are the happiest possible within the work environment. Carpenter et al. (2010) state that "Zappos seems to be creating an environment that encourages motivation and builds inclusion. The company delivers above and beyond the basic workplace needs and addresses the self-actualization needs that most individuals desire from their work experience," (355). Keeping employees happy means keeping their productivity high, even without high levels of supervision or maintenance.

Zappos is also a company that takes pride in its level of information dissemination. The company keeps up a high degree of transparency (Carpenter et al. 2010). This is seen both internally in the case of employees, as well as externally with other corporations. Zappos is now selling the elements of its business model to other businesses eager to adapt to such a culture of innovation and creativity. According to the research, "Zappos already knows how to sell shoes. Now it's hoping to profit from people's fascination with its friendly, antics-filled business model," (Palmeri 2009). Two-day seminars about the innovative organizational structure are now going for $4,000. However, the company was recently bought by Amazon in 2009 for $1.2 billion. How Zappos will maintain this high level of dedication to customer service and transparency within the framework of larger internet conglomerate Amazon may be tricky. Now Zappos clearly does not have the pure levels of freedom it did as an autonomous company. Evolving organizational culture and practices to fit a more restrictive environment might not work well within its transparent business model. As of yet, however, Amazon itself has been incredibly supportive of the continuation of Zappos' free internal structures. Hopefully, this will continue into the future.

Still, there are also external factors that may threaten Zappos' organizational structure. According to the research, "A professional bureaucracy responds slowly to external change. Waves of reform typically produce little impact because professionals often view any change in their surroundings as an annoying distraction," (Bolman & Deal 2003 p 82). Thus, as the business environment outside of Zappos' control evolves, it may be sluggish to keep up. It is hard for a professional bureaucracy to effectively adapt to external changes, and thus this may threaten Zappos' success. The research also suggests how "Traditional managers, steeped in the tradition of the top-down pyramid, struggle to adapt to strange new forms where chains of command are flat rather than multilayered, and coordination arises mainly from a dense network of horizontal relationships," (Bolman & Deal 2003 p 61). Zappos will have to constantly review its external environment and prepare as much as possible for any changes that must be executed internally to match the external environment.