Happiness is... the bottom line

Tags: Companies
In the world of business, Tony Hsieh can be considered the odd man out. When most businesses strive to enhance shareholder value, he talks about enhancing customer and employee happiness.

The chief executive officer of Zappos, the online shopping site now part of the Amazon empire, thinks it is perfectly worthwhile -- in fact, profitable -- to follow Abraham Harold Maslow’s humanistic theories of self-actualisation in business.

“I am in the business of delivering happiness. It is a good business model. (I am) always attempting to create happiness in customers and in employees,” he said in a recent interaction with Financial Chronicle.

It is a philosophy that is more professed than practised in most businesses. But in Zappos case, it is practised to the hilt and has paid off. Since it began about a decade ago, the company has gone from gross sales of $1.6 million to $1 billion.

The company’s slogan, ‘Powered by service’, says it all. The slogan encompasses two key elements. The first -- customer care – is commonplace, and the second -- counter-intuitive human resource strategy – something not heard of anywhere else.

Hsieh joined Zappos as an advisor and investor when the company was founded by Nick Swinmurn. Within a few months, he went on to become the CEO and set the tone for company culture.

“The ultimate goal of everyone is happiness. It is an attempt to be part of something bigger than yourself,” said Hsieh. Zappos corporate culture is based on inspiration rather than motivation that ties in with personal values. Pursuing happiness is not just a life goal; it’s a corporate mission in the company.

Over the years Zappos, which began with selling shoes, has become an online departmental store, selling all manner of goods, including apparel, bags, household items, cosmetics and accessories.

What distinguishes the company is its readiness to take extreme steps. One of them is a 365-day return policy if something doesn’t fit the customer, or he or she wants to return it, for whatever reason. This has sired a cult following for the company.

Another is free domestic shipping for all merchandise. This applies also to dissatisfied customers. There are no minimum order sizes or special exceptions. “Just because shipping is free it does not mean it should take a long time. We understand that getting your items quickly is important to you, so we make every effort to process orders quickly.”

To spread happiness on the employee side, the company has devised a simple but effective trick. On completion of a short training programme, a fresh recruit is offered a $2,000 bonus to quit if he does not fit in. Hsieh explained how it works: “It makes better economic sense to know early on whether an employee has what it takes to get into the culture and vision of the company.” If he doesn’t have that, he is welcome to leave, richer in the pocket.

Each time Zappos interviews a candidate it sends a car to the airport to pick him or her up. The driver tells the recruiting team what happens during the ride into the city. This gives a better insight into the candidate.

Hsieh had earlier founded LinkExchange, an advertising network, which he sold to Microsoft in 1998 for $265 million.

Interestingly, Amazon recently completed the acquisition of Zappos for $1.2billion, higher than the initial stock price-based estimate of $928 million.

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