February 24th, 2020
February 24th, 2020
"We don't know yet what we're going to end up with. We may end up with several ways to set compensation." Those are the words of Darshan Bhatt, a Zappos team member who is part of the "circle" (group) tasked with deciding the pay system at his company. Months ago, Zappos' CEO, Tony Hsieh, decided to convert the online shoe store into a holacracy, which is essentially an organization without managers. Since then, hundreds of employees have left the company. The rest have striven to set the new anti-hierarchical style into motion. The world anticipates the result, and we have questions. How will decisions with far-reaching consequences be made? The answer starts with "lead links," employees that are designated to help a circle fulfill its duties. By default, a lead link can assign tasks to people in his/her circle. Lead links can also determine the roles of people in nearby circles. Those privileges can be modified at any time, though. Hsieh is part of the General Company Circle. That circle is close to all of the circles that would be at the 2nd highest level in a traditional hierarchy. However, there will probably be upwards of 400 circles in the Zappos organization. That's a lot more circles than there are hierarchical levels in a typical, similarly sized company. Hsieh will have authority to appoint the lead links of the circles that touch the General Company Circle and he will head up the circle that makes decisions on hiring, firing and compensation, but he will not decide on pay. One way pay could be determined is by badges. Under that system, a "Compensation Circle" would review employees' skills and decide on their pay based on predetermined figures. If an employee has certifications that are useful to the company and knows all about shipping options, he would receive badges for those things. Each badge means more income. Presumably, there would be a badge for employees who have been around a particular number of years, too. Another way is to let the employees decide by themselves. Mr. Bhatt says this is possible if there are "guard rails". You could come up with a number, but you may have to justify it to the Compensation Circle. There may also be limits before you even get to that step. Further, anyone in the company can evaluate your work. That's already a Zappos policy. You still have to work for you money because those evaluations are going to end up under on the nose of someone (or under the noses of a circle) with firing authority. Employees who are eligible for a salary adjustment will see it happen in late 2015 or sometime next year. I would argue that Hsieh has traversed a formidable speed bump on the way to his managerless dream, a speed bump on which he lost many of his people. On the other hand, many of the lost employees may have been managers who simply weren't excited about losing their titles. I wouldn't expect them to be excited about potentially taking a pay cut either.
At RetailMeNot.com, you find coupon codes and deals for 70,000 online stores. You may have heard of it. Many of the names you see at RetailMeNot provide the company's revenue. The owners of those brands pay to list their deals and codes on the site. Some of the deals are not paid for, however. That's the case with Mary Kay Cosmetics. In March, Mary Kay filed a lawsuit against RetailMeNot, claiming that their use of its intellectual property and display of its coupon codes is not permissible by law. Retailmenot fired back on free speech grounds, stating the following. "RetailMeNot, Inc. continues to believe that it operates in compliance with law and in the best interests of consumers and its retail partners by aggregating information to help shoppers save money using its websites and mobile apps." The digital offers company also believes that, if Mary Kay succeeds in winning the case, there could be a negative impact on consumers. "RetailMeNot believes it is protecting the interests of consumers in a case that could have a negative impact on online content and service providers. Mary Kay's attempt to use trademark law in a manner that is inconsistent with fundamental principles of free speech should alarm consumers because it would deprive them of access to information about digital offers for their favorite retailers and brands." The basis of RetailMeNot's position is that Mary Kay's coupon codes are publicly available and, because of that, anybody can share them on the web or by other means. From Mary Kay's point of view, RetailMeNot "misleads consumers" to believe that the two companies have a relationship and sell products at a reduced price. The company believes that RetailMeNot's practices are detrimental to its direct sales structure, where sales reps meet directly with potential customers in their homes or in public places. According to MarketWatch, RetailMeNot attempted to resolve the problem before resorting to litigation but was unable to stop Mary Kay's legal advances.
According to TechCruch, construction equipment rental is a $40 billion per year industry but most of the equipment in the industry is owned by contractors, not rental companies. Oftentimes, equipment is left sitting, unused, for long periods of time. Therefore, there is a gigantic potential for an AirBNB of construction equipment. That is, a website that allows equipment owners to list and lease their bulldozers, cranes, tractors and other machines. AirBNB does the same with unused apartments a spare rooms. EquipmentShare insures the borrower and the owner, in case the borrower is injured or damages the equipment. Even still, renters are "pre-screened and verified" before they're allowed to borrow anything, according to EquipmentShare's website. After the rental, both parties can review and rate their experience doing business with each other. So, taking care of the equipment is important for everyone involved. As for the user experience, EquipmentShare says you can "easily add equipment, control availability, place rentals, collect payments and coordinate transports" securely. It's well designed, but the the biggest advantage the entrepreneurs possess may be the pricing, which is said to be around 30% less than conventional equipment rental companies charge. On the other side of the scale, there are some weighty challenges, though. In particular, the company needs to expand beyond the Missouri area, its exclusive territory. Willy and Jabbok Schlacks, the creators of the business, say they're studying how AirBNB and other P2P services have expanded. They've joined like-minded entrepreneurs at Y Combinator, a seed accelerator based in California, where the entrepreneurs will spend three months learning from their peers. It's a good decision for them to be there. Y Combinator is where AirBNB got started, as well as Reddit and Dropbox.
Zappos is an online shoes and accessories retailer. Zappos is not a run-of-the-mill retailer, however. From a consumer's point of view, it might appear to be normal. Maybe prices are a little high. You might receive your shoes really quickly, but you probably won't assume your seller is being ruled by a set of extremely unorthodox policies. One of those policies is to allow employees at all levels to make decisions, even big decisions. Employees aren't hired and planted into their positions, they regularly rotate and decide, as a group, what they will do. As a result of these policies and Zappos' core values, which place a heavy emphasis on evolving and providing super effective service, the company has designed and is testing a "surge" wage model. Open Market is the name of it. It's similar to Uber's model, which distributes higher wages to workers who are on the job at the busiest hours. At Zappos, Open Market has been tested in its call centers. If employees work at hours of high call volume, they are paid more. Therefore, their schedules are flexible but they earn less if they don't work when it's busy. Zappos' wages weren't especially high before, around $14.50 per hour. That's close to the national average. However, employees receive excellent benefits and awesome perks including on-site dry cleaning, a ping pong table, a video game room, a nap room, health-related services and plenty more. It's amazing! The new wage model is expected to be so enjoyed that it will be another perk. It is intended to "test how we could give our call center employees more flexibility and be able to incentivize people to come to work when we needed them, even if the timing wasn't always ideal," says Adam Goldstein, Zappos Labs' senior products manager. Zappos Labs is the R&D arm of the company, which attributes a 20% increase in "self-reported happiness" to Open Market. Retail mangers, take heed. Thinking flat out backwardly, in relation to conventional management practices, does work, at least in the case of Zappos. You can learn more about Zappos' core values at its website. Have you ever had a flextime (flexible hours) job? Did you like it? Let us know in the comments below.