This London College Organisations and Behaviour Assignment discusses about Zappos and Amazon organisation structure.

Introduction

Organisations these days do not follow a conventional structure. Organisational structure has become more adaptive and this helps in overall functioning of the organisation. Structure is decided by a strategic plan where managers try to figure out the best framework for their organisation (Normann, 1991).

Organisation structure can be categorized in following ways:

• Hierarchical Organisation Structure
• Flat Organisation Structure
• Tall Organisation Structure
• Matrix Organisation Structure

Task 1

a) Discuss the advantages and disadvantages to Zappos (i) if they maintain a traditional hierarchical structure, and (ii) if they adopt a flatter structure.

Organisation structure decides how each unit in an organisation functions to achieve required goals. Zappos recently decided to change their organisation structure to form a holacratic organisation structure. Organisation structure basically determines the functioning of the organisation and also helps in deciding as to who will be part of decision making process. The following section illustrates about different organisations behaviour and Zappos.

• Advantages and disadvantages to Zappos if they maintain traditional hierarchical structure

In traditional hierarchical organisation structure there is a manager at every level and people report to their manager. The manager is accountable for overall functioning of his team and also commanding the situation. The power is more centralised in this case.

Advantages:

• Zappos can make more strategic decisions if they follow hierarchical structure where the tasks will be overseen by a reporting manager who will be responsible for overall functioning. Employees will have clear understanding of their roles (Barney, 1986).
• Hierarchical structure helps in better conflict management in an organisation. Conflicts can be managed at each level by reporting manager.
• The tasks can be effectively controlled by the leaders of each unit who set guidelines for their subordinates. This will help in achieving desired goals of the organisation.

Disadvantages:

• Hierarchical structure slows down the progress of an organisation and can hamper the growth of the organisation.
• This will make the overall system more concentrated towards power of the manager. Employees will just perform according to the guidelines set by the manager. This will close the overall opportunity of innovation and research in the organisation.
• The process of decision making will become tougher as every decision would require multiple levels of approval. The overall process of decision making will become slow resulting in stagnant growth.

Hierarchical Organisation structure

• Advantages and disadvantages to Zappos if they adopt flatter structure

Zappos recently announced that they would replace their traditional organisational structure with a holacratic organisation structure. This new structure is more self-governing in nature. The organisation now has 1500 employee. Zappos will be organised in 400 circles and employees will be allowed to have multiple roles within each circle. Holacracy will help the employees in gaining confidence as they will self-govern their work. This structure can also create adverse effects resulting in chaos and confusion in the overall functioning of the organisation. The section below illustrates the advantages and disadvantages of Holarctic organisation structure on Zappos.

Advantages:

• The employees of Zappos will be accountable for their own work. This will reduce dependency on the manager. The employees will be able to set clear goals for themselves considering all the situations.
• Decision making will become quicker and easier as the power will be distributed in nature and people will be more accountable. The employees need not worry about multiple approvals all the time and can concentrate all valid work.
• As people will be able to focus more on work, they will try to introduce more ideas into their project. This will improve re-search and innovation area at Zappos.
• This will make the overall system more transparent and accountable thus ensuring a well-defined growth in the organisation.

Disadvantages:

• This is a completely new structure where the power is more distributed in nature. Holacracy which is more self-governed structure can cause confusion is overall functioning of the organisation and people will be responsible for their own work and having too many leaders might result in a deadlock where decision taken by one employee can affect decision taken by another employee.
• This might hamper the overall process of conflict management as managerial power will be more distributed.
• Employees will be free to do what they want .Having a dedicated employee will definitely suit this process but on the other hand a careless employee can ruin the overall functioning as there will be no method to track his work.

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b) Explain how the new organisational structure and culture may impact on both employee and organisational performance

Zappos has agreed to adopt a new organisational structure which is called as Holacracy. Zappos will be organised in 400 circles and will be allowed to have any number of roles within the circle (Stanford, 2007). New organisational structure will have a definite impact on employees and organisational performance. The following section illustrates the details of impact:

• Losing Hierarchical organisation will increase motivation. When we have a hierarchical organisation structure, employees are bound to certain rules. Holacracy is a completely different system where employees will be able to come up with their own ideas of completing tasks in better and faster way. This will improve overall innovation and research with organisation thus ensuring better growth (Gronn, 2002).
• The overall process of decision making will become faster. Employees will be accountable for their tasks would thus be able to take their own decisions. Due to quick decision-making process product delivery will become more on schedule. Holacracy will make the organisational more functional and responsibilities and accountability will increase. Employees will be more accountable for their work.
• Having a holacratic organisational structure can cause lot of confusion within the organisation as decision taken by one employee can affect decision taken by another employee. Zappos should take proper care to sustain such situations and regulate it with help of proper meetings among employees.
• This structure will also result in more motivated employees as people will be able to notice their work. This will result in a happy and motivated taskforce who will try to be more innovative in future. It will result in putting all employees on the driving seat (Timmerman, 2013).

Holacracy Distributed Power

Task 2

Compare and contrast the leadership and management styles of Zappos with its parent company Amazon.

The following section will compare and contrast leadership styles of Amazon and Zappos.

• Amazon follows a hierarchical structure whereas Zappos recently adopted holacracy. In hierarchical structure leadership is more concentrated .Every level has a dedicated leader who is responsible for the work done by his team. In holacracy power is more distributed and employees self-govern their own work (Bandura, 1989).

Amazon organisation structure

• Amazon follows concentrated leadership. The divisional hierarchical structure at Amazon also has designated leaders at each level which guide their subordinates. On the other hand leadership in Zappos is distributed among employees and employees are supposed to set guidelines for their own work.
• When an organisation follows a flat structure, the overall system becomes more transparent and thus making the organisation and work more performance oriented. Having too many leaders slows down the process of decision making and also gives rise to political affairs in an organisation. As Amazon follows a hierarchical structure, the process of decision making is slower compared to flat structure at Zappos. Every request has to go through different levels of approvals however in holacracy employees are accountable for their work and can thus take immediate decisions based on real-time need.
• In Hierarchical structure a manager is responsible for setting clear guidelines for his subordinates. Thus the employees only try to follow the rules. This decreases innovation in any organisation. It is very evident from the fact that Zappos is always known for its unconventional work culture because the leadership is more distributed. Employees try to devise their own ideas for better performance.

Looking at above points we can clearly understand that Amazon and Zappos follow different work cultures and leadership styles. Working style at Zappos is more unique where they follow some unique culture like Ringing the bell, Props e-mail, Million dollar T-shirt, Happy hours. Amazon on the other hand follows a traditional work culture where every level has designated managers who set guidelines for their employees and are responsible for their team.

Task 3

a) Examine how Zappos leadership style may affect the motivation of their employees during the organisational re-structuring.

The recent change in the organisation structure at Zappos will surely keep the employees more motivated as this structure will let the employees self-govern their work. Employees with take interest in working and will be more accountable for their work. The system of Holacracy will allow having multiple roles within a circle which will facilitate in better growth of the organisation as employees will always work for a better role and change in task. The following section illustrates the effects of motivation on the employees.

• Zappos is known to follow an unconventional corporate culture and leadership at Zappos always works towards the needs of the employees. They share company goals with all the employees and thus all the employees try to map their individual goals to the goals of the company (Stredwick, 2000).
• Zappos leadership follows following methods for employee motivation at present.
• Props e-mails-Tony captures all appreciation e-mails from users and sends it to relevant people.
• Million Dollar T-shirt- Every time the company hits a million dollar sale, they celebrate it wearing a common T-shirt.
• Celebration Parades – Department which is appreciated for work engage in a parade with music and costumes.
• Rewards and Recognition- Zappos motivates its employees by rewarding them for their work
• When Holacracy is introduced in employees of Zappos will become more accountable. They will think of better ways in which they can complete their tasks. This will increase overall innovation and research process within Zappos leading to overall growth of the organisation.
• Holacracy is a flat form of organisation structure where the power is more distributed in nature. Holacracy will make the system more transparent will reduce political influence within organisation. Employees will have faith in their work and the organisation. This will motivate the employees to work towards organisational goals and rather than concentrating on internal organisational politics (Murray, 1994). Employees will be passionate about their work and will prove to be more productive.
• Zappos follows an unconventional work culture and mostly recruit fresher. They train the employees help them grow within the organisation. They can motivate these employees by giving them growth opportunities and help them gain expertise in the area they are good at. Zappos can take proper actions to track their employees by organising regular meetings within each circle.

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b) Clearly defined job titles, responsibilities and authority have traditionally been used as a means of motivating employees. Under the new organisation structure there are no job titles or managers. Critically discuss the alternative

In traditional organisation structure where we have authority motivations happens in a different way. Leaders at different levels lay down guidelines and are responsible for motivating employees under them. In the new flat organisational structure where there are no job titles or managers motivation factor has to follow an alternative way (Lawler, 1969). In traditional hierarchical structure employees get motivated by either rewards or recognition or promotion to higher roles.

In a flat structure where the power is more distributed motivating employees can be a challenge. Medium is another such company which follows Holacracy. The following section illustrates how Medium motivates their employees using SCARF approach. SCARF basically stands for Status, Certainty, Autonomy, Relatedness and Fairness.

• Status – Employees are motivated by title change or attaching more tasks to a person. Zappos can also introduce this by providing a valid title to somebody who works efficiently
• Certainty- Certainty plays an important role in motivating employees. It is very important for Zappos to provide an assurance to their employees about job safety and regular hikes. Zappos should also make the employee feel that their work is important.
• Autonomy-Employees should be allowed to work the way they want. Zappos can also try to provide friendly work environment where employees can think peacefully about their tasks. Proper workplace environment will help in more productivity.
• Relatedness- Employees should be allowed to mix up with their counterparts. This will increase overall harmony in the organisation will ensure proper flow of tasks within different circles.
• Fairness- Zappos should ensure proper transparency in the organisation. Employees should have knowledge about the functioning of the organisation so that they can plan their goals accordingly. Employees should be given valid information about organisation stakes, sales and revenues. This will increase overall interest among employees and will make them more accountable for their work.

c) Evaluate the benefits of motivation to both Zappos and its employees

Employee motivation is essential for every organisation. Motivation among employees is the desire to achieve goals and spending right amount of energy in achieving those goals. This will help the employees to grow further in their work and will also increase overall productivity.

Employee Motivation in an Organisation

The following section lists down benefits of employee motivation.

• Increased Productivity- Motivated employees will aim towards organisational goals .They will try their best to increase overall productivity of the organisation and deliver products on schedule.
• Employee Retention – Motivated employees will form an understanding bond with the organisation and will look forward for a long term relationship with the organisation.
• Innovation and Research- Zappos is known for innovation. Motivated employees at Zappos will look for new ways of completing their tasks; they will also try to introduce new ideas which can help them to ensure better productivity.
• Increased Focus and Persistence- Motivated employees will be more focussed towards their work and would strive for better productivity. They will try to self-govern their work in better way rather than waiting for guidelines from their superiors (Carr, 2005).

Task 4

a) Explain the behaviours and dynamics of groups, including the factors that may inhibit effective group formation and teamwork

Zappos has been a role model for corporate culture. Recently, Zappos adopted a new organisational structure, “Holacracy”. According to this structure Zappos will be divided in circles and employees can have any number of roles within those circles. Holacracy come with following unique features.

• When somebody within the organisation holds a role he is accountable for his role and also has the flexibility for taking decisions within his role.
• There is a clean structure and plan laid out and meetings are held on a daily basis to focus and keep track.
• Distributed power makes the on decision making process faster thus improving overall productivity. From hierarchy to Holacracy

The circles at Zappos also must be organised in ways which will distribute power. Zappos can organise its circles in similar ways as Medium introducing the concept of mentor circle. According to this concept peers in a group form a circle where following points can be considered (Dager, 2014).

• Maximum autonomy without having managers.
• When effort required by a person increases another person should be hired to support.
• Issues should be resolved on day to day basis within each circle rather than accumulating them for the end. This will decrease risk.
• Every policy can be made more dynamic to cater real time needs. This will help employees focus more on work and worry less about rules and policies.

When the organisation structure changes from hierarchy to Holacracy, it might result in situation in lot of confusion as every employee will take their own decisions which can overlap with interests of other employees. Meetings should be held to resolve all these conflicts. Employees should not feel that their work in not being tracked or recognised. Regular meetings will ensure that proper tracking is ensured. People who work nicely should be rewarded in these meetings so that it acts as a motivational factor (Lindner, 1998).

Mentor within every circle should be responsible for organising meetings. Zappos can follow a rotational pattern for mentorship as well. Mentor should ensure that these meetings take place on a regular basis so that productivity is on track. These meetings can also serve as centre for conflict management among `employees. The board at Zappos should find out ways in which they can motivate their employees by giving them proper work flexibility, engaging them in fun activities which provide relaxation.

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b) Discuss the strategies that Zappos can use to develop and promote effective teamwork.

Zappos can use following strategies to develop and promote effective teamwork.

• Organisation should focus on organising proper meetings within each circle. This will help in keeping track of the work on day to day basis. Deviations in schedule and tasks can easily be identified and acted upon. Employee communication is very essential for effective team building. In collaborated environment employees have proper sync, and thus they effectively work together. Employees should try to understand the work done by their peers and can help them in adverse situations.
• Teams should be divided on the basis of tasks done where employees can understand work done by other employees in a better way. This will enable the organisation to have proper backup plan in situation of crisis.
• Zappos should engage employees in fun activities where they will get to know about their peers in informal way. This can help in friendly discussions among employees (Braun, 2001).
• Zappos like Medium can introduce concept of Mentor circle where each group has a designated mentor who works towards effective team building within the circle. The mentor can be again changed on rotational basis. This will also help in effective tracking of work within the circle increasing organisational productivity.

Conclusion

Organisation Structures for huge companies are always complex and it plays a major role in strategy planning of an organisation. Today’s era demands an organisation structure which is more flexible in nature and can focus on real time needs. Introducing Holacracy at Zappos will definitely take the organisation towards better growth prospects due to multiple factors like distributed power, faster decision making process, increased employee motivation and reduced political framework in the organisation.

References

Kopelman, R. E., Chiou, A. Y., Lipani, L. J., & Zhu, Z. (2012). Interpreting the success of Zappos.com, Four Seasons, and Nordstrom: Customer centricity is but one?third of the job. Global Business and Organizational Excellence, 31(5), 20-35. Acker, J. (1990). Hierarchies, jobs, bodies: A theory of gendered organizations. Gender & society, 4(2), 139-158. Robertson, B. J. (2006). Holacracy: A complete system for agile organizational governance and steering. Agile Project Management Executive Report, 7(7). Jonker, C. M., & Treur, J. (2003).Relating structure and dynamics in organisation models. In Multi-Agent-Based Simulation II (pp. 50-69).Springer Berlin Heidelberg.  

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