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So a company's pay practices -- how much you'll be paid, how to get a raise -- are kind of a big deal for employees. At the popular online shoe emporium Zappos. We may end up with several ways to set compensation," said Darshan Bhatt, a senior developer at Zappos who is part of the group debating how to structure pay practices.

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No manager say on pay: What they're not going to end up with is individual managers calling the shots on another person's paycheck. That's because the company's CEO Tony Hsieh announced in a memo that as of April 30 there would be no more "people managers. Those who held manager titles were invited to either leave with severance or find new roles in the company that suited their talents and interests.

But no longer would they have authority over anyone else. Instead authority will be distributed across everyone in the company, or rather across the "circles" they join and the roles they fill within those circles. A hierarchy of autonomous circles is a key element of Holacracy, one of a few organizational methods that Zappos is drawing on to become a self-managing organization.

And while there may no longer be managers, there will be "lead links" who are appointed to guide a given circle to fulfill its stated purpose.

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From there will cascade down other circles, then from those circles more circles. All in all, the company expects to have to circles. Related video: How Zappos expects to run without managers. Hsieh will have authority to appoint the lead links of the circles that emanate directly from the GCC. In addition, he will head up the circle that holds domain over hiring, firing and compensation, Bhatt said.

Betting on badges: Right now the company is considering a few methods to establish pay levels. One possibility involves "badges. Someone's current job likely could be broken down into a few of them. Those compensation badges would go through a longer approval process and must be reviewed by the compensation circle, which will be charged with setting competitive pay rates for different skills.

The skills and pay level that a compensation badge represents will be published and available for everyone at Zappos to see.

Set your own pay: Another option under consideration is to have employees set their own salaries. Sounds sweet, but it probably won't be as easy. Bhatt has been suggesting "guard rails" for this option. Hsieh and his team realized that customer service should permeate the whole company, not just one department. He calls the Zappos reps the best in the world. In search of high-caliber employees to staff its call center, Zappos relocated the entire company from San Francisco to Las Vegas in One of the most significant came in early , over lunch at Chevys, a chain Mexican restaurant in San Francisco.

Zappos was then nearly five years old. At first I thought that selling shoes online sounded like a poster child for bad internet ideas. What had started as just one of several dozen angel investments ended up as a job: By I had joined Zappos full-time. But for most of those years we had been short of cash and struggling to cope with growth. In early our biggest problem was customer service—specifically, finding the right employees to staff our call center. We receive thousands of phone calls and e-mails every day, and we view each one as an opportunity to build the Zappos brand into being about the very best customer service.

Our philosophy has been that most of the money we might ordinarily have spent on advertising should be invested in customer service, so that our customers will do the marketing for us through word of mouth. But that requires the right staff members—and our inability to find enough dedicated, high-caliber customer service reps near our San Francisco headquarters was turning into a huge problem.

We initially considered outsourcing it to India or the Philippines, and we met with a few outsourcing companies. We got the whole sales pitch and listened in on sample calls. You could tell on the ones from India that the people talking were from another country. How would they be able to help a customer who asked, say, for shoes like the ones Julia Roberts wears in Eat, Pray, Love? That system never worked very well. So we stopped drop shipping and began buying inventory from manufacturers, but we outsourced the warehousing and shipping to a separate company in Kentucky.

As an e-commerce company, we should have considered warehousing to be our core competency from the beginning. Trusting that a third party would care about our customers as much as we did was one of our biggest mistakes. So we agreed that Zappos employees would staff the call center. But finding them in San Francisco remained a problem. One option would have been to set up a satellite call center, staffed by Zappos employees who were operating someplace far away.

If we were serious about building our brand around being the best in customer service, customer service had to be the whole company, not just a single department. We decided we needed to move our entire headquarters from San Francisco to wherever we built the call center, whose staff we had recently named the Customer Loyalty Team, or CLT. We talked about lower-cost cities where housing would be cheaper and there would be a bigger supply of workers who might think being a phone rep for a fun, growing company was a viable career choice.

We did a lot of research into real estate, wages, and the cost of living in various cities, and we narrowed down the list of possibilities to Phoenix, Louisville, Portland Oregon , Des Moines, Sioux City, and Las Vegas. Over lunch that afternoon at Chevys, we talked through our choices. Could the company afford the huge costs associated with moving its staff? How many of our employees would be willing to relocate to a new state? Would the potential upside be worth the disruption to our young company?

What would be the best decision for our culture?

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  • Zappos Footer.
  • In the United States we offer free shipping both ways to make transactions risk free and as easy as possible for our customers. The additional shipping costs are considerable for us, but we view them as a marketing expense. We also offer a day returns policy for people who have trouble making up their minds. Originally our returns policy was only 30 days, but we kept increasing it at the urging of our customers, who became more loyal as we lengthened the returns period. Our customer service orientation is also apparent on our website.

    We take the exact opposite approach. Looking at every one of our interactions through a branding lens instead of an expense-minimizing lens means that we run our call center very differently from others. Most call centers also have scripts and force their reps to try upselling to generate additional revenue.

    We care only whether the rep goes above and beyond for every customer. Timmy has a big fat wrist. Timmy need watch grande. And can we please continue to talk about Timmy in the third person?

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    Jonathan would be happy to neglect the use of pronouns for the duration of this conversation. Jonathan thinks this watch will work out well for Timmy. Do your watches and stuff have free return shipping like your zapatos? In case Timmy wants another one or something?

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    We will even pay for the return ship! As always, our shipping to Timmy will be free. The rep was a bit confused by the request, but she quickly recovered and put us on hold.

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    Two minutes later she told us the five closest places in Santa Monica that were still open and delivering pizzas. As unsexy and low-tech as it may sound, the telephone is one of the best branding devices out there.