Earnings and Yearnings: Paid to Smile

Zappos.com employees work hard to create a happy organization. PT's case study illustrates what happens when people bring their values to work.

By Carlin Flora, published September 1, 2009 - last reviewed on June 9, 2016

At the Las Vegas headquarters of Zappos.com, an online retail company best known for its array of shoes and its free shipping, employees can get goal-setting tips from the on-site life coach, Dr. Vik. (He's a chiropractor by trade.) In front of the human resources department, anyone who stops by is welcome to have his or her picture taken wearing a "mullet" wig—the '80s hairstyle that recruiting manager Christa Foley says represents her group's motto: "Business in the front, party in the back."

On a typical day, Jamie Naughton, whose title is "Cruise Ship Captain," is planning events for employees. More than 50 percent of the 774 people in the headquarters (another 721 work in a Kentucky warehouse) are on the company-wide Twitter feed, which enables them to meet up easily after work and get to know coworkers in other departments. Those on break can head to the company library, which houses hundreds of self-help and positive psychology books, including CEO Tony Hsieh's favorite, The Happiness Hypothesis, by Jonathan Haidt. Up next semester: a free course on the science of happiness, to complement the dozens of business classes offered each year.

Cultivating happiness is Hsieh's ultimate business goal. Back when he started and sold a tech firm in the '90s, he formed a theory: If you create a work culture that fosters well-being, good practices and (eventually) good profits will naturally flow out of the operation. "In the first company, we made the right hires in terms of skill sets and experience, but we didn't look for a culture fit. I remember dreading going to the office," he says, because that vital sense of a shared purpose among employees was missing. When Hsieh was put in charge of the fledgling Zappos in 1999, he vowed to organize the business around ten "core values"—by which every single employee would be hired and fired. Those values include "Create Fun and a Little Weirdness," "Pursue Growth and Learning," and "Be Humble."

Almost ten years later, Zappos is raking in $1 billion worth of annual gross sales (as of 2008) and employees widely report that their work is exciting and challenging. "We know our employees are happy based on our very low turnover rate and high employee satisfaction scores on surveys," says Rebecca Ratner, director of human resources, "and we know they're productive, but it's our belief, more than a statistically proven fact, that those two are correlated. We really buy into the idea that the better we treat each other, the better we'll all be able to treat our customers." This formula proved irresistible: Amazon is ponying up nearly $900 million to acquire Zappos.

After résumés have been vetted in the standard way, prospective employees undergo a "culture interview" to help suss out whether they'd fit into the slightly wacky, drama-club atmosphere. To test for the value "Build a Positive Team and Family Spirit," the interviewer might ask: "Do you ever socialize with people outside the office?" (It sounds like a trick question, so cautious prospects have to be reassured that it's OK to say yes.) The recruiter may also ask: "How lucky are you in life, on a scale of 1 to 10?" The exact number answer isn't important, says Foley, but how the interviewee talks about her answer is, since research shows that people who consider themselves lucky are open-minded—a Zappos core value.

Augusta Scott, a senior representative on the customer loyalty team, recalls that in her culture interview two years ago, she was asked to draw a pig. "I was quite surprised. I made him rainbow-colored. I still have him up on my cubicle wall." Scott says Zappos is by far the best company she's worked for, because it allows her to express her individuality.

Now that the word is out about what kind of person appeals to Zappos, a few savvy interviewees may talk their way through the culture interview. But a values mismatch is easily revealed during the company's four-week training session, where even new managers must learn how to work the customer service phones. "It's a pretty good screening metric for determining how humble someone is," Foley says. One highly specialized techie was paid to go back to San Francisco after he showed up late to training and claimed it was something he just "had to get through." Zappos's programming team really needed his expertise, but "if you start to compromise on culture," says Hsieh, "it will all start to go downhill."

But doesn't such a process yield a cult-like band of clones? Employees share values but they don't share styles and personalities. A quiet employee is encouraged to connect with customers in his own low-key way, while loudmouths are free to be as chatty as they wish—as long as they are going above and beyond to make sure the client will come back. Scott recalls when a soldier based in Iraq reported that he'd been mistakenly sent an Xbox. Scott made a customer-friendly (if not necessarily profitable in the short-term) call: She let the soldier keep the console and sent games and sundries for his battalion.

"We're not just motivated. We're inspired," Scott says. "We jump on calls—we don't want customers to be on hold." That empowering sense of fulfilling a higher purpose at her work has spilled into Scott's after-hours life. "It's built my self-confidence. And I notice I hold doors open for strangers, I smile at them, I try to help them with anything I can. I'm just a much happier person."

Culture Clash

Standard Interview Question

Zappos: How weird are you?

Typical Company: What are your strengths and weaknesses?

Hiring bonus

Zappos: New hires are offered $2,000 to refuse the job and go away. Those who stay (about 96%) are more committed and engaged thereafter.

Typical Company: Actual hiring bonus, which makes it hard to say "no" to a place where one may not belong. (Or these days, no bonus.)


Zappos: Themed conference rooms including "Zen," "beach," and "superheroes.

Typical Company: Fluorescent lights, white walls.

Customer Service

Zappos: Phone reps are trusted to connect with customers however they see fit.

Typical Company: Phone reps follow scripts, fill out call logs, and adhere to time limits.


Zappos: CEO Hsieh wants employees to move from having a job to "having a vocation."

Typical Company: Make money, get employees to work harder.