Leadership and Change Management Analysis: A Zappos Case Study Report

This report provides a comprehensive analysis of leadership and change management at Zappos, examining the company's organizational changes, cultural shifts, and strategic initiatives. It delves into the challenges faced by Zappos, including the implementation of Holacracy, issues related to recruitment, and the impact of Amazon's acquisition. The report explores the causes and types of change experienced, analyzing the organizational, cultural, and social dimensions affected. It highlights the importance of organizational culture and its role in change management, while also examining the links between power, politics, and conflicts. Finally, the report offers recommendations for leading and managing organizational change, focusing on leadership styles, employee engagement, and organizational development to provide valuable insights for business leaders and students alike.

Leadership and Change
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Introduction to report and key issues of case scenario along with statistical data ................3
TASK 2............................................................................................................................................4
Analysing various causes for changes and types of change experienced...............................4
TASK 3............................................................................................................................................7
Change situation of organisational, cultural and social dimensions along with importance of
culture and its role in relation to organisational change and links between power, politics and
conflicts and their effect on change........................................................................................7
TASK 4............................................................................................................................................9
Recommendations to lead and manage organisational change, reflecting on leadership issues,
employees’ engagement and organisational development.....................................................9
TASK 5..........................................................................................................................................12
Conclusion............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Leadership is the practical skill and research area encompassing ability of organisation or
individual for leading or guiding teams, people, employees and other. Change management is
aggregate term for approaches to support and prepare group, individual and administration in
making organisational change (Bolden, 2016). Both are two important priorities for many
organisation as due to this many businesses fail and develop in market. In order to get better
results, enterprise should coordinate change management efforts and leadership development.
Due to social, political and cultural transformations bring many opportunities for organisation,
society and people in current as well as future environment which can be responded through
leadership and change management. The given assignment is based on case study of Zappos.com
founded by Nick Swinmurn in 1999. It deals in clothing retailer, shoes, eye-wear, handbags and
accessories. The report covers situation of organisational change, analysing their multiple causes
and consequences in social and organisational factors. Also there are recommendation given to
organisation in terms of lead and manage business change, leadership styles, development of
organisation and employees engagement.
TASK 1
Introduction to report and key issues of case scenario along with statistical data
Every organisation has to face issues in organisation due to change in structure, culture
and others. The given report is based on Zappos. It was established in 1999 by Nick Swinmurn.
It is a clothing retailer and online shoe based company (Burnes and By, 2012). It was acquired
by Amazon in July 2009 where all stock having value $1.2 billion. The aim of report is to find
issues related with organisational change which took place in Zappos and giving solution to it.
The organisation faces issues after implementation of Holacracy in businesses. Here,
organisation culture changed from traditional to modern that is Holacracy where employees felt
difficult to accept it. It was new concept for staff to follow and accept. Also issue is related with
Self management where staff were forced to manage each and every things by themselves.
When notice related to change in management was declared and after one week of
passing such notice, 14% of Zappos employees that is 1443 took other Tony offer. There were
210 employees who left job out of which 20% of tech department. Nick was attracted by idea of
online marketing where people could easily purchase shoes. As Zappos team moved forward into

Venture Frogs incubators and Tony joined organisation in 2001 as CEO and business grows by
$8.6 million in gross sales. The company made $70 million sales in 2003 where Tony become
CEO and Nick as chairman. The issues arises because of change in culture and design of other
organisation. Employees faced issues as they are required to give three months notice before
leaving Zappos. The case study depicted when sales reached $184 million in 2004, Sequoia
invested in Zappos that is $20 million. Tony's personal income was $27 million which he
invested in business. So, this can also be considered as an issue due to which change was
required.
Change is important in organisation as it allow staff to learn new opportunities, skills,
exercise creativity which provide benefits through new commitment and new ideas. With
change, firm can easily survive in competitive market and provide services to consumer in better
ways. Thus, it helps to achieve goal and objectives of business.
With change in situation, different environmental impacted has been observed. As
management has change their structure due to which organisation also need to adopt it. Due to
change employment arise in environment, many employees leave their job and accepted other
offers. Due to management and structure, it has been changed.
TASK 2
Analysing various causes for changes and types of change experienced
The business running in environment has to face issue due to various factors (By, Burnes
and Oswick, 2012). Similarly, Zappos has also faced issues due to change in organisation and its
structure. The main issues faced by business are in terms of change in organisational culture,
recruitment and offer, acquisition by Amazon in 2009, down-town project failure and holacracy.
This changes took place in business because of many factors which are described below:
Change in culture- It is first issue which took place in Zappos because of new
technology. Online shopping is the easiest and best way to do shopping. Due to competitive era
individual does not have time to go and purchase products from stores. Thus, online platform
provide opportunity to them and view all type of goods, price and order it. This technology needs
to be adopted by Zappos as it was acquired by Amazon which is online platform for shopping of
all types of products. This was issues which hamper company and its employees. For survival in
market, it need to adopt new and updated technology. This company adopted “wow” customer

service experience for fast delivery. For example, if customer has order at late midnight can get
product by next morning but it was very expensive which represent bad culture of entity. This
facility was provided to loyal and repetitive consumers (Cameron and Green, 2015).
Recruitment and offer- The second issue faced by Zappos which took interview of new
candidates where they asked to provide creative design for shoes and see whether fit for business
or not. The new hires have to go through training programmes and in case not fitted for profile
have to leave job where company pay them $3000 for leaving job. In 2013, 25000 candidates
applied for job where only 240 hired. This organisation focus on building employee rather than
grooming individual. Even entry level employees can became senior manager which is not good
for entity.
Acquisition of Zappos by by Amazon- It is third issue where Zappos was not growing
enough in market. Tony has controlled 30% of Zappos share and voting power was in hand of
other board members. Due to acquisition, controlled and power was in hand of high authority
which leads issues among manager in Zappos. It also leads to unemployment because many staff
has to leave job.
Down-town project- It is fourth issue arise in 2013. Zappos outgrew headquarters
outskirts of Las Vegas and relocated to old city where areas begin to decline. Tony and friends
made initial investment of $350 million divided tech start-ups, small businesses, education, arts
and real estate. In order to receive funding from down-town projects, the aim was to hire 10000
young professionals by 2017. First negative impact was in September 2014, project attract
negative attention of media where 10% of staff positions were eliminated. Second impacts leads
to commit suicide of three down-town project entrepreneurs.
Holacracy- It is fifth issues where it has changed traditional structure to self
management. Holacracy is flexible self governing structure which has no fixed jobs but act as
temporary functional sales. The structure is based on works and projects which has no job
description and hierarchy. This create problems for employees working in organisation to have
proper and structured hierarchy. As every work need to be managed by staff and workers
themselves (Carter and et. al., 2013). Under holacracy, Zappos announced to remove all titles
and people managers. Individuals has responsibilities which is split into three roles such as lead
link, compensation appraiser and mentor. Here, link focus on guiding particular task,
compensation appraisers on salary of employees and mentors on growth of staff. Due to

holacracy, it has also faced problem in not completing Supercloud projects work and have to
replace 14% of workforce.
Change management is procedure which helps individuals and organisations transition
from current to desired or future state. It requires skills, tools and practices in different areas
including support and executive leadership (Goetsch and Davis, 2014.). Similarly, change
experienced means the changes which has been experienced by employees, staff, manager at
workplace, business or organisation. It can be positive as well as negative. The change
experienced by Zappos are described below:
Organisation Wide Change- It is large scale transformation which affect organisation as
a whole. It includes adding new policy, restructuring leadership or introducing enterprise
technology. It is quite expensive which needs to be planned and protecting those affected.
Transformational Change- This change focus on company's organisational strategy that
includes culture trends, technological progress and social climate.
Personnel Change- It means when company implements lay-offs or mass hiring. This
change can cause significant shift in engagement and employee morale.
Unplanned Change- When unexpected events took place in organisation then it is called
unplanned change (Hailey, 2013). For example, hurricanes battered in US caused thousands of
people seek shelter far from home.
Remedial Change- Whenever leaders identify deficiencies and poor performance of
company then implement remedial change. For example, poor performance, financial distress
and others. When Zappos change their management style, it was difficult for them to manage
leaders as new skills and knowledge required to them.
After analysing all change, Zappons has experienced organisation wide change where
culture, creativity, self management strategy has been took place. It has change by company
itself in order to formulate new and updated technology required in business.

TASK 3
Change situation of organisational, cultural and social dimensions along with importance of
culture and its role in relation to organisational change and links between power, politics
and conflicts and their effect on change
After change took place in Zappos, the situation of organisational, cultural and social
dimensions has been changed. The organisation has change in terms of number of employees,
policies, strategies and others. This change provide benefits in terms of increasing sales and
revenues, profits and use of new technology. Due to change in culture dimensions, customer
service became quick and they get online delivery within time. As company work for customer
so their need and wants should be fulfilled. Similarly, in terms of social dimensions staff got
opportunity to work in organisation. The need and demand of people fulfilled because of
providing variety of products.
Culture
It is norms and social behaviour that is found in human societies. It is regarded as central
concept in anthropology that is transmitted from societal learning to society (Hornstein, 2015). It
is way of life of people in which they do things. Culture has three different meaning in terms of
excellence of taste in terms of humanities, outlook, values, customs, attitudes, moral goals shared
by society and collection pattern of belief, knowledge and behaviour. It is very important for
organisation to follow culture and work accordingly. Culture is very importance for all types of
organisation which is identity of nation without it society is impossible. As per author, culture is
collection of transmitted and learned belief, pattern, institutions and other human work and
functioning of specified profession, community, population and community. In order to work
together for building communities culture should be implemented. As each cultural groups have
unique and different perspectives that provide benefits to community. This helps in overcoming
and preventing ethnic and racial divisions. In order to make policies effective, people from
various cultures should be included in decision making. Thus, culture can leads to success of
organisation and running functions effectively. Zappos should also work as per culture of
business and work accordingly. Thus, by following culture, it reflect goodwill and image of
organisation. The culture helps Zappos to perform work effectively and efficiently. It focus on
achieving goal and objectives of organisation.

The changes which took place in organisation is a challenging factors but changing
culture is very important that need to implemented in business. In order to build high performing
organisations, it is necessary to address culture change (Kool and van Dierendonck, 2012). The
employees working in organisation should feel comfortable with change in culture of company.
Whenever employees working in organisation recognise and realise about current culture needs
for transformation for supporting progress and success of business then change took place. There
are four steps required for changing an organisation culture. First is understanding current culture
before changing the culture of organisation. Secondly, need to analyse strategic and types of
culture required for success of enterprise. The management team should analyse important
values for culture and whether those are compatible or not. Thirdly stage is making plan for
ensuring desired organisational culture becomes a reality. Finally, individual working in
organisation need to change behaviour in order to create desired culture which is hardest step in
cultural change. There are some important components which are required in changing culture of
organisation. They are creating belief and value statements, reviewing organisational structure,
work system, practising effective communication and redesigning approach towards recognition
and rewards.
Power
It is capacity of individual for influencing others for work conduct. It is ability of people
for altering and determining rights, liabilities, duties and other legal relations of oneself or others
(Kuipers and et. al., 2014.). The business depends upon power as each operations is conducted
through help of power. When power goes beyond planned then downtime may occur which can
cost to business. Downtime is the situation in which company face difficult to recover. After the
acquisition of Zappos by Amazon, power of manager changes effectively. This has impacted
organization where subordinate became head to manage task. The roles and responsibilities has
change from low level to high level. In case scenario, power has change and given to other
person who are not eligible to manage. Tony has power of money for investment in business
which attrat large number of employees to join their organization for achievement of goal and
objectives. Their power is to make each and every employees as well as consumer happy.
Politics
It is behavior which is perceived by others as self services tactics in order to gain
personal at expense of other people (Renz, 2016). It is behavior and process in human

interactions that consists of authority and power. These politics bring pros and cons to
organization. When there is positive politics at workplace then it can leads to fulfilling need and
demand of employees, increases in productivity and high profit. As company is working for
individual and achievement of goal and objectives of business. Sometimes, it is good to create
politics in business and convenience manager for the benefits of employer and workers. The
negative politics leads to conflicts among staff, making relationship adverse and others. This
situation has been faced by Zappos also which leads to decline in employees ratio of business.
Conflict
It is referred as misunderstanding or disagreement which results from perceived or actual
dissent of beliefs, needs, resources and relationship among individual groups of organizations
(Santhidran Chandran and Borromeo 2013). This conflicts occurs when there is contradiction in
opinions of two person regarding same matters. Zappos has gone through this phase because of
change in structure from traditional to Holacracy. As all responsibilities lies within individual in
order to perform task. Due to this many employees left organization which has increase cost to
firm. The other reasons for conflicts can be communication disruption, misunderstanding and
lack of accountability. There are three conflicts which can occur in business are as relationship,
process and task. Zappos can manage conflicts by handling it positively, concentration on causes
rather than effect, participation of all staffs and formulating grievance handling for all members.
In this way, conflict effect business and its working style.
TASK 4
Recommendations to lead and manage organisational change, reflecting on leadership issues,
employees’ engagement and organisational development
The change in organisation brings positive and negative impact to business. It need to be
accepted by enterprise for better running and achievement of goal and objectives. In order to
improve such situation, there are recommendations to Zappos for better outcomes. In order to
lead and manage organisational change, it needs to create awareness among employee before
implementing it so that they became familiar to accept changes. For Holacracy, Zappos can
provide training and development to all working staffs and employees for better understanding
and learning changes more deeply. In order to manage organisational change, leaders should
understand that employees have to deal with changes at various rates. Zappos need to

communicate effectively with their subordinates so that they can understand each and every
situations effectively. It is recommended to Zappos to check efficiency of their workers and
accordingly assign change task to them so that they perform it in better and effective way for
down town project . Thus, in this it can perform better and achieve ultimate goals and objectives
effectively and efficiently.
There are some leadership issues faced by Zappos for running their business effectively
in competitive era. It can be related with ineffective communication, ineffective accountability,
fear of firing, alignment issues, unclear vision, poor execution. These issues are common in
organisation which creates problems in success of entity. In order to solve such issues by Zappos
recommendation are given to it. For making communication effective, proper structure and
channel need to be followed. The message and information should be shared effectively and
efficiently to all employees who are running their business. It also helps to improve effectiveness
of enterprise for better performance. In order to accountability challenges, Zappos can use
scoreboards for tracking results which business want. In order to implement such system
business requires focus and self discipline for better accountability. It is also recommended to
staff to make aware about all necessary things to managers. In order to resolve fear of firing,
Zappos manager should be effective in decision making so that unskilled and not required can be
eliminated. Also, manager should be able to make on the spot decision for their employees. It is
very important for manager of Zappos to make clear vision for organisation and make aware to
employees so that they can work accordingly. Whenever any decision is made in organisation the
team should support it and move forward with unity for achieving it. This is applied in Zappos
also that it can align work with employees. The manager fails to execute in organisation because
of three reasons such as not following plan with discipline, failing to score on given matters and
lack of right person for right job. Thus, it is recommended to Zappos to focus on solving these
three puzzles in order to make organisation in track for winning. Thus, in order to improve
leadership issue, Zappos should make skilled employee leader so that they can leaf properly for
better outcome.
It is very important to increase employee engagement at workplace. In order to improve
engagement, it is necessary for employer to provide unique needs and motivation to each and
every individual. Due to change in structure from traditional to Holacracy, there is increase in
employee engagement. They focus on participation and achieving goal and objectives. The

employee are happy with organisation and focus on giving better performance. The
recommendations to Zappos for improving employee engagement at workplace can be done
through various ways. The first recommendation is to encourage flexibility which creates
freedom to staff for adjusting work schedules to their better needs. Each and every subordinates
should be provided opportunity to participate in activities of business for improving their
confident and trust among each others. It also leads to create effective relationship with their
staff working in same profile. Zappos can take feedback from their staff and workers in order to
resolve issues, take ideas and work accordingly for better achievement of outcomes. It is
recommended to organisation to offer training and development programmes on regular basis for
all staffs and workers in order to improve them for achieving individual as well as organisational
goals which helps in building confident, enhancement of knowledge and skills. The most
important recommendation to Zappos for employee engagement is to provide bonus to staff. This
can leads to motivate and encourage staff for better performance and creates satisfaction as well
as loyalty towards business. In order to run business, manager of organisation should have
effective leadership style for achievement of goals and objectives. Here, Tony has also unique
leadership style for managing their employees and work so that staff can work properly. The
manager of organisation has used situational leadership style for doing work. As Tony use such
style for gaining competitive advantage in firm. This type of style can suit best to enterprise as
many situation arise in organisation which need to be change frequently.
In order to develop employees and organisation, plan should be made for achieving goal
and objectives. The recommendation for organisational development to Zappos are in terms of
continuous improvement, increased communication, employee development, profit
enhancement, product and service enhancement. In order to run business successfully, it is
recommended to Zappos to do continuous improvement in their offerings. The strategies should
be planned, evaluated, implemented, improved and monitored. There should be proper
interaction, communication and feedback within organisation for development of business. This
can helps Zappos to align staff in order to share values and goals of business. For employee
development, it is recommended to influence them for bringing desired changes. The employees
are required in every field so they need to be skilled and knowledgeable. This can be done by
providing training and development effectively and enhancing their skills on regular basis.
Zappos can focus on different programmes such as learning, competency, training, work process

improvements and skills enhancement. For increasing profits, Zappos can do innovation and
productivity which increase efficiency and sales. The profits can be gain more by minimizing
absenteeism and employee turnover. It is also recommended to Zappos to bring innovation in
their products and service. Organisational development can be increased through market
research, competitive analysis, consumer preferences and expectation for new products and
service.
TASK 5
Conclusion
The given case study is based on Zappos which is retailer dealing in clothing, furniture
etc. As this company has faced various problems for leadership and change of organisation
which creates impact on business. From above report, it can be concluded that the issues faced
by Zappos in terms of Holacracy, acquisition and others that can be resolved by adopting suitable
structure, culture, power, communication channels, proper decision making strategy. The
unplanned, transformational, organisational and others changes have been experienced by
Zappos in terms of culture, creativity and change of policies, strategy. It is very significant to
follow a culture in the organisation in order to run business successfully and effectively. The
power, politics and conflicts provide positive and negative effect on change that leads to decline
productivity, increment of profits, diminishing quality and others. The recommendation has been
given to Zappos in terms of leadership issues, organisational development and employee
engagement like improving communication, enhancement of products and goods, increasing
profits and improvement in decision making. Thus, it is necessary to adopt changes taken place
in business in order to compete and survive in market. The case study is about Tony and its new
business. When change management occurred, 14% of Zappos employees that is 1443 took other
Tony offer. Zappos team moved into Venture Frogs and Tony joined organisation and grows
business by $8.6 million in gross sales. The case study depicted when sales reached $184 million
in 2004, Sequoia invested in Zappos that is $20 million. Tony's personal income was $27 million
which he invested in business. So, this can also be considered as an issue due to which change
was required.