Zappos and Lululemon
hacw_1y
11-8bBenefits.pdf
1/18/2021 Print Preview
https://ng.cengage.com/static/nb/ui/evo/index.html?deploymentId=5835051934529006900868413293&eISBN=9781337614467&id=1034289167&nbId… 1/2
Chapter 11: Zappos: Taking Steps toward Maximizing Stakeholder Satisfaction: 11-8b Benefits Book Title: Business Ethics: Ethical Decision Making and Cases Printed By: Toure Williams ([email protected]) © 2019 Cengage Learning, Cengage Learning
11-8b Benefits
Another aspect of Zappos that is unique is the benefits it provides to its employees. The company has an extensive health plan that pays 100 percent of employee medical benefits and on average 85 percent of medical expenses for employees’ dependents. The company provides employees with dental, vision, and life insurance. Other benefits include a flexible spending account, prepaid legal services, a 40 percent employee discount, free lunches and snacks, paid volunteer time, life coaching, and a car pool program.
Along with the extensive benefits package, Zappos developed a compensation model for its “Customer Loyalty Team” (call-center representatives) that incentivizes employee development. At Zappos the goal is to answer 80 percent of customer inquiries within 20 seconds, although employees are encouraged to take the time needed to ensure quality service. Initially, employees were paid $11 per hour for the first 90 days. After 90 days, the employee moved to $13 per hour. To move beyond $13 an hour, employees had to demonstrate growth and learning by completing specific skill set courses that allow employees to specialize in certain areas of the call center. Employees were given freedom to choose the shifts they wanted based on seniority. Although the reasoning for Zappos’s compensation model is to motivate employees and promote personal growth, the base pay was less than the national hourly average of $15.92 earned by call-center representatives.
Zappos determined that the pay structure and the process for employee shift signups were inefficient for the company’s needs. With Hsieh’s encouragement the company adopted scheduling software called Open Market. Under this new system, call-center employees would be given 10 percent time flexibility to pursue their own projects. Employees could decide when to work, but the compensation system was revamped to mimic the surge-time pricing of popular ride-sharing service Uber. With this compensation system, call-center employees working during periods of high demand would receive higher pay. In other words, Zappos’s hourly compensation for its call-center employees would be based on demand. Zappos hopes to expand this system to all departments eventually. For seniority-based jobs, this system holds risks. For instance, seniority-based incentives also take into account company loyalty, camaraderie with coworkers, and dedication that are also important to work productivity. However, Zappos believes the system works well for its call-center employees because many employees are employed for shorter periods.
Chapter 11: Zappos: Taking Steps toward Maximizing Stakeholder Satisfaction: 11-8b Benefits Book Title: Business Ethics: Ethical Decision Making and Cases Printed By: Toure Williams ([email protected]) © 2019 Cengage Learning, Cengage Learning
© 2021 Cengage Learning Inc. All rights reserved. No part of this work may by reproduced or used in any form or by any means - graphic, electronic, or mechanical, or in any other manner - without the written permission of the copyright holder.
1/18/2021 Print Preview
https://ng.cengage.com/static/nb/ui/evo/index.html?deploymentId=5835051934529006900868413293&eISBN=9781337614467&id=1034289167&nbId… 2/2
