TranscriptQuestion: How do you create culture?
Tony Hsieh: Creating culture isn’t something that can really be dictated top down. It’s really more about having it come from the employees. And that’s literally what we did to figure out our core values. I emailed all of our employees—this was about five years or so into it—and asked them "What should our core values be?" And got back a whole bunch of different responses. And it actually is a pretty hard thing to do. It’s been about a year going back and forth, and we eventually came up with our final list of 10 core values at Zappos.
And you know, a lot of companies have things, they may call them "core values" or "guiding principles," but the thing we wanted to come up with was a list of committable core values. And by committable, meaning that we were willing to hire, or fire people based on whether they were living up to those core values independent of their actual specific job performance.
And so we’ve actually passed on a lot of really smart, talented people that we know could make an immediate impact on the top or bottom line, but if they’re not a culture fit, if they don’t live up to our core values, then we won’t hire them. And ultimately what we try to do is actually take care of it on the front end. When we hire people, we do two sets of interviews. The hiring manager and his or her team will interview for the standard fit within the team: relevant experience, technical ability, and so on. But then our HR Department does a separate set of interviews purely for culture fit. And they have to pass both in order to be hired.
So for example, one of our core values is, "be humble." And there are a lot of really smart, talented people out there that are also really egotistical. And it’s not even a question, we just won’t hire them. Whereas, probably the conversation at most companies would be, "Well this person might be kind of annoying and rub you the wrong way a lot of times, but he can add a lot of value to the company, therefore we should hire him." And I think, that one hire won’t necessarily bring the company culture downhill, but if you keep making compromises like that over and over and over again, I think that’s why most large companies don’t have great cultures.
Question: How can you tell that potential employee won’t fit the company's culture?
Tony Hsieh: So, our recruiting team over time has gotten actually pretty go at figuring out whether somebody is going to be a culture fit or not. And we actually have interview questions for each and every one of the core values. And it's not necessarily what they say, but how they say it a lot of times. And, over time, our recruiting team has really developed their gut in terms of whether what the right call is for a candidate.
We actually last year had over 25,000 people apply to work at Zappos and we only hired 250 of them, so about 1%. I think I heard the stat that it's actually harder to get into Zappos than into Harvard. So I'd say our recruiting team does a good job of screening on the front end. And, yes, it is true, they are not perfect and there are times when people do make it through the process, but then everyone that’s hired goes through a four-week training program. The same training program that our Call Center Reps and it’s pretty hard to fake something for four weeks. And so we also use the training program as part of... it’s almost like an extended interview.
Question: Do you end up training many people who are not eventually hired?
Tony Hsieh: It really varies. It used to be really bad, it used to be that within the first month or so half the people that were accepted in were no longer employed by the end of the first month. But now the vast majority do make it through. But we still get cases where, for example, we had someone that was actually a pretty senior technical hire, and because we are based in Las Vegas, a lot of the technology people we actually have to relocate from other places. And this was a candidate that relocated... we paid to relocate from L.A. to Vegas and he started the first four weeks of training and by the end of the first week, it was pretty clear that his attitude was that customer service was beneath him and that really he was just waiting to make it through the program so he could start the actual job he was hired for. But we actually ended up letting him go during the training program—even though what he was doing in the training program didn’t have anything to do with the actual job function—because, for us, that’s how strongly we believe in the importance of culture and in making sure that we are hiring people whose personal values match the corporate values.
Interviewed by Victoria Brown