Leadership

Zappos' Hsieh: Hire and Fire Based on Cultural Fit

By Jessica Stillman

Updated on: February 11, 2009 / 7:48 AM EST / MoneyWatch

The Find: The CEO of successful online retailer Zappos goes out on a limb and suggests employees should be hired and fired based on how they fit in with the company culture alone.
The Source: An interview conducted by Seesmic founder Loic Le Meur with Zappos CEO Tony Hsieh in a bathroom at this year's TED conference and posted on ReadWriteWeb.

The Takeaway: Zappos attracted a lot of publicity recently when it came out that the company paid people to quit, but the firm's well known management quirks aside, it's also received lots of coverage from a more hard-nosed business perspective for selling a whopping $1 billion worth of shoes. So when CEO Hsieh claims some businesses would benefit from implementing his innovative management techniques, he has quite a bit of credibility.

Company culture, Hsieh insists in this interview, is fundamental to his business's success and other companies would be well-advised to pay more attention to cultural fit when hiring and firing, even if doing so comes at a short-term cost to the bottom line:

Hsieh firmly believes... investing in a corporate culture that allows employees freedom and space is the essence of what makes Zappos so successful. "If you get the culture right, then most of the other stuff, like great customer service or building a brand will just happen naturally.... We've actually passed on a lot of really talented people that we know would make an impact to our top or bottom line," says Hsieh, "but if you know they're not a culture fit we won't hire them. Similarly, he explains the company will fire people even if they're doing their job perfectly if they're bad for the culture.

Among other morale and company culture building efforts, Zappos offers a popcorn machine, employee karaoke at lunch and the occasional dress-up parade (neighbors be warned). While it's obvious that this obsession with culture wouldn't work for some types of companies (those requiring hard to find technical skills, for example), Hsieh's assertion that culture trumps money in the short term offers food for thought. But is it really a good idea to fire a perfectly performing employee just because he's not into belting pop tunes at lunch or dressing up as a pirate on alternate Fridays?

View the complete video interview here (it's in a bathroom â€" really) as well as the condensed text summary. For those interested in the wacky world of Zappos, venture capitalist Guy Kawasaki takes readers on a tour of the colorful offices on this American Express Open Forum blog post.

The Question: Is hiring and firing based on cultural fit likely to stymie diversity and foster group think?

(Image of Zappos office by toprankonlinemarke ting, CC 2.0)