Intuitively, the University of Warwick’s studies make sense; however, I disagree with Graham’s suggestion that companies such as Zappos should cut costs at the expense of diluting corporate culture. Companies that clearly define and promote a distinct corporate strategy are ultimately the most successful.
Zappos’ large-scale success is because of a distinct corporate culture that resonates within its employees and customers. Employees at Zappos are not being paid for high-end skills or talent; they are being paid for operational productivity. This is achieved through incentivizing employees by offering a family environment, health benefits, and opportunities for internal promotion, which all decrease employee turnover. Other successful companies such as Google do not need to offer benefits or compensation. They can have a cold, profit maximizing corporate attitude because employee turnover is actually desired. Technology companies thrive on cycling through top talent and need turnover to inject new ideas. Furthermore, young employees of tech companies better themselves through turnover by gaining experience from company to company.
The corporate culture of Amazon, Zappos’ parent company since 2009, is an example of another successful, yet distinct corporate culture. Amazon undercuts all low cost competition including Walmart through squeezing the life out its workers and through controversial cost minimization. Nevertheless, Amazon is by far the largest and most successful online distributor in the world that monopolizes the industry with its ability to buy out competitors.
Amazon – Dark Side of a Commercial Empire