Chapter Four

Business Ethics and Social Responsibility: Doing Well by Doing Good

Case: Zappos Employees Do More Than Sell Shoes

It's hard to imagine not being able to buy a pair of shoes online. It's even harder to imagine not owning a pair of shoes at all. The founders and employees at Zappos are familiar with both situations. Co-founder and CEO Tony Hsieh got Zappos off the ground in 1999 when he and other investors realized that nowhere on the Internet could consumers find a real selection of shoes. You know how successful Zappos has become since then, despite subsequent competition-but you might not be aware of the company's efforts to give back to its community, including giving shoes away to children in need.

Zappos engages in social responsibility initiatives because "we feel that it's the right thing to do," explains Shannon Roy, the company's Happiness Hippie (her job title). The company develops relationships with charitable organizations that are similar to those it builds with customers and vendors, looking for ways that employees can interact directly with the community through these organizations. Some of the broad areas in which Zappos offers assistance are poverty and education, cancer research and care, and pets and nature. Specific efforts include partnerships with charitable organizations, such as Goodie Two Shoes, a foundation that provides new shoes and socks to children in crisis or need. Through its Goodie Two Shoes Giveaway each year, the organization teams up with Zappos and other firms to donate and distribute thousands of footwear products to children who need them. "It's giving back to the community," says Shannon Roy, who adds that Zappos employees feel driven to participate. "It's part of our being, part of our culture, it's very inherent in what Zappos is all about." Working at Zappos is "grander than the 9 to 5 job. It's doing something for the greater good."

It would be easy for an online retailer like Zappos to set up shop anywhere and ignore its surroundings. But that's not Zappos. Instead, the firm made a deal to renovate the vacant Las Vegas City Hall for $40 million, bringing about 2,000 employees to downtown Las Vegas-an area that could use an economic and social boost. CEO Tony Hsieh admits that originally he thought about building a "dream corporate campus," much like those of Apple, Google, and Nike. But when the Las Vegas opportunity came along, Hsieh and other Zappos managers thought: "Let's not be like the other companies. Let's not be insular and only care about our employees. We want to help contribute and help build a community and really integrate into a community around our campus." City officials predicted that the economic impact to the downtown area could top $336 million, bolstering real estate, health care, restaurants and hotels, retailers, and other businesses. "I think this is part of what our brand is about," observes Matt Burchard, senior director of marketing, photo, and video. "We've added a core tenet of what we stand for, and that's community."

Burchard notes that Zappos is committed to investing in things beyond its core business, like the infrastructure of downtown Las Vegas. Recently, The Downtown Project (founded by Hsieh and others) partnered with Venture for America to attract new college graduates for two-year stints to help startup businesses get off the ground in Las Vegas. In addition, The Downtown Project has bought up Las Vegas properties, such as an old Motel 6, a 7-Eleven building, and numerous condominiums for demolition or renovation. The idea is to revitalize the entire area-both economically and socially.

Zappos fulfills the four levels of the social responsibility pyramid: economic, legal, ethical, and philanthropic. The company is stable and profitable, giving it a solid platform from which to launch social responsibility initiatives. It operates with a strong legal and ethical base. Recently, when Zappos became the target of a cyber attack that gained access to its internal network (and the accounts of 24 million users), the firm acted fast, putting nearly every employee to work assisting in its response to the breach. Even though the breach did not reach complete credit card numbers or other critical data, the company notified its customers and reset all of their passwords. Zappos also warned customers to be on the lookout for phishing emails and other scams. Finally, Zappos is generous in its philanthropic efforts, donating money, shoes, and employee time to its various causes. "We don't overanalyze it," says Rob Siefker, director of the customer loyalty team. "We just know who we are and who we want to be. We act on that.

Sources: Company website, www.zappos.com, accessed June 27, 2012; Goodie Two Shoes Foundation, www.goodietwoshoes.org, accessed June 27, 2012; Joe Schoenmann, "Zappos CEO Buys Motel, Strikes Deal to Bring Young Talent Downtown," Las Vegas Sun, March 27, 2012, www.lasvegassun.com; Dave Toplikar, "Las Vegas City Council Approves Final Deal Bringing Zappos Downtown," Las Vegas Sun, February 1, 2012, www.lasvegassun.com; "100 Best Companies to Work For," CNN Money, January 19, 2012, http://money.cnn.com; Andy Greenberg, "Zappos Says Hackers Accessed 24 Million Customers' Account Details," Forbes, January 15, 2012, www.forbes.com.

Critical Thinking Questions

Using information from the case, answer the following questions (1 & 2). (Be sure you read and understand the concepts in Chapters 3 & 4 to answer the following questions.)

1. Briefly explain how Zappos has implemented social responsibility programs into its business. (Include at least a 50-word response)

2. How have charitable giving and volunteer engagement programs helped Zappos foster social responsibility? (Include at least a 100-word response)