Zappos Does Damage Control About Layoffs

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Zappos-Company-CultureAccording to Zappos CEO Tony Hsieh, the company's plans to lay off 30 employees started an "avalanche" of false reports. Part of the backlash comes from concern about Hsieh's promise to invest in Las Vegas. In 2012, he started the Downtown Project and poured $350 million into real estate and 300 start-ups that, today, employ about 800 people. 

The perception isn't helped by an open resignation letter written by David Gould. Gould left a teaching job at the University of Iowa to join the Downtown Project. This is excerpt from the letter:

"Tomorrow, many of the people who merged their voices with yours will find themselves without a job. While their names have yet to be revealed, the disillusioned expressions I conjure up are keeping me awake tonight. This group will undoubtedly include numerous young adults, who have not yet found your good fortune. As they have naively purchased homes and started families, this decision will impact them greatly."

In response to the letter and other criticism, Hsieh puts the layoffs in perspective: 

"We eliminated 30 positions from our corporate support staff. We directly employ more than 300 people, and through our investments there are over800 people working in our porfolio of companies in downtown Vegas. Later this week we are adding about 30 positions when we open up The Market and we plan to continue to grow our total job count."

A 2008 ZDNet article compliments Zappo's transparency when it laid off 8% of its workforce six years ago. 

Discussion Starters: 

  • Read Hsieh's entire response. Which arguments do you find most and least persuasive? 
  • Read the 2008 ZDNet article. What has changed in social media in the past six years? 
  • Zappos usually wins points for its corporate culture. How, if at all, do you think that reputation factors into the media coverage?