Cutting staff without killing morale: Zappos gets it done

Yesterday, online shoe (and clothing) retailer Zappos announced that it would be laying off 8% of its workforce. The move is not unlike what many retailers are doing: cutting costs in light of tough market conditions. But did you ever notice that there seems to be a right and a wrong way to reduce your headcount? It may be largely intangible, but you just know when it feels like a company is doing it the right way. And Zappos seems to have done it right.

CEO Tony Tony Hsieh sent a letter to all employees and posted a statement on his company blog. Basically, the powers that be wanted costs reduced. Zappos is doing well this year, especially in light of how other retailers are suffering. But their cost structure for this year was based upon projections they just won't meet, and so they need to scale back the costs. The company is profitable, but needs to get costs in line with sales.