So there I am leaving a baseball game between the Texas Rangers and the Atlanta Braves. As I was walking to the car, I noticed that my cousin had just sent me an email. He thought I would enjoy the article (thanks AL) since it was about blogs. Since I hadn’t spoken to him in a few days, I thought I would give him a buzz and follow up on the article. During our conversation he mentioned that the list of blogs had a few cool stories and one of them was a company that actually bribes their new employees to quit. The company is Zappos. Since I don’t recall ever hearing of something like that I asked him to email me the article.
Zappos is a company that is growing and has a dynamic personality, to the point where a huge number of its 1,600 employees are power users of Twitter so that their friends, colleagues, and customers know what they’re up to at any moment in time. But here’s what’s really interesting. It’s a hard job, answering phones and talking to customers for hours at a time. So when Zappos hires new employees, it provides a four-week training period that immerses them in the company’s strategy, culture, and vision.
After a week or so in the experience, though, it’s time for what Zappos calls "The Offer." The company, which works hard to recruit people to join, says to its newest employees: "If you quit today, we will pay you for the amount of time you’ve worked, plus we will offer you a $1,000 bonus." Zappos actually bribes its new employees to quit!
Why does Zappos do this? They believe if you’re willing to take the company up on the offer, you obviously don’t have the sense of commitment they are looking for. Zappos wants to learn if there’s a bad fit between what makes the organization tick and what makes individual employees tick–and it’s willing to pay to learn sooner rather than later.
My initial reaction was that this idea was a little crazy, it couldn’t work and there wasn’t a place in business for this kind of practice. But then I thought a little longer and harder about it and realized that companies offer incentive packages to staff all the time. Yes most of the time — in fact every time I have heard a story, it is about staff that have been employed for a bunch of years.
- But why couldn’t it work after a month?
- Maybe this strategy is a good one?
I realize it can’t work in every company and certainly you could fire staff if it doesn’t work out from the company point of view, but doesn’t this strategy give you tremendous insight on what the employee is thinking?
I really look forward to your thoughts and comments.
P.S. About ten percent of new employees take the money and run.
Matt Gershner says:
I had read this article when it came out and I think it’s brilliant – so much cheaper than having an employee that doesn’t want to be there.
And, as a sometimes customer of Zappos – their service is second to none. I ordered dress shoes right before my wedding and forgot to put down expedited shipping (so much going on that week), so when I called, the agent upgraded me to overnight at no cost and even enclosed a handwritten card wishing us luck on the wedding – it was too bad the shoes didn’t fit and I had to return them.
I would use this practice as a model on how to get the very best and, more importantly, get rid of those who are only looking for a paycheck.
Steve Runfeldt says:
Do the employees ever try to negotiate a higher bonus? “No, I won’t leave for $1000, but if you offer me $5000, I might be interested.”
Think of all the money they could save on training costs is if they made the offer at the time of the interview.
I was going to say that they should make the same offer to long term employees, but many companies actually do that, don’t they?
Do they get more if they agree to go work for a competitor?
Dustin Cannon says:
Very neat idea. It always amazes me how few companies think about the incentives they give employees. And by incentive, I mean in the truest sense of the word. What are you paying them to do? Show up? Get new customers? Work faster? Work slower? Work efficiently?
When you really think about it, it is often not the answer you think it should be?
http://en.wikipedia.org/wiki/Principal-agent_problem
Merrill Dubrow says:
Steve,
Interesting questions. Not sure they let the staff negotiate the offer to leave. The article didn’t mention that they have increased the offer since they started the program but it isn’t customized by person – more of a company policy here is the deal sort of thing.
I wonder if they mention that there is a deal in place during the interviewing process – that might make a difference to some folks and weed out other.
I don’t recall seeing anything they do for long term employees – lots of companies give packages these days… or at least in the past. I wouldn’t be surprised if some of that went away in the next few years.
Good comments.
Merrill
Shawn Smith says:
One thing that isn’t mentioned too much is that anyone who takes the offer is not allowed to apply for a job at Zappos.com again. Ever. And, yes, the offer was recently bumped to $2,000. Also, EVERY employee, from managers to accountants to computer programmers to buyers to everyone else goes through the training, and actually spends a week talking to customers on the phone even if that’s not their “regular” job.
There are all kinds of other perks the company offers–see the recent story on ABC’s Nightline to get an idea.
Khary Campbell says:
I have to imagine that this is incredibly cost effective, especially from an HR standpoint. I’m not sure you could truly quantify how much they are saving by weeding out these types of employees but it would be interesting to see their turnover rates, especially 5-10 years from now compared to companies with your more traditional training programs. Thanks for the good read.
Bob Graham says:
Reminds me of the classic exchange between Capt Spaulding (Groucho Marx) and Emmanuel Ravelli (Chico Marx) in “Animal Crackers”
The setup: Captain Spaulding has just returned from the wilds of Africa to appear as a special guest at Mrs. Rittenhouse’ Long Island party. As we enter the scene, the entertainment has turned up…
Hives: Signor Emanuel Ravelli!
(Fanfare)
Ravelli: How do you do?
Mrs. Rittenhouse: How do you do?
Ravelli: Where’s the dining room?
Spaulding: Say, I used to know a fellow, looked exactly like you, by the name of…ah…Emanuel Ravelli. Are you his brother?
Ravelli: I’m Emanuel Ravelli.
Spaulding: You’re Emanuel Ravelli?
Ravelli: I’m Emanuel Ravelli.
Spaulding: Well, no wonder you look like him…But I still insist, there is a resemblance.
Ravelli: Ha, ha, ha, ha…hey, he thinks I look alike.
Spaulding: Well, if you do it’s a tough break for both of you.
Mrs. Rittenhouse: You are one of the musicians? But you were not due until tomorrow.
Ravelli: Couldn’t come tomorrow, that’s too quick.
Spaulding: Say, you’re lucky they didn’t come yesterday!
Ravelli: We were busy yesterday, but we charge just the same.
Spaulding: This is better than exploring! What do you fellows get an hour?
Ravelli: Oh, for playing we getta ten dollars an hour.
Spaulding: I see…What do you get for not playing?
Ravelli: Twelve dollars an hour.
Spaulding: Well, clip me off a piece of that.
Ravelli: Now, for rehearsing we make special rate. Thatsa fifteen dollars an hour.
Spaulding: That’s for rehearsing?
Ravelli: Thatsa for rehearsing.
Spaulding: And what do you get for not rehearsing?
Ravelli: You couldn’t afford it…Heh…you see, if we don’t rehearse, we don’t play…And, if we don’t play…That runs into money.
Spaulding: How much would you want to run into an open manhole?
Ravelli: Just the cover charge. Ha, ha, ha, ha, ha, ha…
Spaulding: Well, drop in some time.
Ravelli: Sewer!
Spaulding: Well, we cleaned that up pretty well.
Ravelli: Well, let’s see how we stand…
Spaulding: Flatfooted.
Ravelli: Yesterday, we didn’t come. You remember, yesterday we didn’t come?
Spaulding: Oh, I remember…
Ravelli: Yeah, that’s three-hundred dollars.
Spaulding: Yesterday you didn’t come, that’s three-hundred dollars?
Ravelli: That’s three-hundred dollars.
Spaulding: Well, that’s reasonable. I can see that alright.
Ravelli: Now…today, we did come. That’s uh…
Spaulding: That’s a hundred you owe us.
Ravelli: Say, I bet I’m gonna lose on the deal…Tomorrow, we leave. That’s worth about…
Spaulding: A million dollars!
Ravelli: Yeah, that’s alright for me, but I gotta partner!