Paying Employees To Quit
Last week in celebrating the geeks in your organisation we looked at the Geek Squad where its CEO Robert Stephens stated “marketing is a tax you pay for being unremarkable.” Tony Hsieh of Zappos makes much the same argument about his business, which may be why he spends so little time or money on traditional marketing. His company initially championed its over-the-top performance for customers as a matter of strategy, a way to avoid being pigeonholed as an online shoe retailer.
Sure, Zappos started out selling footwear. But if it developed a reputation for killer service and a fun-loving personality, the CEO reasoned, it would be easier to expand into new categories, from fashion to cosmetics to housewares (all of which it has done).“Then a funny thing happened that we didn’t expect,”Hsieh goes on. “When people saw they were working on something beyond profits, or being the biggest retailer in a certain category, when they were working on something that meant something to them, they became more engaged. There’s a difference between motivation and inspiration. You can accomplish stuff by motivating employees. But you can accomplish much more by inspiring people around a vision with meaning to them and that you are passionate about.”
If you want evidence of the rank-and-file sense of mission at Hsieh’s organization, thumb through an eight-hundred-page tome called the Zappos Culture Book. Every year, the CEO invites his employees to contribute a riff, rant, or serious essay that captures what it feels like to work at the company. He promises that Zappos will publish the responses verbatim, other than corrections for spelling and typos, and share them with job candidates, suppliers, business partners, and customers. He also gathers lots of candid workplace photos and groups them under headings such as, “What would Zappos look like if we were 10 feet tall?” and “How does Zappos freak its freak? “and “How much do Zappponians care about hair?”
The book, filled with heartfelt tributes, earnest poetry, and bizarre entries of all sorts, is a strange and wonderful window into what makes the company and its people tick, and their deep sense of engagement with both their work and their colleagues. Jimmy A. from finance says simply, “Zappos culture is the confluence of genius and insanity.”
One reason Zapponians work with a sense of camaraderie and shared identity is that the company makes it easy for new recruits to leave if the Zappos way of working is not for them. It’s a demanding job, answering phones and solving customer problems for hours at a time, and doing it with a sense of humor and style. And it doesn’t pay all that well. So when Zappos hires employees, it provides a four-week training period that immerses them in the company strategy, values, and obsession with customers. During those four weeks, it is impossible not to understand what a career at Zappos will feel like: the expectations, the intensity, and the commitment.
A week into the crash course, its time for “The Offer.” This hard-charging company, which works diligently to recruit highly qualified people, says to its new hires: “If you quit today, we will pay you for the amount of time you have worked, plus we will pay a $2,000 bonus.” Zappos actually bribes new employees to leave! Why? Because if you’re willing to take the Offer, you obviously don’t have the sense of commitment the organization needs. There is a hard to fake energy, a kind of zealotry, about the Zappos culture, which means, by definition, it’s not for everybody. So 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 the later. (The Offer stands for the duration of the training period).
Indeed, Tony Hsieh and his colleagues keep raising the size of the quit-now bonus, to encourage most recruits to opt out. (Fewer than 3 per cent of new employees choose to leave.) It started at $100, went to $500, then $1,000, and definitely will go higher than $2,000. But the ultimate value of this unusual practice, Hsieh argues, is the message it sends to people who stay, “The biggest benefit,” he says, “is not that it sorts out people who don’t believe in the long-term vision of what Zappos stands for, although that is important. The biggest benefit comes from all the people who decide not to take the offer. Those people had to go home, think about whether this was a company they were prepared to commit to, talk about it with their family and friends. They wind up more engaged than they would have been if we had not offered the chance to leave.”