The thinking behind this process is that if new employees are willing to take the deal over a long term career with the company, then they aren’t going to be good for customers.
This is kind of a ‘deal or no-deal’ mentality, but it makes sense. I just didn’t think a company had the balls or revenue to employ such a tactic. How and why do they do it?
Bill Taylor met with Zappos CEO Tony Hsieh at the company headquarters outside of Las Vegas, NV. Hsieh explained that quality customer service through its 1-800 number has been a main cause of the dramatic increase in sales from $70 million less than 5 years ago, to over $1 billion this year.
Zappos employs around 1,600 employees and they all use Twitter! I’m not totally sure how that explains better customer service, but I guess it’s cool that they are such tech hipsters.
Zappos has been doing the ‘quit-now bonus’, also known as ‘The Offer’, for new employees since the very beginning of the company. It started out with a $100 bribe and then increased to $500 over the new few years. Today it’s at $1,000, but the Zappos executives expect that offer to rise to keep up with the ever-increasing need to keep quality staff. About 10% of new employees take the money and quit.
And they definitely do have a quality staff. From looking at reviews of Zappos, I’ve come across quite a few overly-positive gushing reviews like the ones mentioned by Taylor.
According to Bill Taylor’s article which appears on the Harvard Business School website:
ItÃ¢â‚¬â„¢s a small practice with big implications: Companies donÃ¢â‚¬â„¢t engage emotionally with their customersÃ¢â‚¬â€people do. If you want to create a memorable company, you have to fill your company with memorable people. How are you making sure that youÃ¢â‚¬â„¢re filling your organization with the right people? And how much are you willing to pay to find out?
So, in a purely cynical way, I’m wondering: Has anyone had another job lined up, but opted to start work in 4 weeks. Then they go to Zappos, get paid for 4 weeks of training, PLUS earn a nice little $1,000 departure gift?
What do you think, are Zappos’ policies the wave of the future, or just a clever PR trick? Bring it on in the comments section.
Harvard Business Publishing: Why Zappos Pays New Employees To Quit – And You Should Too, May 19, 2008