Zappos pays you $2K to quit

I wanted to know what my esteemed forum brethren think about the Zappos practice of offering employees $2000 to quit after 1 week of training. Our CEO wants us to institute this sort of program, and I want some more perspectives on it.

The story from Zappos is that "The Offer" helps weed out those employees who are only there for the money, and don't truly belong in the Zappos culture. They say that only 2-3% actually take them up on the offer (company wide), but the statistic for call center employees taking the offer is actually around 10%.

I want to know what you think about this. Here are some points to ponder for your response -

---One, it's a lot of money.
---Two, it could backfire, and the only people who don't take the offer are those who can't get a job anywhere else, so you're still left with the bad apples.
---Three, would The Offer include some sort of release of claims and liability?
---Four, what if you have an employee who, after some predetermined time, you know you want to get rid of - do you have to offer them the money, or can you just fire them? If you don't offer them the money, could they somehow come back and say they were owed the money?
---Five, would #4 make a difference (legally) if you designated these individuals as "trainees" and not "employees?" The articles I see coming out of Zappos seem to imply these individuals are not "employees" yet.

So many questions!!!

Comments

  • 6 Comments sorted by Votes Date Added
  • COO Alfred Lin of Zappos spoke at our recent HR and Social Media event in Chicago. One of his selling points for the $2k offer was that employees frequently know the job's not going to work out long before management does. I think he'd say the employees you want to keep wouldn't take the offer, because they'll be too excited about staying.

    I think, too, that they're making the offer more than once during the five-week training period (one week company orientation, one week job-specific, two weeks on the phone, one week pick-pack-and-ship - no matter what position you're taking).

    Not sure what Zappos is doing about releases and the like. I'd always suggest getting a release, if your state law doesn't get in the way.

    And I don't think the employee/trainee distinction would make any difference in limiting any liability you might have.

    Brad Forrister
    VP Content
  • Zappos is a smart company so my guess is they have thought this through pretty carefully before implementing it. Certainly, they have determined that it costs alot more than $2k to keep employees who are disengaged or unhappy. They are probably right.

    I could also see the positive benefit of reinforcing committment. If I turn down $2k, mentally I am reinforcing my committment to be at Zappos. That could reap some positive benefits down the road. (Interestingly, the world famous Seattle Pike Place Fish Market asks new employees to commit after three months of working)

    Also, its a nice gesture. Zappos is basically saying "We hired you. Its not working out for you. Here is $2k for your trouble. Good luck. Thanks for not staying on and underperforming."

    $2K is just about the right amount too. Enough to work as an incentive but not so much that it probably would draw good people away from a job they are enjoying.

    I dont think McDonalds will implement this policy anytime soon but I think it could be a good move for companies that are highly committed to having an engaged, motivated workforce.
  • Being in an industry with very high turnover and a limited qualified workforce, I am having a difficult time getting my mind around this concept. On the average, we calculate our associated costs to replace a production employee at $7500. To me it doesn't make sense to pay $2000 when getting hit with a $7500 replacement cost.
  • I follow the CEO of Zappos on Twitter. He seems like a great leader, and since his company has come so far it would seem he has lead them to success. His ideas are innovative, and sometimes hard for us old die hards to fathom. When I first heard of this one I couldn't figure out why anyone would invite new hires to quit. I couldn't imagine he offset his savings in unemployment with his costs. However, the loyalty he commands really contributes to the company's success And one of the ways he does it is by making sure his employees only have to work with others who are as dedicated as they are, thereby increasing their dedication and loyalty. Strange as thispay them $2000 idea is, it really pays off.
  • I brought this up at our SHRM chapter board meeting today and I think it blew their minds.
  • At the only SHRM chapter meeting I ever attended, I drank my coffee black. I think[B] that[/B] blew their minds.
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