Friday, December 3, 2010

The Value of Paying Employees to Walk Away

I've always been interested in people, passion, and connecting the dots between the two. Here's a fragment of an interview by Peter Hopkins and HP with Tony Hsieh that took my attention. He is the CEO of (and a millionaire by the age of 24). You'll find here one of his most original way to screen out passionate people and keep them as valuable assets in your company.

Peter Hopkins: Go to the first question here, Amy Nichols and she writes, “This is in reference to a very interesting and much discussed aspect of your hiring practice where you have employees do a training, a rigorous training where they learn everything about the company, and then at a period you give them a bonus to potentially walk away where you pay them you through that time, but then a bonus on top of that.” And she asks, “How often do new hires take advantage of this $2,000 offer to quit Zappos?”

Tony Hsieh: Yeah, on average it’s about 2 or 3% of people take it, so there are some classes where each class is 20 to 40 people, so some classes nobody takes it, and some classes 2 or 3 people might take it. And we started this a few years ago, and it actually started out at $100 dollars, and we keep actually upping the offer. It’s at 2,000 now, and actually at the end of the training, which is four weeks, we up it to $3,000 and extend it beyond that. And we keep upping it because we feel like not enough people are taking it, and the original motivation was to get people that…We don’t want people at Zappos that are there just for a paycheck, and we’re headquartered out of Las Vegas. Starting pay is $11.00 an hour for a call center, so it’s a pretty significant chunk of money, and our thought was we want people that really believe in the company and really want to be with the company for the long term.

And the biggest surprise was actually from the people that didn’t take the offer because they still had to go home after their weekend and talk to their friends and family and ask themselves, Is this a company that I really believe in, that I really want to commit myself to? “Is this a company whose culture I want to be a part of and contribute to?” And when they decide to turn down the easy money, when they come back to the office on Monday, they’re that much more passionate and engaged and committed. And that has been, by far, the biggest benefit.
The way I see it, losing those 2 - 3% candidates and the couple thousand dollar per person is worth more than having the mess later on. The mess of having unenthusiastic worker with no passion, that might snowball into numerous unsatisfied customer and explode later on with bad word-of-mouth. And by then it's already too late. Pay in advance, or pay it later. The latter in most cases are worse.

In other words, I'm on the same page with Tony. Let me know what you think. 


Fellexandro Ruby

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