Why Zappos Pays New Employees to Quit

July 14, 2008

Over at Harvard Business Publishing, Bill Taylor has a post titled “Why Zappos Pays New Employees to Quit – And You Should Too“.  Bill talks about how Zappos uses corporate culture to align execution with strategy.  In his words…

When Zappos hires new employees, it provides a four-week training period that immerses them in the company’s strategy, culture, and obsession with customers. People get paid their full salary during this period.

After a week or so in this immersive experience, though, it’s time for what Zappos calls “The Offer.” The fast-growing 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!

This may seem counterintertuitive – aren’t good employees hard to find?  But that is exactly the point.  Zappos’ obsession with customer support is at the heart of their strategy.  Any employee that isn’t willing to embrace this approach will eventually detract from the company success.  Good to weed them out early on.

However, as Zappos gets larger and more successful, some employees might be willing to stick around even if they don’t completely buy into the approach.  For that reason, Zappos has upped the offer as time has gone on, from $100 to $500 to the current $1000.    To me, this increase is a great sign that senior management actually believes in their mission.  I think they could easily justify $5000 or more.

A reminder for all of us: the best business performance starts with the best people.

(Thanks to Bob for the pointer.)