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Maybe the best way to keep employees is to pay them to go away...
Zappos is an online shoe and clothing store that got its start in 1999. Zappos does things a bit differently.
In Steven Levitt's and Stephen Dubner's latest book, Think Like a Freak, they describe how walking through a Zappos call center is like a trip to Mardi Gras with music, games and costumes. (If you haven't read Levitt's and Dubner's Freak books you're missing something.)
Customer reps are empowered and trusted at Zappos. They can talk to customers as long as they want-no scripts-they settle problems sans a supervisor and can even fire customers who cause undo problems.
Call centers are notorious for turnover, of course. They're filled with hourly employees (at Zappos $11 per hour) who tend to be transient.
Zappos asked a question: What if a company could weed out bad employees before they are hired and by that lower the turnover rate?
That made sense. To accomplish it, they started with some math.
It's estimated that it costs an average of $4000 to replace just one lost hourly employee. A recent survey of 2500 companies sited by Levitt and Dubner found that a single bad hire can cost more than $25,000 in recruitment, training, lost productivity, lower morale etc.
After looking at the numbers they decided on a course of action.
After a few weeks of training, and before they are officially hired, Zappos decided to offer potential employees $2000 plus their earned wages up to that point...to quit.
"It's really putting the employee in the position of 'Do you care more about money or do you care more about this culture and company,'" Zappos CEO Tony Hsieh told Levitt and Dubner. "And if they care more about the easy money, then we probably aren't the right fit for them."
If they don't take the money, it's a good sign that they might turn out to be a long-term employee. In either case, it's better to find out what you have early.
Zappo's logic is that to pay an employee $2000 and some change to go away is a paltry sum compared to what it would cost the company if they hired them, they got ensconced in the culture and then quit on their own or was fired.
Now that's some big picture thinking.
Less than one percent of new hires accept the offer.
How has it affected the stability of their workforce? I did some digging: Zappos has 1500 employees and for the last four years their employee retention rate has been above 85%. Remember, this is a call center paying eleven bucks an hour!
Oh, by the way, Zappos is the most successful service of its kind and was sold to Amazon in 2009 for $1.2 billion.
There is no question that Zappos is a fun, empowering, creative place to work and that helps in their ability to retain employees. So their "offer" is not the only reason employee retention is high.
But there also is no doubt that employing such an innovative "weeding out" process has made a significant difference.
Paying employees to go away in order to improve employee retention.
Sound crazy?
Yep. But then sometimes crazy works.
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