The Customer Service Survey

Paying People to Quit

by Peter Leppik on Thu, 2008-05-22 01:00

I've written about Zappos before, the online shoe store which has been building a reputation for do-anything-to-please customer service. Today's fascinating story is that Zappos pays new employees $1,000 to quit a month after they start employment.

The idea is that Zappos only wants employees so committed to the company that they'll forego the bonus to work there (apparently about 10% of new hires take the money and run).

It's a fascinating idea, and I can certainly see how it would work for a hip, young startup; it's also a neat application of psychological theory: because an employee gave up a substantial bonus to work at Zappos, he's going to be biased to think it's a more desirable place to work than he would have if he hadn't made the choice.

It's also a lot cheaper to pay a couple weeks' extra pay to get rid of a potentially bad employee right away rather than pay him for months or years before finally firing him. After a month on the job, most people will know if the company is a good fit for them or not.

Despite the benefits, I can't imagine many Fortune-500 employees adopting this practice. It's just too counterintuitive, and (sadly) too many companies don't care enough about hiring only the best.

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