The Smartest Thing Zappos HR Ever Did Has Barely Caught On. Why?

Remember a few years back when Zappos, the darling of the HR world, announced it was offering new employees $1000 on their 90 day anniversary to leave the company? (BTW – that offer is now up to $4,000 to leave the company! Talk about doubling down on culture!) At the time that’s all HR people talked about – it was revolutionary to our industry. Pretty soon every company would be paying their employees to leave.  So, what happened to that?  Zappos is still offering to pay employees to leave. Is your company? Why not?

It hasn’t caught on because your leadership is afraid your good hires would actually take you up on your offer!!! 

Of all the HR gimmicks Zappos does, offering employees a quitting bonus at 90 days is the best one because it puts everything on the table.  It’s the one thing they did that those other companies are too afraid to steal!  When you go to an employee and say “we need you to be all in so if you can’t be all in, here’s a $1000 bill, all you have to do is leave”…

That’s having true faith in your organization and your culture.  We only want people to work here that really want to be here.  Many say it, but 99.9% aren’t willing to back it up with an offer.

It hasn’t caught on because your HR team is too weak!

Think about the HR person who takes that idea to the executive conference room.  They’re either really good at what they do, or really crazy! Most leadership teams are not going to buy in on the initial idea.  To get an idea like that approved, you have to have executive buy in, in a major way.  You have to be able to sell it.

That person is not your average HR person. That’s an HR person willing to do thing different, willing to put their beliefs on the line.  Those kind of HR folks are the ones who get the corporate logo tattooed on their ass and don’t even tell you about it.

It hasn’t caught on because you are desperate for talent, and couldn’t take marginally engaged employees leaving. 

In a candidate-driven economy, the importance of holding on to every employee becomes that much more important, we think. Leadership starts putting up with crazy employee behavior because they believe addressing the issue ‘might’ cause them to leave. Even if someone sucks it’s still a warm body filling a hole that we have ten more to fill. If employees have a ton of jobs to choose from, handing out $1000 bills could cause mass departures.

HR pros discount this policy.  They say it’s meaningless. It wouldn’t make a difference in their environment.  They have a performance management process that gets rid of ‘those’ kinds of employees.

The true fact is, we are scared.

We are scared to go and do this because we know the truth.  That doing this would cause some turnover. That it would cause our systems and processes to be taxed.  We don’t have the resources to handle it.  We don’t have the leadership to handle it.  We don’t have the guts to try it.

Well, Amazon did. When Amazon bought Zappos it took on a form of the practice in its fulfillment centers to the tune of $1,000 per year, up to five years! From Inc.:

“After some tweaking, Bezos and Amazon aptly titled the program “Pay to Quit.”

The program works differently than at Zappos. Rather than receiving the offer once during training, employees at Amazon’s fulfillment centers get the offer once a year, every year. In the first year, the offer is for $2,000. The amount then increases by $1,000 each year to a maximum of $5,000, where it remains.

Each year an employee gets the offer, he or she has invested more in the company and may find it harder to leave. The offer increases to adjust to the sense of investment. For skeptical shareholders, Bezos explained the rationale: “The goal is to encourage folks to take a moment and think about what they really want,” he wrote. “In the long-run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company.”

High-performance cultures pay people to quit. They only want those truly invested in working for your company, because those are the folks who will make the difference. It’s the pinnacle of having an employment brand. This is who we are, if you truly want us, we want you, and we are willing to put cash on the line to ensure that is the case.

It might be the single greatest HR initiave in history that barely any organization is using.

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Tim Sackett
Tim Sackett SPHR, is the ultimate Mama’s Boy!  After 15+ years of successfully leading HR and Talent Acquisition departments for Fortune 500s and smaller technical firms, Tim took over running the contingent staffing firm HRU Technical Resources in Lansing, MI. Serving as the Executive Vice President, Tim runs the company his mother started over 30 years ago, and don’t tell Mom, but he thinks he does a better job at it than she did!  Check out his blog at www.timsackett.com. Because he's got A LOT to say, and FOT just isn't enough for him.

5 Comments

  1. Benjamin McCall says:

    Or it hasn’t caught on because most companies don’t have an Amazon Or VC backers as an owner to back that kind of send off.

    Reply
  2. nobody questions a golden parachute for an executive. That same executive questions one for the common employee.

    Reply
  3. Michaelm says:

    Its does not really work for either Amazon or Zappos. It does not really work as both have a high turn over already for a variety of reasons. It forces both to have labor issues, training issues, and a constant flood of exits as bad managers mistreat people knowing most are leaving soon anyway. It also fails because it does not take into account why people work in the first place. Most people at these levels are labor and front line supervisors, they have rent to pay, car payments and credit cards but often not mortgages. They live in Mom’s basement or occupy a house that the family has owned across several generations. The people who often take the deal are short timers anyway. And last it often does not work because lives do not align with HR review cycles. Responsible people change jobs when a better one presents itself, they don’t jump ship with an offer like that unless they have something else already lined up. In that case they were going to leave anyway, or were poor performers who knew they were on the bottom 10% and were going to be forced out soon. This does more for HR leadership and executive egos than it does for the employee who also has to promise or who is told if they accept the buyout they can never come back.

    Reply

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