HR Insights, HR Management

Why Hasn’t Zappos Offer to Pay Employees to Leave Caught on Yet?

photo by istockphoto.com

Remember a few years back when Zappos, the darling of the HR world, announced it was offering new employees $1,000 on their 90-day anniversary to leave the company?

At the time, that’s all HR people talked about – it was revolutionary – because pretty soon every company would be paying their employees to leave. What happened to that?

Well, Zappos is still offering to pay employees to leave. Is your company? Why not?

Why hasn’t Zappos $1,000 offer caught on?

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 at bonus at 90 days is the best one because it puts everything on the table. It’s the one thing they did that 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 $1,000 and all you have to do is leave, that’s having true faith in your organization, your culture. We only want people to work here that really want to be here. Many say it, but 99.9 percent 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 crazy — because most leadership teams are not going to buy-in on the initial idea.

HR can’t sell ideas like this

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 things differently, 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 the recession put people second and business first. (Remember when your employees were first?)

In a down economy, the importance of your workforce has taken a back seat. It has. Leadership and management training was almost non-existent, retention programs disappeared, and work-life balance turned into “get-your-ass-back-to-work” balance.

That’s simple economics. When your pool of labor far outreaches your needs, the employer holds more of the power. This makes the exercise of giving people money to leave seem a little silly.

“We’re scared to go and do this”

That’s because, first, people aren’t leaving because they have no where else to go. Second, if someone sucks, I’m getting rid of them because I have 100 others waiting to take their spot.

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 fact is, we are scared. We are scared to go and do this because we know the truth — that it would cause turnover that 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.

It’s the single most brilliant thing that Zappos has done in the HR space, and you’re not doing it.

This was originally published on Tim Sackett’s blog, The Tim Sackett Project.

Tim Sackett, MS, SPHR is executive vice president of HRU Technical Resources, a contingent staffing firm in Lansing, MI. Tim has 20 years of HR and talent background split evenly between corporate HR gigs among the Fortune 500 and the HR vendor community – so he gets it from both sides of the desk. A frequent contributor to the talent blog Fistful of Talent, Tim also speaks at many HR conferences and events. Contact him here.
  • http://twitter.com/AWilhelmSourcer Allison Wilhelm

    The problem is that even if you give someone an incentive to leave, leaving that early is not going to look good on a resume, and leaving any job without something else lined up is a huge risk. $1,000 may be good, but it’s probably not going to last very long unless the employee is still living with their parents, or if they did a good job saving in their first few weeks. It’s still more financially responsible to stay with the job if you can. Also, isn’t a high turnover rate bad for a company’s bottom line? Why would they want to encourage that?

  • http://www.verticalelevation.com/ Carol Schultz

    Tim: I have built a business preaching companies shouldn’t act like sheep. Maybe this is why the 1k to leave thing isn’t catching on? @Allison’s comments are right on target. Maybe this will work with low wage workers, which most of Zappo’s employees are. No one with any sense would take the money without a backup plan. This isn’t an HR issue. What works for Zappos wouldn’t work for most companies, e.g., What high earning sales person would take 1k to leave a job with a 100k base, 200k+ OTE? There is no logic in your article.

  • Mel Kleiman

    Two quick comments.”

    1. HR did not come up with the idea at Zappos the president did.

    2.The latest I read said they are now paying $4,000.00 because no one was taking the $1,000.00 they first offered or the other amounts as the keep raising the ante. They have less than a 3% leave rate.

    • Ryan Johnson

      I would factor into it that it sounds like you have to pull up roots and move to Vegas to work there in the first place. To go through picking up and moving again after a few months seems like a significant deterrent to taking some bonus money.

  • JMW

    This is the dumbest thing I have read all day.