Zappos, the online shoe store (recently purchased by Amazon) has a very interesting employee management system. The have a “standing offer to quit.” At any time, they will pay $5,000 to any employee who wants to quit.
What? Yep. Any employee who wants to quit instantly gets $5,000, and all the Zappos employees know this.
Why in the world would any company do something like this?
If you have some corporate management experience, you might already know the answer.
It’s because they don’t want any employees in their company who truly don’t want to be there. If any person would rather take the $5,000 than work there, that’s not a committed employee who is having fun. Therefore, it’s cheaper for Zappos to pay them $5,000 and boot them out than it is for a crappy employee to stick around. The employees who don’t take that offer are likely going to be motivated and effective team members.
The numbers back this up. Poor employees cost employers massive amounts of money. It also costs 150%-200% the annual salary equivalent to fire, re-hire, and re-train a new employee for a given job position.
$5,000 is a good deal for Zappos.
Want to know why it’s $5,000? Because at one point it was $200 and no one took the deal. So they raised to to $300, then $500, then $1000, and so on. As of this writing, the exact number might actually be more than $5,000.
Recently they also offered a three month severance to any employee who quit. 14% of the company did. This made Zappos happy, not mad. Jettisoning their bottom 14% of employees was a damn good move on their part. Imagine how profitable they are now.
If you have employees, are you 100% sure they want to be there? Are you 100% sure they’re doing their best?
With their constant $5,000 offer to quit, Zappos never has to ask this question. They already know.