Retail Contrarian

Hey Buddy - Would You Quit for $1,000?

Many companies pay a hiring bonus to new hires but it seems that one company is actually paying new hires a bonus to quit. That’s right, a bonus for a new hire who quits. 

Fast Company co-founder Bill Taylor writes at Harvard Business Online that internet shoe retailer Zappos is so focused on hiring and keeping employees who are committed to the company’s strategy and obsession with great customer service that they actually offer new hires a $1,000 bonus to leave.

Why? Here’s an excerpt from the article Why Zappos Pays New Employees to Quit—And You Should Too:

Because if you’re willing to take the company up on the offer, you obviously don’t have the sense of commitment they are looking for. It’s hard to describe the level of energy in the Zappos culture—which means, by definition, it’s not for everybody. Zappos wants to learn if there’s a bad fit between what makes the organization tick and what makes individual employees tick—and it’s willing to pay to learn sooner rather than later. (About ten percent of new call-center employees take the money and run.)

Think about how much money this small bonus saves them!  An employee who isn’t really committed to a job but continues to work in the position is unlikely to deliver exceptional customer service. This will cost the company sales and, even worse, cost them customers.  Since an un-committed employee is unlikely to stay in the position long-term the company will still have to incur the cost of replacing and training a replacement.

And a company that pays someone to leave early is far less likely to incur the cost of losing sales and customers.  Sounds like a smart investment.  Remember, we’re not talking about employees who couldn’t make it past their initial 90-days.  Zappos is using the bonus to identify and remove those employees who are able to do the job but aren’t committed to it.

I think this is brilliant.  It sounds like something other retailers might want to explore.

So would this work in retail or would too many people try to get hired just to get the bonus to leave? Things that make you go “hmmm.”

Thanks to Glenn F. for sharing this article with me.

Updating the Employee Referral Bonus Program

I've always been a big proponent of paying employees a referral bonus since the quality of employees you get from staff referrals is usually higher than when you rely on people just walking in off the street.  I've always believed that you shouldn't pay the referral bonus until the new employee reached his/her 90th day. 

I recently read an article from the restaurant industry pointing out that in today's instant gratification world the three-month wait for a payout may no longer be enough to motivate employees. 

I think they have a point. Almost every company I talk to feels that their referral program isn't used as much as they would like it to be. I've come around to a new position on this.  I would pay 50% of the bonus when the referred person is hired and the other 50% when they make their 90 days.

Making The First Day Count

Remember when you were first learning to count down a register?  I don't know about you, but for a while I was as slow as molasses. For the first few weeks I thought my manager was going to wear out the carpet pacing while he waited for me to finish.  Over time, of course, I got faster and faster.  Like most retailers, I eventually learned to count down a register at lightening speed while talking on the phone and completing paperwork.  How did I improve?  Practice, of course. The more I did it the faster I got.

There is one task you have that you don't get to practice much even though it is one of the more important parts of your job.  You probably don't even realize the impact it has on your store's long-term success.  I'm talking about working with new employees.

Unless you run a large retail operation, outside of the holidays you may only bring new employees on a couple of times a year. Because you don't do it that often you may not do it as well as you'd like.  I know, because I've done my fair share of starting new employees and more often than not the experience wasn't up to the standards I had expected.

Here are some tips to help you make sure you give your new employees the best possible experience.

1. Schedule an employee's first day for a day you can give them your undivided attention. Always start the new person on your slowest day. For most of us that means Tuesday through Thursday.

2. Staff up on an employee's first day. You need enough employees to cover the floor so you can spend an appropriate amount of time with your new employee.  Don't make the mistake I did - I not only didn't staff up but I would schedule the new employee to work the floor. You can imagine how well that worked out.

3. Have all of the employee's paperwork ready days before they start.  Once I started an employee only to discover I was out of new employee packets. So there I was spending all of my time getting other stores to fax me the necessary paperwork. Yes, it was a fax and not an email.  I've been doing this for a while, you know.  I'm sure the employee went home and told her family what an idiot her new manager was.

4. Have an agenda for their first few days so both of you know what is going to take place.  Having a successful new employee orientation is important for getting the new hire off on the right foot.  An agenda keeps you focused on everything that needs to be done and done correctly.  If you work for a large retailer there is a good chance your employee will miss their first paycheck if you don't get everything done correctly and completely. You want talk about how NOT to start a new employee, have them not get paid for a month.

5. Assign a mentor to the new employee. I think we can all remember how awkward it is to start a new job. You don't know how to do much and you walk around feeling like you have two left hands and two left feet. The last thing you want to do is keep asking your new manager so many questions you're fearful that you're bugging them.  By having a non-manager as a mentor the employee will feel more comfortable asking questions, and we know the staff knows more than you do anyway!

6. Celebrate the employee's first day. I'm written before that it's odd that we throw a party when an employee leaves. "Hip hip hooray, you're leaving!"  Okay, there are employees we would do that for, but most of the time we're sad to see our employees go. Well, throw a celebration when an employee leaves AND when they start.  Imagine how special someone feels when you celebrate their joining the team. A little cake, a few balloons, a welcome card signed by the entire staff and you've delivered a WOW that will keep giving for a long, long time.

So while I doubt you'll get as good at starting new hires off as you are at counting down a register, with a little bit of planning and focus you can do it well enough for an employee to always remember how great it was to start working for you.

Remember, we can't expect our employees to wow our customers until we wow them first. And that starts on the very first day.