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Why Zappos.com Pays New Hires $1,000 to Quit

Founded in 1999, the online shoe retailer Zappos.com has been an astonishing success story, growing to nearly $1 billion in sales. Even more impressive than its sales numbers, however, are the numbers of customers who rave about Zappos’ customer service excellence. The company’s success at customer service starts with its training program. In this interview, Zappos training manager Rachael Brown reveals how the company develops its stellar customer service—and why Zappos offers new employees $1,000 to quit. To listen to a podcast of the interview, visit http://podcast.amanet.org/edgewise/innovative-thinking/82/rachael-brown-on-paying-employees-to-quit/#more-82

Q: Tell us a little bit more about that $1,000 to quit offer. Why pay new employees to quit instead of just letting them go or letting them leave of their own accord?

Rachael Brown: Well, I mean, there’s a lot of reasons why we do it. I think one of the biggest reasons is we really don’t want anyone to be stuck at Zappos. We really want people to kind of make a decision and really commit right off the bat during our training program.
So, we do the offer really to look for engaged employees— the people who really want to be here. And when we do it, it’s not just, “Hey, here’s $1,000. Take it to quit.” We really kind of talk about their experience. Now that they’ve been at Zappos for a little while, they understand our culture.

Q: What has the employee feedback about this offer been like? What are the employees who chose to stay telling you? Has it really convinced them of how serious Zappos is about customer service?

RB: The feedback is great. The people that do take it are so thankful that we understand that this just isn’t the right place for them. But the employees that don’t take it are very committed. They go home and they come back with these great stories about how they told their family about this crazy offer that Zappos asked them to quit today, and they definitely come back with a sense of commitment.

Q: Zappos’ CEO, Tony Hsieh was actively involved in creating this $1,000 to quit offer. It’s pretty unusual for a CEO to get involved with a company’s training program at that level. Can you tell me a little bit more about how important it is to have such strong support from Zappos’ senior management?

RB: He’s always been actively involved, and actually most of the senior management has. And I think that’s a really smart move. I mean, if you think about it, every new employee who’s coming in is going to help shape and nurture our culture. I think every CEO should be very involved in the training process and what goes on in that process and how we’re molding these people into great fits for our company.

Q: Zappos has experienced some pretty heady growth so far—from $70 million to $1 billion in sales in just five years. Growing that quickly must be a challenge from a training standpoint. What will Zappos do in the future to keep its reputation for customer service excellence?

RB: I think we’ll be doing just what we’ve been doing now. We have an awesome, awesome team here, and we’ve changed even over the course of the past three years from a one week training program. In 2008 we just started a four week training program. We really do change with what’s going on. We’re very active in seeking feedback and finding out what we can do to improve and to make sure that that’s always our stance in our training.

Q: Can you talk a little bit about the importance of empowering representatives to take ownership of customer service issues on their own?

RB: Anyone who is answering the phone has the same empowerment as their lead or their manager. They have the same tools. And I think that’s the coolest thing. Everything that I can do as a manager, you can do after your first week on the phones. You have the same tools, and we’re really looking for you to make the right judgment. And our part in the training department is to really have them look at the gray areas, to really be creative and think outside the box, and also to explain to them to use their judgment in looking at what’s best for the customer and also what’s best for Zappos in this situation. It’s been great because employees definitely feel empowered to do anything for the customers.

Last month, Performance & Profits asked readers how their companies could improve customer service. Here’s what you said: