Steven D. Levitt Quote

So, absent the chance to make every job applicant work as hard as a college applicant, is there some quick, clever, cheap way of weeding out bad employees before they are hired? Zappos has come up with one such trick. You will recall from the last chapter that Zappos, the online shoe store, has a variety of unorthodox ideas about how a business can be run. You may also recall that its customer-service reps are central to the firm’s success. So even though the job might pay only $11 an hour, Zappos wants to know that each new employee is fully committed to the company’s ethos. That’s where The Offer comes in. When new employees are in the onboarding period—they’ve already been screened, offered a job, and completed a few weeks of training—Zappos offers them a chance to quit. Even better, quitters will be paid for their training time and also get a bonus representing their first month’s salary—roughly $2,000—just for quitting! All they have to do is go through an exit interview and surrender their eligibility to be rehired at Zappos. Doesn’t that sound nuts? What kind of company would offer a new employee $2,000 to not work? A clever company. It’s really putting the employee in the position of ‘Do you care more about money or do you care more about this culture and the company?’ says Tony Hsieh, the company’s CEO. And if they care more about the easy money, then we probably aren’t the right fit for them. Hsieh figured that any worker who would take the easy $2,000 was the kind of worker who would end up costing Zappos a lot more in the long run. By one industry estimate, it costs an average of roughly $4,000 to replace a single employee, and one recent survey of 2,500 companies found that a single bad hire can cost more than $25,000 in lost productivity, lower morale, and the like. So Zappos decided to pay a measly $2,000 up front and let the bad hires weed themselves out before they took root. As of this writing, fewer than 1 percent of new hires at Zappos accept The Offer.