Zappos and the “Right People”

Tony Hsieh, CEO of Zappos, is one of my all-time favorite people. In 1998, he sold his first company, LinkExchange, to Microsoft for nearly $300 million. A couple of years later, he took over the helm at Zappos, and grew it into the largest online shoe retailer in the world. The company was eventually bought by Amazon for more than $1 billion.

But what really stands out about Tony is his humility. Even after all of his accomplishments, he gives himself surprisingly little credit.

Instead, he attributes his success to finding the “right people.

When Tony took over at Zappo, he decided to conduct a unique experiment when hiring. Every new employee, regardless of age, experience, or position, is required to take part in a four-week training program on Zappo’s culture and business practices. One week in, all the new employees get what is called “The Offer.” They are told that if they leave immediately, they will receive a check for $3,000 plus all the time they have worked so far.

When Zappos first announced this policy, many people were aghast. They couldn’t believe that Zappos would spend all this time and money on recruiting, just to turn around and give the new hires an opportunity to leave – and not just an opportunity, but an added bonus! Didn’t they want these people to stick around?

But when you think about it, it all boils down to a simple rule of thumb:

Whether you win or lose, find out fast.

On average, approximately 2-3% of new employees at Zappos take the money and run. Chances are that the few employees who left immediately would have bolted for a better offer the first chance they got. At that point, the costs of replacing them would be substantially higher.

The other 97% – the people who stayed – were those who truly believed in the company and culture. They weren’t in it for immediate gains; they actually saw the job as a long-term investment. This has increased employee retention, reduced costs, and allowed the company to devote more resources to the ultimate goal of outstanding customer service.

What do you think about Zappos’ hiring policy?

2 Responses to “Zappos and the “Right People””

  1. You say it has turned to be a good policy for Zappo. I think it may be a good policy for every company if it takes care of the rest of 97% that chose to stay. If the company treats them well, why not.

  2. Cuong Nguyen says:

    I say it was a brilliant idea…It this type of out of the box thinking that allow successful people to succeed.

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