Did you know it can cost £30,000 to replace a colleague? Check out how Zappos focus on getting the right people through their door.
Rock band Van Halen’s infamously wild frontman David Lee Roth was renowned for demanding M&Ms in the dressing room, with all the brown ones picked out.
This legendary rider requirement created an image of the singer as the ultimate prima donna. But according to Freakonomics writers Stephen J. Dubner and Steven Levitt, the reality was a lot more pragmatic, and surprisingly thoughtful.
During the band’s 1980s heyday they used lots of stage lighting and paraphernalia, much of it heavy and potentially dangerous. Worried that fans could get hurt during a show if some rigging fell down, Roth came up with the M&M clause to ensure that venue staff had paid attention to the detail in his rider.
This process, which the Freakonomics writers described as “teaching your garden to weed itself”, has been adopted by American online retailer Zappos. Known for paying recently trained recruits $2,000 to leave (a golden ‘hi n goodbye’) the company is famous for preserving and nourishing its unique company culture.
The $2,000 payment is made to colleagues after they’ve completed their training to join the call centre or Customer Loyalty team. They are paid for their training time and offered $2,000 to leave if they feel Zappos isn’t the right cultural fit for them.
It sounds like an off-the-wall (and very expensive) business strategy but culture is of paramount importance to Zappos. Their CEO Tony Hseih has said that he only wants employees “who want to be part of our culture”. Anyone whose main priority is money is probably not the right fit for the company.
Focusing on getting the right people through the door is important at any organisation. It’s no good hiring someone for them to leave only a few months later. Given that replacing a single colleague costs UK employers more than £30,000, according to Oxford Economics, Zappos’ approach seems smart.
By far the biggest expense for companies replacing a colleague is the loss of productivity caused by the time it takes (28 weeks on average) to get a new recruit up to speed. The remaining costs arise from the logistics of finding a replacement, for example advertising the role.
So it’s common sense that it’s far better to keep existing colleagues and retrain them if necessary. That’s why Zappos takes great care to make sure that colleagues feel empowered, allowing them for example to handle customer service calls in their own way without constraining them to a script.
The company also makes sure that colleagues are in charge of their own development and that there are a plethora of learning opportunities. Endeavouring to keep work interesting and making full use of an employee’s potential naturally helps them to feel more connected to their work.
Most people aspire to find meaning in their work but this is becoming even more important for a younger generation not so connected to the concept of a ‘job for life’. Doing something worthwhile with opportunities for progression go a long way to keeping all staff engaged, particularly restless Millennials.
Engaging colleagues at all levels has never been more important. As employee engagement moves ever-higher up the agenda at different businesses and organisations, internal communications professionals may find themselves increasingly taking centre stage.