EX­AM­PLE:

Finweek English Edition - - INSIGHT: INTERNATIONAL -

Let’s say a com­pany has 600 staff mem­bers, with salaries av­er­ag­ing R300 000 per per­son a year (ac­cord­ing to SalaryEx­plorer. com, the av­er­age an­nual salary in South Africa is R301 392, although there’s con­sid­er­able vari­a­tion be­tween the up­per-end and the min­i­mum).

If the turnover rate is 10%, 60 staff mem­bers are quit­ting each year.

Fac­tor­ing in costs such as train­ing, lost pro­duc­tiv­ity, new hire and re­cruit­ment costs, at a cost of 150% per em­ployee lost (or R450 000 per an­num), this means the com­pany will spend at least R27m a year (ie 60 x R450 000) to re­place the lost staff com­ple­ment.

So Zap­pos’ strat­egy of iden­ti­fy­ing the mis­fits early – at a cost of only one week’s salary and R36 000 per em­ployee (the rand equiv­a­lent of Zap­pos’ $4 000 of­fer) – could save the com­pany a size­able chunk of rev­enue in the long run.

Sur­pris­ingly, the quit­ting bonus also keeps staff on the job for longer. A mere 3% of Zap­pos’ new staff mem­bers take the $4 000 and quit. (In­ter­est­ingly, Zap­pos’ quit­ting in­cen­tive started at $100 and was raised to $1 000, then $2 000 and fi­nally $4 000 be­cause Hsieh didn’t feel enough

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