Employee satisfaction for $2.40 a day

Have you gotten your iPhone yet? As a Mac fan (our entire law firm runs on Macs), I had no problem waiting in line for an hour at my local AT&T store last Friday evening. When I got there (about an hour after the iPhones went on sale), I was about fortieth in line. When I was seventh, they sold out. Would it have killed the AT&T store people to come out and count the people in line, and tell me, the six people in front of me, and everyone behind me that we were out of luck? Maybe.

Fortunately, a friend texted me that the Apple store near where I live had plenty. I went there, waited in no line, and had my new gadget in about five minutes. And I'm happy to report that it lives up to all the hype.

While there have been about a skitillion stories written about the iPhone (that's one followed by a wad of zeroes, or ten to the wad), one of the most interesting to me as an employer evangelist is this: Apple reportedly is giving each of its employees a free 8-gigabyte iPhone. I first read about this in John Moore's excellent marketing blog, Brand Autopsy. John is a brand guru who's worked with Starbucks and Whole Foods. His post on "Marketing to Employees" described the Apple employee giveaway, which was reported in the San Jose Mercury News. John writes:

Apple is doing a lot of things right in marketing the iPhone. But amidst all the iPhone hubbub, one vital marketing nugget is getting lost:

Apple is giving all its full-time U.S.-based employees an iPhone.

I am a huge proponent of companies spending marketing money on employees. It's simple. Astonish employees and they will, in turn, astonish customers. Giving every full-time employee a $600 (retail value) iPhone is an astonishing act that will only help to feed the already vibrant evangelical corporate culture within Apple.

[Other reports (MacRumors, Ars Technica) add that the iPhone giveaway also includes part-time employees who have been with Apple for at least a year.]

John's key line — "Astonish employees and they will, in turn, astonish customers" — reminds me of our post from last month, "Put your employees first and your customers second." In that piece, I described a recent British study that showed that employee satisfaction — more than customer satisfaction — was a leading indicator for company growth. The study talked about "emotional contagion," where the employees' good feelings rubbed off onto the customers.

This also reminds me about the Cornell study showing that bonuses were ten times more effective than merit increases in raising employee performance. (See "Bonuses: more bang for your buck.") If bonuses are more effective than raises, then iPhones and other employee giveaways are even more effective. Think about it: each 8 GB iPhone retails for $599. Ignore the fact that it costs Apple something less than that to make. Giving each Apple employee a $599 bonus would be nice, but it wouldn't really generate any excitement. And if you convert that $599 to a raise, it works out to less than 30 cents an hour for full-time employees, or $2.40 a day. Big whoop.

Instead of giving employees a 30-cent raise, Apple gave them a status symbol and a story to tell their friends and family. (And it got another news story out of the deal.)

The lesson for employers: find creative, surprising ways to reward your employees, instead of just a 3% merit increase. Your employees in turn will reward you with better performance.

Comments

[Wally Bock]

I'll wait a bit on the iPhone. I think that Apple products are often more than products. They're a theological position and lifestyle choice. The first wave of iPhones went to folks like may Apple-loving friends. In a couple of months or so, I'll check around to see how the non-fans feel about iPhones they've bought.

[Scott McArthur]

This is so true! I recently suggested to my CEO that we buy all 400 consultants a state of the art iPod. Yes he said - great I thought - good for everyones mood and we can use podcasts to keep everyone up to date and we can all use the iPod to back up our data. Then the voice of doom from our parent company! "If we did that for you we'd have to do it for everyone!".

My response? Great buy all 50,000 one! Result - boring corporate response - no!