Jet.com’s No-Haggle Approach to Compensation Jet.com’s No-Haggle Approach to Compensation
Just like Amazon put the bookstore and then the department store online, Jet.com tried to do the same thing
with the discount shopping club. In the original business model, shoppers paid a membership fee for the
privilege of buying a variety of goods at great discounts online. After the company launched, however, it
dropped the membership fee and is instead relying on its software to make Jet the go-to website for the best
deals. The software features a “smart cart,” which shows consumers how they can get steeper discounts by
combining items available from one nearby location. The idea is to be able to offer the lowest prices by
getting customers involved in lowering transportation costs. In 2016, Walmart added Jet.com to its stable of
online businesses.
Besides looking for new angles in retailing, Jet is looking for fresh approaches to employee compensation.
The company set up a pay structure in which each position has a preset salary. Employees holding positions
at the same level—say, directors or associate directors—earn the same amount.
This approach removes salary negotiations from compensation decisions. With a preset salary, job candidates
can take the given amount of pay or reject it. The belief behind this approach is that it treats employees more
fairly. The highest pay is tied to a person’s work responsibilities, rather than his or her skill at negotiating or
boldness about speaking up. And employees know that others at the same level are paid the same amount, so
they don’t wonder about who might be making more.
Setting one salary per position, instead of a range, also rules out paying one employee more for performing
better than others at the same level. So how does the company apply performance reviews to pay?
Apparently, it doesn’t. Jet does not have a formal performance review process but instead expects managers
to provide employees with immediate, courteous feedback when they see instances of great or below-par
performance. CEO and founder Marc Lore insists that if employees are treated well, they will do their best,
and he is willing to trust them.
All of these differences are aimed at an important goal of Lore’s: employee happiness. As he told a New York
Times reporter, “I’m constantly asking people at Jet if they’re happy. It’s really important for me to know that
they love working here and think this is the best place they’ve ever worked.”
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