A startup decided to pay for employees’ weddings rather than give them raises

“We have gathered here today…”
“We have gathered here today…”
Image: Boxed
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Boxed Wholesale CEO Chieh Huang made headlines last year when he announced that he would pay the college tuition for his employees’ children out of his own pocket after learning how difficult it was for many of them to make ends meet. The offer is available to all current full-time employees and there are no strings attached, even as the company grows. 

At the time the offer was made, the e-commerce company, which delivers bulk goods in the US, had raised $30 million in venture capital funding and Huang contributed a double-digit percentage of his stake in the company to a non-profit foundation to cover the tuition checks. He’s already written a handful of them.

“The tuition program is 100% genuine because writing those checks is not the easiest thing to do,” he told Quartz from Tokyo, where he’s visiting family. Huang, the son of Taiwanese immigrants, points to his own story of upward mobility as inspiration to create the program.

In January, Boxed raised an additional $100 million in financing as it goes up against Amazon and Costco. The fresh capital has enabled Huang to announce a new company perk: compensating his employees for their weddings up to $20,000. This time, the money will come out of the company’s coffers.

The decision to pay for weddings traces back to one employee’s personal crisis. Huang learned that a warehouse worker broke down in tears over not being able to pay for his upcoming wedding because his paychecks were being used to cover a family member’s medical bills. “What a terrible spot to be in,” Huang says.

The company has 122 full-time workers, two-thirds of which work in its fulfillment centers around the US (Edison, New Jersey; Atlanta; Las Vegas). So far about five or six employees have taken Huang up on his offer and are planning to get married this year. Huang estimates about 10% of the company will ultimately take advantage of the perk. As with tuition, there are no restrictions on the offer (though it’s worth noting that if two employees married each other, they would only receive up to $20,000, not $40,000).

Huang says his investors have generally responded by saying “this is typical Chieh,” but there is logic around the seemingly outlandish perk. Covering the occasional wedding is likely less costly than giving raises to every employee in a fast-growing startup, and the positive publicity around the announcement has the potential to attract customers.

(Boxed warehouse employees are paid around $14 an hour. There is currently debate to raise the minimum wage; New York City, where Boxed is headquartered, recently passed a law raising its minimum wage to $15 by the end of 2018.)

Huang says he considered raising wages but ultimately decided to invest in fringe benefits, like unlimited maternity and paternity leave. Those benefits, he argues, help employees when they really need it and lift up the company culture. “Building culture is a money-saver over time,” he says, noting that even employees who likely won’t use the perks still benefit. “No one has said, ‘Oh, I don’t have kids or I’m not getting married, so how is this benefiting me?’ People have really bought into the team and the mission, and I haven’t heard any complaints.”

Undoubtedly, the gesture inspires loyalty. Employees who accept a $20,000 one-time cash gift for a major life event may feel more indebted to their company than employees who receive regular raises and promotions. The attrition rate is very low: only five full-time employees have left Boxed since the company was founded in 2013. Costco also has notably low attrition, while Amazon’s turnover rate is higher.

The move also poses a question about what a company’s responsibility is to an employee: Should the office feel like family?

Huang names Amazon-owned retailer Zappos as an inspiration for its approach to company culture. Zappos CEO Tony Hsieh, also the son of Taiwanese immigrants, is known for officiating employee weddings and offering perks like spontaneous happy hours to its call center workers, who are paid around $13 an hour.

When he started Boxed, Huang spent time with Hsieh and his team in Las Vegas. “Seeing how bought-into the mission the folks that surround him were was definitely part of the inspiration,” Huang says. “I thought, ‘I want a culture where people actually enjoy going to work and going after a goal.'”