Amazon.com Employs Reverse Psychology with 'Pay to Quit' HR Practice
April 15, 2014
It’s a practice that has business owners shaking their heads — companies offering bonuses for employees to quit their jobs.
But that’s exactly what Amazon.com has started doing with its employees. Each year the retail e-commerce giant plans to offer its fulfillment-center employees a $2,000 bonus if they decide to quit. It increases $1,000 each year until it caps at $5,000.
Amazon.com (News - Alert) CEO and founder Jeff Bezos explained the new human resources (HR) policy in the company’s annual shareholder letter. "The headline on the offer is ‘Please Don't Take This Offer.’ We hope they don't take the offer; we want them to stay," wrote Bezos. “Why do we make this offer? The goal is to encourage folks to take a moment and think about what they really want. In the long run, an employee staying somewhere they don't want to be isn't healthy for the employee or the company."
It’s an edgy solution to a common HR problem — finding the right people with the right skills and attitude to fill a high-turnover job. Amazon.com adopted it from fellow e-commerce company Zappos, which Amazon bought back in 2009. The expansion of the program into Amazon.com hiring practices has industry insiders looking closely at the idea.
Zappos started it back in 2008 as a way to retain employees who wanted to be there and were interested in providing high-quality customer service, an area where the company made its name after its launch.
While some are shaking their heads in confusion, there are those who see the benefits. “Most CEOs agree turnover costs tens of thousands of dollars in recruitment, training, and lost productivity,” wrote Keith McFarland in a Bloomberg (News - Alert) Businessweek article about the original Zappos policy. “So identifying the misfits early—at a cost of just one-week's salary and $2,000—could just be the best deal a company can make. What would you pay to get a full-time, weeklong look at your recruits' character, work habits and social skills prior to making a commitment to them?”
However, the policy brings up other questions about other HR issues, such as unemployment compensation, which differs from state to state.
“Unemployment insurance is a huge cost for many global companies and one that HR and corporate management want to keep as low as possible,” wrote Judy Motti in an article for Tech Times. “Is that what is behind Amazon's 'Pay to Quit' program? We're not sure given we're not employment lawyers.”
Whatever the reason, Amazon.com can be sure of one thing — the business community is watching and waiting to see if it works.
Edited by Alisen Downey