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Employee Retention Strategy: Amazon – Pay to Quit Policy Submitted by Muskan Wahi

We’ve all heard of companies offering bonuses to their employees to incentivize certain behaviours but Amazon pays their employees to quit their job. Amazon has a solution for employees who no longer want to work there — pay them to quit. Once a year, the company offers to pay full-time associates at Amazon fulfilment centres up to $5,000 to leave the company. Employees are eligible after one year of service, but there is a caveat: Those who accept the offer can never work at Amazon again. The company offers $2,000 to employees who have been at the company one year, and the offer increases by $1,000 per year of tenure, maxing out at $5,000. Amazon believes that in the long-term, staying somewhere you don’t want to be isn’t healthy for their employees or for the company. They want people working at Amazon who want to be there. This program, which is called Pay to Quit, was first created by online shoe retailer Zappos, which Amazon bought in 2009. Zappos only extended the offer to its newest employees, within the first few weeks of employment, and the “quitting bonus” was set at $1,000. Amazon claims that they don’t actually want employees to accept the offer. In fact, the headline on the memo states “Please Don’t Take This Offer”. So why do they present it in the first place? Their goal is to encourage their employees to take a moment and think about what they really want. Considering the high costs associated with employee turnover, incentivizing employees to quit may sound like a counter-intuitive business strategy but it actually enhances employee engagement and is cost-effective in the long run. The program weeds out disengaged employees and helps establish a positive mindset for employee engagement. If they choose to actually not take the money and stay, it means that they are committed to the organization and committed to their work. This makes them more engaged, more productive, and ultimately boosts Amazon’s bottom line. On the flip side, disengaged workers are more likely to accept the offer, and these types of employees cost organizations a substantial amount of money. According to Amazon, an actively disengaged employee, someone who is unhappy and

unproductive at work, costs their organization $3,400 for every $10,000 of salary, or 34 percent. That means a disengaged employee who makes $70,000 annually costs their organization $23,800 a year. Though it may cost the company more money to rehire and retrain someone in the short-term, Amazon is able to then fill that position with a more qualified employee. It’s worth it to them financially in the long run....