Amazon pays warehouse workers to quit
Taking a page from sister company, Zappos, Amazon is paying its fulfillment center workers up to $5,000 to quit.
The policy, entitled Pay to Quit, was explained last week in Amazon CEO Jeff Bezos’s letter to shareholders. After the worker completes his/her first year with Amazon, the offer is $2,000. It goes up by $1,000 every year after that until it hits $5,000.
"The headline on the offer is ‘Please Don’t Take This Offer,"’ wrote Mr. Bezos. "We hope they don’t take the offer; we want them to stay. 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."
An Amazon spokeswoman told The Tennessean that "a small percentage" have taken the deal since it was implemented for U.S. workers at the start of the year.
The offer is complemented by Amazon’s incentive to pay up to 95 percent of tuition for all employees who want to take classes for "in-demand fields," such as nursing or airplane mechanics that aren’t relevant to their jobs at Amazon.
"The goal is to enable choice," wrote Mr. Bezos. "We know that for some of our fulfillment center employees, Amazon will be a career. For others, Amazon might be a stepping stone on the way to a job somewhere else — a job that may require new skills. If the right training can make the difference, we want to help."
Pay to quit incentives are rare. Zappos, which Amazon acquired in July 2009, offers one for new customer service workers, and Netflix another for corporate employees.
Although Mr. Bezos last year boasted that Amazon’s warehouse jobs pay 30 percent more than jobs in traditional retail stores, reports have surfaced about strict rules and harsh working conditions. Amazon has denied charges of unsafe working conditions.
- Amazon’s Shareholder Letter – Amazon
- Amazon’s offer to unhappy warehouse workers: Up to $5K to quit
– VentureBeat - Amazon offers employees $5,000 to quit – CNN
- Amazon to pay employees to leave – The Tennessean
- Amazon hiring 7,000 workers – CNN
- How Netflix Reinvented HR – Harvard Business Review
- Inside Amazon’s Warehouse – The Morning Call
Discussion Questions
Do you think Amazon’s Pay to Quit offer is a good idea? Why do you think Amazon is offering it solely to warehouse workers and not other employees of the company?
Amazon is copying a pure culture play from Zappos. Is Amazon a brand with an internal culture like Zappos? I’m not sure, but I would hesitate to bet against Jeff. The man is a retail icon for a reason!
For Amazon to continue to excel, employees must be working at capacity. Recognizing that not all employees view a particular job as a career and working to facilitate movement to jobs that better fulfill their goals sounds like a good step to keeping good employees and finding the best fit with the organization. Certainly this is not a common practice and will be interesting to watch over time.
Yes, it’s a quick way to get at those employees you are probably better without. And, I really don’t understand why it isn’t a company wide policy EXCEPT that it is probably more expensive to remove a deadbeat vice president of marketing than it is a disgruntled selector. Although, if you think about it, keeping the selector around just slows down productivity, but we all know what bad marketing can cost you.
Continuous testing of a model – always a good plan. Amazon has nearly 120,000 associates. If you opened this to all employees, and a change of control took place, the exposure from the sharks, not to mention the half a billion dollars that employees could ask for, would be a bit more than Mr. Bezos would want to take on….
The policy is definitely a good idea. An added example of Amazon’s willingness and ability to work with an out-of-the-box idea – human resources or other. In too many retailers’ worlds, this would take a committee about a generation to resolve, and then be shut down by the legal department.
Amazon has a unique hiring process which focuses on being hired into the company culture, not so much the job. They expect you will not be in this initial job for years. This process takes a lot of employee time, but likely reduces turnover. I can see where this great process may not be as effective with warehouse workers. Pay to Quit appears to be a program to increase turnover cost. The real issue may be warehouse management.
Great plan to find out who is really not interested in being an employee in its warehouses. It is offering those who don’t want to be there a way to leave with a reason that a future employer will not see as a negative. Question: “Why did you leave your last job?” Answer: “They offered a package and I took it.”
I think the answer to why not companywide is easy. Too many employees at too high a pay (assuming the buyout amount was based on compensation) would accept resulting in all the negatives Roger pointed out.
The need for distribution center workers is the most variable employee in the workforce. It makes sense to scale up and down (similar to a contractor model). Amazon is smart to offer this as it ensures goodwill with employees and creates a positive experience upon exiting the firm.
Amazon has a great test and learn strategy and is not afraid to experiment. This serves them well throughout the entire company and this is another one of those great examples.
It’s a great idea so long as you can remain the employer of choice. In a warehouse environment, these companies are the employer of choice. It’s a neat idea there.
But in white collar Seattle, Amazon isn’t and cannot be THE employer of choice, because no such thing can exist. There are too many companies, too many segments of employees, and too many job opportunities. People will leave, as people often switch jobs in that environment. Maybe even a little more so if they are paid to leave. The effect on morale will turn negative if others feel the fool for staying.
It is a good idea for Amazon, and I’m just thinking ahead here. If the option to quit for a lump sum of money seems attractive to the disgruntled worker, in the long run it is less expensive for Amazon than having to fire them plus pay unemployment compensation. This could be one of the reasons Amazon chose this option.
It is a great idea and can be used to build a company where people want to be instead of where people need to be. It is a buyout program for people who are coming to work, but not working.
Why are they offering it to warehouse people only? They are the easiest jobs to fill and have the lowest impact on the bottom line.
I like this idea a lot. As long as it’s balanced with incentives the other way (job performance), it makes good fiscal sense. You’re saying, “if you’re on the team, here’s some incentives that will help you be passionate about staying. But if you’re not, here’s an incentive to help you leave and find something you can be passionate about.” You’re curating the team.
You’re also helping anyone who’s borderline negative move on before they become disruptive, which is huge. The key to all this though is good interviewing/screening techniques, which would lower the number of people you’d eventually be paying to leave.
Yes. Giving their employees options demonstrates that Amazon cares about their employees, their futures, and how they perceive their time at Amazon and after. It is a great way to keep happy workers and an incentive for unhappy workers to leave.
It gives an out to those workers who would otherwise hold on for dear life while being miserable at work. This is a very good idea.
This is a fantastic practice and idea! This small incentive is far less expensive than the loss of productivity caused by employees that aren’t really engaged in the first place, not to mention the actual cost of termination for those employees requiring management intervention to leave. I see an opportunity for some interesting research dealing with the ideal amount to offer, the percentage of turnover caused by such a policy, and the actual ROI of implementation.