How this trick from Zappos and Amazon is saving the company a lot of money and keeping employees happy
Chances are, most of us have at least once in our lives spent some time in a job that we didn’t really care for and found boring. Now imagine if your boss came up to you and offered you $5000 to quit that job and go pursue your dream career. Crazy right? Nope, according to Amazon, just good business.
Amazon made headlines in 2018 when it began to offer a new program called “Pay to Quit”. In the program, the company offers $2,000 to full-time associates at Amazon fulfillment centers that have been at the company for 1 year to quit. The offer increases by $1,000 every year until it maxes out at $5,000. Then for the rest of their time at the company in the fulfillment center role, the associates are given a chance every year to take $5,000 to quit. The only major rule is that if you take the offer, you can never work at Amazon ever again.
For clarification, these full-time associate roles at Amazon fulfillment centers are the roles that involve working in the warehouses. These are the people that handle all the shipments and boxes that come through Amazon, so it’s a fairly physical job.
The idea comes over from the company Zappos, which was bought by Amazon in 2009. Zappos is known to be an interesting company that often comes up with unique ideas like this one.
Now, when I first heard about this idea, I was surprised. When I told my dad, a small business entrepreneur, he was shocked! Why would you ever pay someone to quit? It took some research and some thought, but I came to realize that this may actually be an amazing idea for 3 reasons.
1) It’s Cost-Effective in the Long Term
According to a recent infographic by entrepreneur.com, companies where the majority of employees aren’t engaged or happy with their work, actually tend to see about a 30% decrease in income. Similarly, data firm Gallup found in a study that the average non-happy/disengaged worker costs a company about 30% of their salary. According to Glassdoor, an employer rating site, the average Amazon Fulfillment Center Associate earns close to $30,000 a year. So on average, following the 30% mark, an unhappy employee costs Amazon about $9,000 a year in wasted salary. Now, multiply that number against the thousands of employees Amazon has.
By offering up to $5,000 to quit, Amazon is hypothetically actually making a pretty strong deal. Better to pay $5,000 once rather than $9,000 every year.
2) A Happier Employee-Base
For starters, it’s obvious that by offering this deal, Amazon would be able to filter out unhappy employees, which would hypothetically leave happy employees.
However, there’s a deeper level to this idea. First, is the mentality of self-agency. It’s no secret, and multiple psychological studies have proven this, humans crave control over their own lives. We feel uncomfortable when circumstances are out of control and, as such, we revolt against the systems that hold us in such a state. These revolts can be large like entire countries launching revolutions to something as small as an employee purposely wasting paper when printing because “this company has enough money”.
Giving someone agency is when you give them the ability to represent themselves and exert control over their circumstances. In a way, that is exactly what Amazon is doing with this program. When they launched the program, the message from Jeff Bezos was that he hoped people wouldn’t take the offer. The plan isn’t to get people to quit, it’s to offer them the chance to know that the offer exists. In today’s media hype with entrepreneurship and technology, the typical 9-to-5 job is often referred to as the “rat race”, the idea that one has no control and is simply going through the motions.
3) The Control of Safety Conditions
However, through this program, Amazon has provided its employees with some level of agency. It’s essentially like saying, “you’re not trapped, you are in control of your life and to prove it, we’re willing to give you $5,000 to leave if you want to leave.” Now, every year when the employees sign off on not taking the offer, they are given the psychological reassurance that the decision to stay is theirs. They now have the mentality that they are staying in that company because they want to stay, not because they’re being forced to stay. Which leads us to our second point, of the reassurance mentality.
Every year when an employee rejects the offer to leave, they are psychologically convincing themselves that they chose to stay, which means they want to stay. In the end, you now have a workforce of individuals who are rejecting a cash offer and are telling themselves that they want to stay with your company, which is one step closer to them saying that they love the company.
One of the most important details about this plan is the fact that it’s offered to Amazon’s fulfillment center employees. Like we clarified earlier, those are individuals that work in the factories, handling shipments and packages. That job is physical, requires attention to detail, and can have limited room for mistakes when you’re dealing with heavy machinery. Now, while Amazon may take amazing strides towards providing a strong employee experience, there is no secret that those jobs can cause fatigue over time. Not to mention, there’s the normal psychological effect of repetition, which we know can cause us to make small mistakes.