Amazon.com will pay unhappy employees a bonus—up to $5,000—to leave, in a program that the online retail behemoth calls “Pay to Quit.”
Unlike traditional severance, the departure bonuses are not linked with firings or reductions-in-force intended to shrink payroll. In fact, Amazon is in the process of expanding its ranks. Instead, the program is intended to measure employee loyalty. As Amazon CEO Jeff Bezos explained in an April 10, 2014, letter to shareholders:
“Pay to Quit is pretty simple. Once a year, we offer to pay our associates to quit. The first year the offer is made, it’s for $2,000. Then it goes up one thousand dollars a year until it reaches $5,000. ... 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.”
While Amazon has experimented with similar offers in recent years, it rolled out the program to its 40,000 warehouse employees in January. By the end of the first quarter of 2014, fewer than 10 percent of employees who received the offer had taken it and left the company.
Enough of an Incentive?
John A. Challenger, CEO of staffing management consultancy Challenger, Gray & Christmas Inc., questioned whether $5,000 is enough to embolden disengaged employees to leave. “That amount may cover expenses for two or three months, but with unemployment lasting about four months for those out of work, employees who take the deal may fall short of their financial obligations, unless they have an ample rainy-day fund established,” he posted on his firm's website.
According to the latest data from the Bureau of Labor Statistics, the median duration of unemployment for those seeking jobs in March 2014 was 16.3 weeks, Challenger noted, adding:
“This certainly is the type of novel approach to workplace issues that we have come to expect from tech companies. There may be more effective ways to gauge and build employee engagement and loyalty, and it is likely that Amazon has many other employee engagement and loyalty programs. As Bezos acknowledged, it is better for both the employer and the employee if that worker truly wants to be there, but there are always going to be some workers who are simply happy earning a steady paycheck.”
Stephen Miller, CEBS, is an online editor/manager for SHRM.
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