Saturday, April 12, 2014

Amazon offers workers $5,000 to quit

On first hearing, it sounds
almost insane – every year,
Amazon ( AMZN) offers workers
in its distribution warehouses
up to $5,000 to quit. Why would
a company ask employees to
quit and why in the world would
it pay them to do so?
But like many of the unusual
practices adopted under
Amazon CEO Jeff Bezos, the pay-
to-quit policy is grounded in
data. The goal of the offer is to
encourage unmotivated and
disaffected employees to leave
on their own, while making
employees who reject the offer
feel more dedicated to the job.

Delivered with the headline
"Please Don't Take This Offer,"
the pay-to-quit offers start at
$2,000 for an employee's first
year and rise by $1,000 a year
up to a maximum of $5,000.
"The goal is to encourage folks
to take a moment and think
about what they really want,"
CEO Bezos explained in a letter to
shareholders this week. "In the
long-run, an employee staying
somewhere they don't want to
be isn't healthy for the employee
or the company."

Creating a positive work culture
The original idea came from
Zappos, a popular online shoe
site Amazon acquired in 2009.
Zappos CEO Tony Hsieh
developed the pay-to-quit offer
among numerous other policies
designed to create a positive
work culture at Zappos, which is
known for fantastic customer
service. The Las Vegas-based
company has continued to
operate independently since
Amazon took over.
Zappos call-center reps have
great leeway to please
customers, to the point of
recommending competitors'
websites when Zappos is out of
stock of a product the customer
wants. And even the driver who
picks up job applicants at the
airport delivers feedback on the
candidate's attitude. Hsieh wrote
a book detailing his strategy,
called "Delivering Happiness."

Amazon says few employees
actually take the offer. The
company employed over
117,000 people at the end of
2013, most working in one of its
96 distribution centers around
the world. Hsieh has said only
2% to 3% of his employees opt
for the cash instead of their job.
Keeping employees motivated is
a key challenge in environments
such as retailing, call centers and
other high-volume, low-pay
workplaces. Zappos's efforts
seem to have paid off, as higher
employee morale generates
better customer service leading
to high customer loyalty.

"On the one hand, I love
anything that encourages the
people who are unhappy to
leave and get out," says Suzanne
Lucas, a 10-year corporate HR
veteran who writes the Evil HR
lady blog. But Lucas also worries
that some people may quit for
the money and later regret the
decision. "When I did layoffs,
there were always people who
would volunteer for the
package, get it and then call
sobbing when the money ran
out," she says.

A pay-to-quit policy can also
improve hiring decisions,
making sure companies look for
people who will fit in, says hiring
and recruiting consultant Josh
Bersin, principal at Bersin by
Deloitte. "I've talked with Zappos
and others about this and it is a
great idea," he says. Hiring
managers have to be "much
more rigorous about
assessment for fit, culture and
Some human-resources experts
also question whether the pay-
to-quit policy fits with the rest of
Amazon's employment practices
in its warehouses; Warehouse
workers have reported
sometimes harsh working
conditions . Amazon has denied
charges of unsafe working
conditions and noted its healthy
pay increases for warehouse

"What I've read about Amazon
doesn't suggest they have a
similarly strong and singular
culture," says Ann Bares, a
compensation expert at Altura
Consulting Group. "You can't
become Zappos by simply
copying one of their practices in
isolation, though many
organizations have tried."

Reference: Yahoo News

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