Pay to Quit: Amazon’s Employee Retention Strategy

Whether you are a startup, small business or large corporation, having an effective employee retention strategy is critical to the long-term success of your company. Retaining employees, just like retaining clients, is a much more cost-effective way to grow your business. Finding and onboarding new employees as well as hoping that they are a cultural fit is a long and expensive process. By retaining your best employees, you not only avoid this inefficiency, you also propel your chances for attracting other phenomenal employees.

Do you have an employee retention strategy? Let’s take a look at one successful company with an unorthodox approach. 

Employees working at Amazon’s fulfillment centers for one or more years receive a cash offer once a year to quit their jobs, with the amount starting at $2,000 and increasing every year by $1,000 until it maxes out at $5,000. As an employee retention strategy, that sounds counterintuitive, if not a little crazy, particularly considering how expensive it is to replace employees. The average U.S. company spends $4,000 to hire a new employee (Glassdoor, HR and Recruiting Stats for 2019).

We’ve all heard of companies offering bonuses to their employees as incentives for their efforts like referring employees, meeting sales goals, etc., but a bonus for quitting? 

Pay to Quit, as the Amazon program is named, may not make employees work harder, but it does foster commitment. One key aspect to the program is that employees who accept the “offer” to quit can never work at any Amazon facility nor subsidiary again in their lifetime. Those who turn down the offer are essentially saying that they would pay to stay at their job, which has a powerful  and positive psychological impact on employee happiness and commitment. This boosts engagement, productivity, and ultimately, Amazon’s profitability.

The goal of the program is to encourage employees to really think about what they want out of their careers. A disengaged employee remaining in a job they don’t want to be at is not beneficial to the employee nor the company.

According to Gallup, companies must achieve a 4-to-1 ratio of engaged to disengaged employees in order to counteract the negative effects of disengaged workers. This shows that while employee engagement isn’t the main focus for most organizations, it can have a greater impact than many of us realize. Disengaged employees exhibit decreased productivity and contribute to more negative customer experiences. Company culture and morale decline when employees don’t feel a connection to the organization, which leads to a greater difficulty in achieving corporate goals. Disengaged employees can have a significant negative impact on an organization.While Pay to Quit is an employee retention strategy that has been successful for Amazon, it is not suitable for all companies. However, it’s worth thinking about other creative and unconventional strategies that can help your company outperform. Do you need assistance with creating an employee retention strategy tailored to your company? We have solutions designed to scale with you. Request a demo.