Amazon Adopts Human Resources Cue From Zappos, Adopting Its Subsidiary’s Policy Of Offering Employees Cash To Quit

When Amazon.com Inc. (NASDAQ:AMZN) bought online footwear and clothing retailer Zappos in 2009 for $1.2 billion, Amazon promised the Henderson, Nev.-based company it could continue the unconventional approaches to online retail that helped the 15-year-old company grow gross sales to $70 million in its first four years.

Now, nearly four years after the acquisition, Amazon has adopted one of its subsidiary’s unconventional human resource strategies, paying recent employees to quit, something Amazon CEO Jeff Bezos said in his recent annual letter to shareholders is being adopted at his company’s fulfillment centers. Hiring and retaining good workers is a significant expense for companies, enough that offering these mini-payouts is viewed as a way of weeding out workers who might not be completely committed for the longer run.

“Pay to Quit is pretty simple,” Bezos wrote in his annual shareholders letter ahead of the company’s annual meeting in Seattle last May. “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 headline on the offer is ‘Please Don’t Take This Offer.’ 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.”

Zappos, which is known to focus on customer service and features helpline phone numbers prominently on all of is pages, implemented this strategy in 2007, starting with a $100 payout for employees after their first 90 days. The sum quickly grew to $1,000.

“Zappos wants to learn if there’s a bad fit between what makes the organization tick and what makes individual employees tick – and it’s willing to pay to learn sooner rather than later,” Bill Taylor, co-founder of Fast Company magazine, wrote in the Harvard Business Review shortly after Zappos announced its pay-to-quit policy.

Though this disincentive has hardly spread across HR departments like a viral YouTube clip, it has popped up elsewhere. Lot18, a Mahopac, N.Y.-based seller of hard-to-find wines, in 2012 offered disgruntled workers one month pay to quit and there were seven takers, according to the Observer.

The policy may not make sense for everyone, especially employers that already have high turnaround and large numbers of disgruntled workers.

“It’s an innovative talent management scheme worth trying, but it does come with a health warning in that you need to screen employees very effectively so most do fit your culture, and you need to have great onboarding process and a positive brand and culture or you could find yourself with unsustainably high level of turnover at your 90-day period,” wrote Kazim Ladimeji, who runs the U.K.-based career website thecareercafe.com, in a post in November at Recruiter.com.