Paying workers who aren't interested in staying with the company to quit their jobs can sound like the opposite of good payroll management, but in reality it may save employers money down the line. Paying certain employees to leave is a strategy that has gotten some media attention recently after Amazon CEO Jeff Bezos said in a letter to shareholders that the company would implement the practice.
It's an approach that The Washington Post noted is still rare, but isn't entirely new. Zappos has had this HR payroll strategy, which it calls "The Offer," for some years. The notion that giving certain workers money to walk away from the company isn't widespread, but for some businesses it might make sense. For instance, recruiting tends to be expensive for companies, so retention is often a key focus of HR departments. However, retaining workers who aren't productive, strong performers or engaged can end up financially hurting the company. The idea behind offering these employees to leave is that it saves employers in the long run, as the costs of inefficient workers adds up for companies.
The Specifics of Amazon's Unique Strategy
In Bezos' letter, he highlighted that the Pay to Quit program gives fulfillment-center workers the option once every year to leave the company, with the monetary offer increasing by $1,000 annually until it reaches the maximum of $5,000. Bezos' letter noted the first year workers would be offered $2,000 to quit. However, the goal Bezos wrote isn't to encourage employees to actually quit, but to think about how engaged they are in their jobs. Amazon wants its staff members to work for the company only if they want to, as it isn't healthy for the company to retain those workers who aren't happy, engaged or productive at their jobs. Many of the employees who will be given the offer are front-line workers who may not have the most fulfilling jobs. The offer workers will be provided is titled "Please Don't Take This Offer."
According to a Harvard Business Review blog, the notion that it isn't good for companies to keep workers that don't make the business better may be advantageous in certain instances. Giving employees an out of a job that they don't like or can't handle means the business culls those workers from the labor force. It also reaffirms to those employees who stay that they are happy in their jobs.
Rita McGrath, associate professor of management at Columbia Business School, told Human Resources Executive (HRE) Online that more large corporations may follow Zappos and Amazon's leads, but it can end up sending a mixed message to those workers who feel good about their employment at the company.
"On the one hand, [such programs say] 'We want to keep and develop you as part of our talent pool,'" said McGrath. "On the other hand, [the policy says] 'We're happy to pay to see you go.'"
With employee engagement receiving much of the spotlight in HR right now, thinking about this payroll management strategy may help human resources departments focus on the financial benefits of having engaged members of the workforce.