In his latest letter to its shareholders, Amazon CEO Jeff Bezos has unveiled his new and (not so) unique “Pay to Quit” policy. The aim of the policy is simple, to weed out the uninspired and the disaffected by offering them a generous coup de grace; $5,000 in exchange of their quitting. Though Bezos avers in his letter that he does not want the employees to take the offer, and that he wants them to stay, $5,000 seems like a price too steep just to cherish one’s (unproductive) employees. Bezos further asserts that the goal of the program is to encourage people to take stock of what they really want. Bezos says that in the long-run, an employee staying somewhere s/he does not want to be is bad both for the employee and for the company.
The logistics of the “Pay to Quit” program are pretty simple. The program applies only to Amazon’s warehouse associates. Upon completing one year of employment with Amazon, the associates are offered a contract the headline of which reads- “Please Don’t Take This Offer”. The associates are offered $2,000 after the completion of the first year of their association with Amazon. Every subsequent year sees a hike of $1,000 in the amount with a ceiling once the amount reaches $5,000. This, the proponents of the policy argue, will help those who do not align well with the culture of the company to “pass easily”. For the companies, it is less paperwork. An employee going out by her/his self saves the company from all the HR hassle that might have been involved, such as, citing a cause for termination of employment and the ominous notice requirements.
This policy was originally innovated by “Zappos”, an e-retailer of footwear known for its rigorous customer-oriented policies. For Zappos employees, the offer was open from the first week of their employment, and some say the employees were even offered $4,000 to quit during primary training. Zappos, though acquired by Amazon in 2009, is largely an independent entity and to this day practices this policy.
Important questions arise now. Is a $5,000 check really worth being out of a job in the current economy? Under close scrutiny, the policy quickly dissipates as nothing but a farce. An average Amazon warehouse employee makes around $12 in an hour or $25,000 in a year. This, plus some stock grants which make up 9% of her/his salary are a rough estimate of what s/he makes. The quandary that arises now is this. For a new employee, who is working at the warehouse not by choice but a chance, $2,000 would be a meagre more than a month’s pay and thus s/he would be unwilling to take that offer. On the other hand, an employee who has vested 5 years or more of her/his life in the company would see her/his contribution to be more than worth $5,000 and thus would be reluctant to take the offer. In any case, only some, especially those high performers with other job offers would avail of this offer and this would in turn work to the detriment of Amazon, as those who want out might choose to stay in and those who are efficient performers might end up leaving the company. Jeff Bezos claims that only 10% employees availed of the offer but in light of the above analysis, it is highly unlikely that the same was because of their love for the Amazon work environment, known to be extremely harsh for warehouse employees.
Another issue is whether there could be such “contracts” which could amicably let you out of your contractual obligations. Should “Pay to Quit” be a clause in the employment contract itself, or should it be a separate and distinct contract? Another thing that has to be kept in mind is Jeff Bezos has aggressive expansion plans for Amazon, and thus wants to leave out the “dregs” to recruit those willing to do quality work for minimum wage. Thus, once put in perspective, it is evident that far from being a respite for its employees wanting to leave, the policy is a bourgeois tool of oppression dressed in a PR-friendly garb to win brownie points for Amazon and Bezos.
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