Buck Bond Group

Pay-to-Quit: The Next Cool Thing in HR Strategy?

by Tags:

Zappos started it, Amazon and Netflix adopted it, and Harvard Business Review wrote about it — the latest HR strategy — paying employees to quit. Although the idea originated with Zappos in 2008 (a subsidiary of Amazon) the program gained interest among HR professionals and the press after CEO Jeff Bezos released a letter to Amazon’s stockholders explaining that giving a financial incentive to employees to quit was good for business. According to Bezos, unhappy employees make for unsuccessful companies and rewarding them to quit is an innovative way of routing out unproductive, disengaged employees by helping them reflect on the type of work and career path that would make them happy.

The way the program works at Amazon is that once a year, employees are given a financial incentive of $1,000 to quit, the offer increases by $1,000 a year and is capped at $5,000. Other firms are offering as much as one month’s salary. The general consensus about pay-to-quit policies is mixed.   Some feel it is a way to retain top talent who care about the firm. Others think that large companies are more likely to offer disengaged workers financial incentives to move on, to the mutual benefit of both employer and employee. Cornerstone , a cloud-based talent management software solutions firm, blogged about Heinz offering employees, who did not support a change in leadership, a kind of pay-to-quit program in the form of a voluntary severance package with a deadline.

Will it take hold? Rebecca Ray of The Conference Board is not so sure pay-to-quit incentives will gain momentum. According to Ray, companies may not want to risk further talent shortages; on the other hand, she states that there is “the cool factor [in being seen as] a company that is interested in the well-being of employees.” On the down side, employment attorneys point out the significant costs associated with employee turnover and the fact that unmotivated employees may feel the fault lies with the company. They recommend that firms thinking about pay-to-quit programs consider obtaining a release of all claims in exchange for the payment to safeguard against any potential lawsuits.

Do you think pay-to-quit programs are forward-thinking and here to stay or an easy out for employers to get rid of disgruntled employees under the guise of helping them find their ideal job?