Another Reason Amazon Is the Coolest

Amazon's "pay to quit" offer is genius.

Apr 13, 2014 at 10:30AM

Amazon.com (NASDAQ:AMZN) seems to be making so many headlines these days that it's easy to see some of the really neat stories fall through the cracks. After all, we're so mesmerized by order-delivering drones, Fire TV, and refreshed reports of an Amazon smartphone that we sometimes miss the smaller stories that may pay off in even bigger ways. 

After all, aren't grocery store scanners and drop-off lockers for localized Amazon returns pretty cool? However, one of the coolest things about Amazon doesn't involve bar-raising technology at all. Amazon is starting to turn heads with a plan that pays employees to walk away.

In a letter to shareholders on Thursday night, CEO Jeff Bezos offered up details of a plan that Amazon offered to warehouse workers in January, in which they can collect as much as $5,000 to leave the company. 

Now, a "pay to quit" offer may not seem all that unusual. Companies often offer their more tenured employees incentives to quit voluntarily, knowing that they can be replaced with younger and cheaper hires. Some companies facing the grim prospects of having to lay people off dangle carrots so some folks step up before the ax drops.

However, Amazon's new strategy is unique in that it's still hiring and that even relatively new employees can take the money and run. Fresh hires were offered $2,000 to quit, increasing by $1,000 for every year of service until it maxes out at $5,000. The offer -- carrying a "Please Don't Take This Offer" header -- will be repeated every year.

"The goal is to encourage folks to take a moment and think about what they really want," Bezos writes. "In the long run, an employee staying somewhere they don't want to be isn't healthy for the employee or the company."

Encouraging someone to leave may not seem like a sound financial decision, especially since it takes time and money to train a replacement. However, at a time when some retailers are being taken to task for what they're paying, here's Amazon flipping the script by telling them that they can profit from leaving if it's not the right job. It's deflection in a perfectly executed form. 

An Amazon spokesperson tells CNNMoney that less than 10% of those offered the plan in January took the bait. That may seem surprisingly low given the nature of the work at Amazon's distribution centers, but it's a testament to Amazon's ultimate appeal as a place to work.

It's also brilliant to publicize the practice, which Amazon borrowed from its forward-thinking Zappos online shoe-selling subsidiary. After all, there won't be a shortage of folks lining up to work at an Amazon warehouse, possibly with the intention of leaving next January to score a cool $2,000 after the taxing holiday rush. However, it wouldn't be a surprise if many of those opportunists enjoy the job and stick around. Amazon will get to retain the people that truly want to stay there, enhancing the overall satisfaction and quality of its front line. 

Well played, Bezos.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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