Could Paying Employees to Quit Save Amazon?

One innovative move in employee relations may spark a positive revolution at Amazon.

Apr 16, 2014 at 2:00PM

In recent months, Amazon.com (NASDAQ:AMZN) has faced scrutiny about employee treatment. Increasing numbers of investors have been wondering if Amazon is too uncomfortable a stock for their portfolios due to this criticism. But founder and CEO Jeff Bezos' most recent shareholder letter revealed a new, unorthodox "benefit" for warehouse employees: Amazon will give them a lump sum of cash to tell it to take their job and shove it.

For all that Amazon has recently been gaining a reputation for treating employees poorly, the policy takes a page from Zappos. Exemplary employee culture is a factor that sets Zappos apart in the corporate landscape. There's no shortage of media coverage of CEO and founder Tony Hsieh's unorthodox methods, creating a zany, fun place to work.

Amazon's copycatting makes sense for a lot of reasons -- of all companies, it's more than allowed to copy Zappos: The Internet giant bought the online shoe peddler in 2009.

Given increasing awareness of how important it is for successful, growing businesses to have happy employees -- and one of its own business units' success in that area -- is Bezos starting to "get it" more than many may think?

Please don't go
Bezos' letter certainly sounds as if he's concerned with having satisfied employees. In his words:

We hope [employees] 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.

The idea segues into one that is increasingly recognized as an intangible asset to companies: happy workers. If employees aren't happy, they won't perform well, customers will revolt, and that all feeds directly into companies' long-term financial standing.

The unorthodox idea of paying unhappy people to leave certainly can give some literal get up and go to those who want to get up and quit.

Another Internet giant, Netflix (NASDAQ:NFLX), also gives employees the option of receiving a lump sum to leave. But that program is limited to those working in its corporate layer, so warehouse workers aren't included in the program.

Still, big Internet companies often know the value of happy employees. Many of the best benefits emanate from innovators like Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB), after all.

The law of attraction
Rejecting industry norms and treating employees well shouldn't be underestimated as a competitive advantage. Making sure customers' positive feelings about a product or service doesn't erode is a real foundational strength.

Pro-stakeholder investing recognizes many operational aspects that take a decision beyond simply price-to-earnings ratios and complex number crunching, both of which can hide future business strength and weakness. Employee treatment and happiness is one of them.

Employees who aren't happy -- or "engaged" -- are actually profit drains. According to Gallup, "actively disengaged" employees represent $450 billion to $550 billion in squandered productivity every year.

Layoff-happy organizations suffer from beat-down morale as survivors wonder when their time will come, or simply feel guilty about their pink-slipped comrades. Meanwhile, high turnover of any kind is a financial weaknesses: Retraining new employees constantly is a real cost, not a bottom-line benefit, as conventional wisdom often claims.

When it comes to happy employees, Gallup points out companies that can boast 9.3 "engaged" employees for every one "disengaged" worker enjoyed 147% higher earnings per share compared to comparable companies in the 2011-2012 time frame. Sounds good, right?

Love versus the lottery
Here's some food for thought. When it comes to people who love their jobs, millions in cash might not budge them from their life's work. In a poll revealed last December, Gallup revealed that if engaged employees won the lottery, they'd keep their current jobs even with a massive windfall.

Just about two-thirds of "engaged" respondents said $10 million in lottery winnings wouldn't convince them to quit their current jobs. That's some strong human capital that isn't likely to disappear into thin air one day.

Of "actively disengaged" employees, just 20% would keep their current jobs. Perhaps more interesting, 41% of those would seek a different job if they won such a sum. That's pretty insulting to whatever job they currently hold, and certainly shows the level of disloyalty brewing in disengaged employees.

Amazon and investors: Give us everything, from A to Z
Personally, I think Amazon is an amazing stock for investors to hold in their portfolios. Its business strength is awe-inspiring given the wide variety of services it provides even beyond its more obvious e-commerce base. (How many people are even aware it owns Zappos?) I wouldn't actually blame anyone for holding it in their portfolios for the long haul, and at times I've even recommended it.

But I'd love to love it more. I absolutely I do think that its employee treatment is revealing itself to be weak link in its otherwise powerful chain.

A company this innovative certainly can find ways to add a little more joy for rank-and-file employees. Meanwhile, investors know that Amazon isn't too concerned about profits as it pushes for volume. And what makes one important component of sales volume, volume, volume? Warehouse workers. Why not invest in this area as well as robots and drones?

Maybe paying disengaged workers to quit is the first step for Amazon to improve the benefits and culture for all of its workers, making them happy to stay and achieve. And maybe Jeff Bezos will start to shore up what is increasingly looking like a PR -- and business -- weakness.

Treating people well is the right thing to do. More and more, though, it's revealing itself to be a profitable thing to do, too.

Innovation and disruption hits your living room
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last, and the great innovators the likes of Amazon are ready to tackle this war. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 

Alyce Lomax has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Facebook, Google-Class C Shares, and Netflix. The Motley Fool owns shares of Amazon.com, Facebook, Google-Class C Shares, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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