However, Dan Ariely has explained that the secondary effect is potentially more powerful. For those that choose to stay, they will forever live with their past action of having turned down lots of money to work there. So, when they're having a crappy day and hating their job, they're probably thinking "why didn't I take the money and quit?!". The only way to reconcile their thoughts and actions is to explain that, in fact, they must really love this job and therefore should work hard at it. This effect is known as ‘Cognitive Dissonance’ and is fascinating.
Here's a link to a video of Dan explaining this and a really excellent Coursera course he does on Irrational behaviour.
I would argue the opposite. This policy is going to get rid of the most ambitious of your lower-paid folks, leaving you with people who have loyalty - and those who don't feel they have other options. the "lifers" who want to stay with your company long-term, even at the cost of their long-term career. I mean, those people can be good employees to have, but I wouldn't call them more motivated than the folks who will switch jobs for a 20% bonus. (oh god, do you remember when you went from $20/hr to $25/hr? you feel it in a way that you don't feel going from $40/hr to $50/hr)
I mean, I'm not going to switch jobs for five grand, unless I was going to switch jobs otherwise... but that's because it's a very small portion of my yearly income as a percentage. If amazon is offering this to warehouse workers who presumably make around $25K/yr, that's 20% of a yearly salary.
For a 20% bonus? Yeah, I'd probably switch jobs. Or just take a nice long vacation. But, I'm also not the sort to stick with a company if I don't think it's furthering my own career goals.
I agree that if you are giving this to people making $100K+ per year, it doesn't really have the same impact. Five grand is about what I'd expect for a "hey, you are doing okay but not stellar" annual raise within the company.
My big point, though, was that ambition and loyalty are often conflicting motivations.
But I doubt you'd have people staying in a job they dislike for another year just to get an extra $1k when they do quit. Also you'll have compounded another year of turning down cash to work there so the cognitive dissonance might be even stronger.
This program gives them some control over when someone is likely to quit. I.e. not in the middle of a holiday rush.
Another way to look at this that doesn't require any cognitive dissonance is that Amazon lets hourly employees accumulate up to 2-3 months of severance pay (I'm not sure how much time that represents because I don't know their hourly rates, but I'm guessing it averages out to something like $12/hour).
I think it's a great program. Besides offering a friendly incentive for unmotivated workers to leave; it improves the confidence of those working there and provides useful transitional assistance to those moving on for career reasons; lower-paid workers often suffer economic disruption even when moving to a better job because they may miss a pay cycle or have to take on new expenses (new work equipment, different clothes, a car or moving to another town), so a cash cushion for such things is a big plus. It's good cheap publicity for Amazon, not to mention they probably retain their ex-employees and their associates as future customers.
The obvious solution to fix this flaw in the system would be to raise the offer daily instead of annually, be approximately $1000/365 =~ $2.74 per day. Or more simply by $20 per week, which comes out to about the same per year ($1040).
Of course it's likely employees would wait e.g. 3 months to get the "quitting bonus". In fact, jordn quite clearly stated that also, in the first line of his comment.
Then if you hate your job and you're close to that specified time it's in your interest to wait, even though the point of the policy is that Amazon would rather that you quit.
If they just increased the offer with more granularity they wouldn't create that conflict of interest. You'd only get more money as a function of the time you stayed on the job, so you might as well quit right away instead of waiting a few months for a much larger payout.
Right, or did I miss something?
Seems like a great outcome for both the employee and the employer.
This might be the most important aspect of the program. An employee abruptly putting in his or her notice can cause continuity issues for the business, especially if they don't give them the customary 2 weeks of notice. If $5000 can buy employees leaving at predictable times during the year, the business can take steps to ensure that the employee's job functions are covered. That predictability alone may be worth $5k.
Is my mind supposed to work like that? I'd think "I should've taken the money, oh well, I had my reasons at the time, they've turned out to be wrong, nevermind, time to go."
Of course this is not an absolute: It will not work on everyone all the time. But that is not the point.
There's a multitude of effects that conspire to make us easy to manipulate in this way. I'd recommend Ciadini's book "Influence" as a good introduction to this topic - it's popularised, but full of references to the actual studies, and covers a long range of effects.
$5,000 isn't really lots of money; it's probably about six months of mortgage payments in an average town.
On a 25-year mortgage that doesn't make much of a dent.
Better to keep grumbling, keep earning and keep a roof over the family.
It's not impossible to get a home for $150k in Seattle, but your choices are very limited.
But people often don't think rationally that way (and definitely not all the time). A large lump sum may seem bigger than it actually is. Which is why sales folks often try to peanut butter the costs over a range ("it's the cost of one coffee a day for a month!")
1 - http://money.cnn.com/2013/07/30/news/companies/amazon-wareho...
Or because taking the money makes the feel guilty, but quitting and not taking it makes them feel stupid, so they just plod along feeling angry.
That is not the only other way to reconcile their thoughts and actions. They can beat themselves up for not taking the money / regret their choice ('I am so stupid for not taking that money, I hate this job'). I know plenty of people who beat themselves up on a regular day to day basis about all sorts of life choices they wish they had made differently.
Seems metacognition, the ability to reflect on one's own thought process, would be a really good cure for such cognitive dissonance.
It's classic reverse psychology.
I also don't think that's "classic reverse psychology". (Although I'm not a psychologist).
Here's how their typical financial offer is structured for new software engineers:
1st year: signing bonus + relocation bonus + 5% of stock grant
2nd year: signing bonus + 15% stock grant
3rd year: 40% stock grant
4th year: 40% stock grant
If you quit within the first year, you have to give the relocation and signing bonus back. That's much much more than $1k. So there's a strong financial incentive / golden handcuffs to keep you there for at least 1-2 years, even if you are unhappy!
After the 2nd year, the financial incentive of staying is still there in form of the large stock grant (which has grown due to their stock price rising) that you've been promised and waiting on for a long time.
I can see someone rationally and happily taking the incentive after the third or fourth years and quit (i.e. after they've done damage to the work environment as an unhappy/unmotivated employee, and no longer have to give a fortune back to the company)... but before then, I doubt it'll change the behavior of any currently employed, overworked, over-paged, under-paid, under-appreciated software engineers.
Who this policy might affect though is future hires, and their perception of Amazon. People who have a choice between offers from MS and Amazon for example. They might consider this an interesting policy and assume that it would have improved employee morale at Amazon even though it's common knowledge that Amazon has terrible work life balance, etc.
I should also note that the Zappos policy makes a lot of sense to me, but this is very different from that, as is the employee culture of Zappos from Amazon.
Not to sound elitist, but what is $5k to a software engineer making 120k/year regardless of the cost of living in Seattle.
This makes more sense.
No quick success story to tell - I've been bootstrapping for 5 years in China and it's been hard. But I've been happier overall focusing everyday on pretty much whatever-the-hell I want to think about, and my business just broke $1M USD revenues this year by doing that, so overall it seems right decision for me.
Policies like this are probably a win-win for all involved.
I first started a technical sourcing/manufacturing/engineering consulting company. Then later started a 2nd company that uses the experience and engineers in my consulting company, but instead of consulting we just do direct sales of custom designed products and tooling, like a virtual ODM.
This deal is for warehouse employees only and most of the people(90%+) working in warehouse are contractors.
They handpick employee(s) and once a year and offer him/her this deal.
I wonder if they target the ones that are starting to limp...
Do you have a source on that?
I do not understand why this item is in shareholders' update. I feel sorry for Amazon's shareholders.
My other coworkers are nowhere near as talented and the lack of peers greatly contributes to my frustration (which makes me unmotivated).
I've been curious about implementing this at my own company but I'd be interested in someone's actual experience with it, vs. hearing about it from people incentivized to claim it worked well because it was their idea to implement.
:-) ... :-(
This would never be worth it for a developer working for Amazon proper.
Staffing agencies are expensive, they are not really that much cheaper. If Amazon got rid of the staffing agency they could pay the employees they already have more money and there wouldnt be a question if employees are happy or not, motivated or not.
The buy outs are just to keep their staffing agency busy. How is the staffing agency going to say all of a sudden, "You know what, we dont even require a diploma or a GED anymore, we did before but now we don't".
With their staff agency they are burning money right in front of employees' faces while telling them that they cannot pay them one dime more. They have pissed off and cleaned out half the freaking state now they will hire anyone. Now they are going to pay some perfectly good employees to leave. Really these employees are exceptional. If you can last somewhere for 2-3 years where most people can't last 2-3 weeks, you are a valuable employee. That is Amazon's problem: They do not value people.
Maybe this type of program says more about the weak state of organized labor in the US then it does about breeding a healthy and good company culture. There seems to be something you can read in between the lines with this.
Not to mention, as another commenter pointed out , once you decline the money you will look back and remember you made the decision to stay when presented an opportunity to leave.
If this is a global policy then the argument that they're the scum of the Earth with regard to employees cannot hold much water.
If you want to get rid of someone in most EU countries, it's going to cost you a lot more for them to sign away their rights by quitting. From that perspective, this is just an attempt to get rid of people cheaply.
But exactly those people you actually want to take the offer won't, they are much better off forcing their employer to either fire them or make them a better offer.