The first (and stated) effect of this policy is to weed out the unmotivated employees.
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’[1] and is fascinating.
Here's a link to a video of Dan explaining this[2] and a really excellent Coursera course he does on Irrational behaviour[3].
>The first (and stated) effect of this policy is to weed out the unmotivated employees.
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.
From the literature, Amazon contracts out it's warehouse duties to fulfillment companies. I'd be interested if anyone knew if Amazon had any direct employees (other than Sr. Management) that worked in the warehouses.
Huh. What about call centers? Thinking of it that way, the whole thing starts to make a little more sense. It is /hard/ to run a good low-end support organization, and it's one of those rare situations where attitude matters to the point where you want to get rid of the bad attitudes even if they are otherwise competent.
If you are making $25k a year working in a warehouse, another five grand is absolutely huge.
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.
I recall hearing about that for Zappos, but here the offer is repeated every year. Doesn't that ruin the effect - you know you can get (potentially even more) by quitting in a few months? And if it's only offered at certain times of the year, then there'll be a bunch of people hanging on until the offer comes around again.
You're missing the point that every pretty much every organization has people hanging on because they need the money, this is incentive to get some of those people to move on, not to eliminate the possibility of employees ever hanging on for a little bit more money.
Actually that was the other point (the one made in the article), which I wasn't missing but was simply not commenting on. The post above mine brought up a second point, which is the one I was questioning as the circumstances between Zappos and Amazon seem significantly different.
Well, I suspect there will be people postponing quitting for a few months just so they can cash out with the offer. That's undesirable for Amazon.
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.
There are lots of pragmatic reasons you might want to work at Amazon for a while and then leave for example, someone who's studying and wants to move into some other line of work after graduation. Waiting tables is the stereotypical student support job (partly because of lectures during the day and people preferring to attend restaurants in the evening), but my understanding is that Amazon warehouses run more or less 24-7.
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.
If the offer is annual and they add an extra $1000 per year then on average the disgruntled employee has to wait 6 months to quit and get a higher severance, not 1 year. Which means that 1/4 of those employees only have to churn through 3 more months to get an extra $1000, hardly something nobody would do.
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).
I think you misunderstood jordn's comment. When he said "staying in a job they dislike for another year just to get an extra $1k when they do quit." I think he was talking about a hypothetical situation were an employee has been working for Amazon for, say 2 years, and got offered the $2k. They'd be unlikely to wait another full year, just to be able to get $3k when they quit. In other words, if they want to quit, they will do so at the closest offer (e.g. $2k) rather than waiting another year AFTER that offer to get a larger one (e.g. $3k).
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.
Right, I'm just elaborating and pointing out that this caveat only happens as long as the offer is structured in such a way that you have a massive increase to it at a specified time once a year.
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.
But that defeats the Conginitive Dissonance side of the things. If the offer is available daily (or even weekly), then the employee can just quit the very day (or next week) he feels crappy about his job.
How is it a problem that people who have such a tenuous attachment to their work that they'd quit next week for a bit of cash as soon as they're feeling down do so?
Seems like a great outcome for both the employee and the employer.
It also means that people will quit at a predictable moment, rather than in the middle of the christmas season. I think it is a very clever policy from Amazon at several levels.
> ...then there'll be a bunch of people hanging on until the offer comes around again.
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.
"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."
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."
Your mind almost certainly works like that whether you like it or not, unless you're a substantial outlier. There's tons of research that attacks this effect from various angles, and pretty consistently it finds that we have an exceedingly strong drive towards consistency between thoughts and emotions and actual physical behaviour.
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.
I'm aware of cognitive biases, and know they get me, I just find this use really feeble. Individuals and all that. When I make bad decisions I don't reconcile anything, I swear and grumble and cut my losses and tell myself to forget about it and move on, and sooner or later I usually do forget about it. New day, new situation, new factors, new decisions. New opportunities to make new bad decisions! I'll take a look at that book, thanks.
In very obvious cases, yes, people act like you've described. What this effect manipulates is the judgment of whether something was a bad decision in the first place. People can get disgruntled at a job that is objectively quite good, and can convince themselves that they're satisfied with a situation that's actually not that great.
That's why they're common fallacies. Not everyone has them, and not all the time, but they're common. There's also a fallacy for thinking you're not susceptible to them, and one for being too hard on yourself.
You can trigger compliance effects with a can of soda. Of course there needs to be a correspondence in magnitude, but it's not really about the absolute amounts.
Rents have been skewing much higher than mortgage costs for some time. I'd guess it's 2-3 mo. of rent, max. In silicon valley it might be 1-2mo.
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!")
$2500 a month is 30K. The average warehouse worker at Amazon is around $25K (1), so the temptation might be there for them. For engineers, that amount is not likely to be considered.
Your theory might explain why the offer is only made once a year. Most likely, your bad day isn't going to line up with the availability of the offer. If it was always on offer, you might be more inclined to jump ship impulsively.
I'm curious about the opposite -- I'm assuming it likely keeps dead weight around longer too; someone who isn't happy or motivated, waiting around for a few months for the 5k bonus for leaving.
This might actually be desirable for amazon as it likely helps them keep their employees through the rough holiday season where they probably see a larger than average quit rate. I'd be willing to bet that the choice to quit and receive compensation comes shortly after the holiday season ends, thus dangling a carrot in front of the employees to muscle through.
For a company like Amazon a few months probably isn't significant in the grand scheme of things. They don't operate like a startup that is constantly a few months away from failure. Plus they have a lot more employees to fill in the gaps.
"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"
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.
From what I've heard this is really offered to employees deemed "under developed" which basically means they're shitty at their job. It's a clever way not to pay severance.
That thinking is completely stupid, because even if no where else will offer money for quitting, they are being offered it to quit in their current job. That offer is of zero benefit if they DON'T take it. Staying BECAUSE there's an incentive to quit is perhaps one of the most ridiculous thoughts I've heard. Then again, some people are very stupid.
I also don't think that's "classic reverse psychology". (Although I'm not a psychologist).
As someone who actually worked at Amazon for a few long years, I'm always skeptical of such seemingly positive news, and often think "hmm, could this be another marketing trick to influence people's perception of Amazon rather than actually changing anything", and %90 of the time I'm right :)
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.
It's no where near as much money as it is to the people who are actually getting the offer. It's like 2 weeks pay for an engineer and 2 months pay for a warehouse worker.
Purely on a legal level, getting your most disgruntled employees to identify themselves and waive all claims in exchange for $2,000-5,000 is probably a pretty good deal.
From what I've read, they have plenty of employees with zero rights to claims, under schemes like German "minijobs" ( www.reddit.com/r/technology/comments/1szub2/9000_workers_at_amazoncoms_german_operations_were/ )
Defending against costly litigation and employment law claims - warranted or otherwise - costs a lot more in legal fees and reputational damage than a couple of months severance pay. And even if they do find themselves in the dock, an employee being shown to have turned down a couple of nonspecific, nondiscriminatory financial incentives to leave certainly weakens any allegations of protracted mistreatment. Anyone know what strings are attached to this offer?
About 5 years ago during worst of the downturn, I took $20,000 USD option our consulting firm gave and voluntarily quit a $120,000 base salary job. At the time, I thought that job sucked pretty bad and was looking for an out anyhow. I've been an entrepreneur ever since.
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.
As much as the the $1bn exits are revered, 5 yars to $1m USD revenues IS quick success. Most who start a company will never get to that kind of revenue, and of the ones that do, many will take far longer. It's an impressive feat.
I came to Shenzhen China because I'm a manufacturing guy and this is the place to be for that. Plus the 8% YOY growth and low labor rates here give a better chance for bootstrap success. And finally, yes, I got a hot girlfriend during my visit and wanted to stay a while. She's now my wife.
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.
Haha, well I started out as a warehouse worker at a chemical factory in West Virginia, where I worked for 7 years. We didn't have a parachute policy at the chemical factory, and given my experience with and without a parachute policy, I'd say Amazon's policy creates value on both sides.
The article made it sounds like a universal offer, maybe I could see per-business unit, but not per-employee. That would require you to already know who the dissatisfied workers are. The stated point was to discover early who is not satisfied in their job.
As others have mentioned: keep in mind this offer is for warehouse employees. There's lots of hard metrics being gathered on those employees, so it's straightforward to figure out which ones are underperforming.
This reminds of the unlimited vacation policy. Essentially with both these policies, the company is deflecting issues regarding job satisfaction and burnout onto the employee. The employee almost gets bullied into not taking the offer so as to show that they are above the petty reward. These psychological games are not created by chance; they are instituted to keep everything black and white, with us or against us. By drawing a line in the sand, they are eliminating the necessary conversations employees should be having with HR or supervisors to improve the workplace and their own individual situations.
Although nobody else seems to have mentioned it, this sounds to me like they are trying to avoid employees being dissatisfied but sticking around in order to get severance pay. Obviously if you quit voluntarily, no severance pay, but Amazon gives you a bit of money anyways (much less than severance pay), so that maybe you won't stick around longer than is good for either of you.
Hmm, I'm in Canada, and while the legal minimum here probably isn't much higher than the US, maybe companies tend to offer more. Could just be what I've heard of in the largish engineering companies I've been in.
In general, there is no requirement for any severance in the U.S. It can be negotiated for, and in certain specific cases laws may require either notice or severance.
Motivation by general pride in your work and refusal to compromise on standards will drive you to do your job well, but it won't drive you to be "motivated" in the sense of wanting your job to go well.
Big defense contractors have a yearly VRIF (Voluntary Reduction In Force), which is when they offer slightly better than average retirement packages to expendable older employees. Young people would never get the offer (because they couldn't retire) and important older engineers would also never get the offer, even though many of them wanted it. This is a big improvement over that since it can be used by younger employees and the employee decides unilaterally if they want the package.
A few years ago I worked at a place where the CEO instituted this policy in the wake of reading about Zappos doing it. I remember him standing up at the weekly company meeting and offering a few thousand dollars to anyone who quit. The thing is, a week earlier, another coworker had put in his two weeks, and the look on his face upon hearing that announcement... I'm not sure if he ever got the money, but oh well. C'est la vie.
What was your experience of the impact that policy had at that company? Anything? Did any lower performers leave to take the incentive?
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.
I have a vaguely similar anecdote. A former employer of mine withheld bonuses from the entire team since I had recently given my notice. They were quite open about the fact that they would give out the bonuses once I had left, and just didn't want me to get a slice of that particular pie.
You'd have to ask them. I'm not a lawyer, and don't have ambitions of being one, but they might have been concerned with such an action appearing punitive.
Does this apply to Amazon's subcontractor warehouse employees? Because those are some jobs seriously worth quitting for $5,000: http://www.motherjones.com/print/161491
This would never be worth it for a developer working for Amazon proper.
Amazon runs through whole towns. That is an understatement. They arrive and go through 8-10 counties worth of people. Every person that they let go was not a bad employee and every employee they kept was not a good employee. Amazon is assholes. They have their temporary staffing agency because they don't want to pay health benefits. If Amazon kept all the good employees that the staffing agency gave them then they would no longer need the staffing agency.
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.
I wonder what the chances of labor coordinating and everyone deciding collectively to take the offer at the same time? That would put Amazon in a tough spot and allow labor to negotiate a better deal. Amazon must be very confident that won't happen.
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.
This policy is specifically designed to weed out all but the most desperate employees. When you're living paycheque-to-paycheque you can't afford to strike. The reason I pay union dues is to top up that strike fund.
Yeah Amazon are great to their permanent workers, management and so on. But what about the vast of majority of permatemp workers who do all the moving, warehouse work etc. ?
This is genius. Many people feel stuck in jobs they don't like for financial reasons. They're surely not as productive as they could be if they were happier. Providing even a small bit of assistance to help them out the door helps both sides. Employees don't feel trapped and employers don't have to wonder if their employee is just have a rough time or if he/she does not want to be there any longer.
Not to mention, as another commenter pointed out [1], once you decline the money you will look back and remember you made the decision to stay when presented an opportunity to leave.
I would be amazed if anyone accepted this offer, it's not enough money to justify making every other job interview afterwards harder. I bet it's just a PR trick to make them look like better employers after the warehouse conditions were exposed.
How does it make other interviews harder? Saying you left because you felt the company wasn't a good fit for you and they offered you a sum of money that gave you a little leeway to plan your next move sounds perfectly reasonable to me.
Who says you have to have job interviews afterwards? I've known plenty of people who line up interviews before they actually quit, then only quit when they've got another job lined up.
Seems to me that this can only work in countries with little in the way of job protection.
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.
Can we get the US federal government to institute this policy? With the caveat that once you quit you are prohibited from collecting a federal paycheck elsewhere.
At first I thought you meant that the US Government would just pay anyone to quit their job AND I LOVED IT! I still think it's a good idea, and I know everyone probably thinks that first idea is stupid, but I think it's great. Getting people to feel comfortable quitting their jobs is the only way we're going to reinvent this economy.
I would think that it would be more of a tiered system. For some higher pay employees it might benefit them to remain in unsatisfactory job just to make the big bucks. They are then draining amazon and not contributing like they would be if the y were truly pleased with their job
So in other words, there's now a $5000 hiring bonus if you can figure out a way to jump ship to Google or any of Amazon's other competitors. Sounds good to me.
I very much agree with this. A great way to weed out employees who aren't happy there, and as such, will be unmotivated, unproductive, and bring down overall morale.
Most blue collar workers turn over in a year, so this is just PR fluff. Companies can and do write them up at any time for the smallest of mistakes and then fire them, often within the first three months. Any statement made about a manual labor job and "After the first year" is ridiculous as is the tuition plan.
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’[1] and is fascinating.
Here's a link to a video of Dan explaining this[2] and a really excellent Coursera course he does on Irrational behaviour[3].
[1] http://en.wikipedia.org/wiki/Cognitive_dissonance
[2] http://bigthink.com/videos/dan-ariely-zappos-and-the-offer
[3] https://www.coursera.org/course/behavioralecon