Getting Paid to Quit: Why some employers pay up to $25,000 to get employees to quit

Getting Paid to Quit: Why some employers pay up to $25,000 to get employees to quit

Stress - business person stressed at office. Business woman holding coffee cup with STRESS written. Overworked and over caffeinated female businesswoman. The bad seed. The weak link. The well poisoner. Every office has one: the person who should have never been hired.

Now some companies are fighting back against these morale-killing mismatches by adopting radical new programs that get bad hires to weed themselves out voluntarily, saving their employers (and their shareholders) a bundle.

Since the beginning of time, companies big and small have struggled to detect and eliminate bad hires. It’s a hard task for most managers. The problem is everywhere—and it is expensive.

Last year, for example, a study from CareerBuilder found that more than half of the employers in each of the 10 largest world economies said a bad hire had cost them revenue, tanked employee morale or hurt client relationships. In the U.S., a single bad hire costs a company over $50,000, the study said. The stakes are even higher in Germany, where a bad seed costs a company about €50,000 (about $65,000). There were similar estimates from British, Indian, and Chinese employers.

If these bad eggs really cost companies that much, why not just pay them to quit?

That’s the concept that online apparel retailer Zappos embraced when it launched its seminal pay-to-quit program (nicknamed “the offer”) to weed out employees who just weren’t that into working for the company. New employees have a decision to make: stay, or take a company-endorsed $2,000 “bribe” to quit.

“We really want everyone at Zappos to be here because they want to be and because they believe in the culture. If they know they don’t quite mesh with our culture, we don’t want them to feel stuck here, so we give them an option,” the company writes on its website. “Less than 2 percent of all employees end up accepting the offer.”

Amazon has followed suit with a Pay to Quit program that offers first-year employees $2,000 to quit as well. But at Amazon, the ransom increases by $1,000 per year for the next four years. By the fifth year, Amazon offers employees $5,000 to quit.

“Why do we make this offer?” CEO Jeff Bezos wrote in his letter to shareholders this April. “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.”

Online gaming company Riot Games, which is based in Santa Monica, Calif., runs its own riff on the Zappos concept. The program, called Queue Dodge, was revealed on June 19. It works like this: any time during their first 60 days, new hires in North America can quit and get 10 percent of their annual salary up to $25,000. No questions asked.

“We don’t want to actively push people out or dare them to leave, but we do want to provide a well-lit, safe exit path,” the company said. “If someone gags on the unique flavor of our culture, they’d be doing themselves and the company a disservice to hang on just for the paycheck.”

How many disgruntled employees work at your company? How many people do you know who are bad fits in their positions and could benefit from an incentive to look for the exit? After all, if a bad hire costs your company $50,000, then a $2,000 reward to quit is probably one of the best investments your company can make.

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