A COUNTERINTUITIVE APPROACH TO EMPLOYEE HIRING AND RETENTION

Businesses in the various segments of the horse-racing industry often struggle with employee turnover, and it can be expensive and time consuming.  Research by the U. S. Department of Labor found that the costs to an employer of a wrong hiring decision can reach up to 30% of an employee’s annual earnings.  Companies routinely screen prospective employees by reading resumes, conducting interviews, and checking backgrounds and references, but these procedures have their limitations and a certain number of bad hiring choices are inevitably made.

Online retailers Zappos and Amazon have implemented an unusual incentive-laden technique for identifying and amicably parting ways with employees who should not have been hired or who no longer like their jobs.

Zappos pioneered a program known as “The Offer” in which new employees are tendered a monetary inducement to quit.  After an individual has been on the job for about a week, he or she can choose to be paid for time worked plus $4,000.  About 97% of new hires refuse the offer.

When Amazon acquired Zappos in 2009, it followed suit and installed “Pay to Quit” for employees in its fulfillment centers in an effort to reduce turnover.  Amazon’s proposal to employees to resign is made once a year.  During the first year of a person’s employment, the incentive is $2,000 and then it escalates by $1,000 for every subsequent year worked until it is capped at $5,000.  Amazon tells its employees, “Please don’t accept this offer.”

The unorthodox methodology used by Zappos and Amazon is a rare new approach to the age-old employer problem of sorting out unqualified, insufficiently motivated, or disgruntled employees, who contribute to an unproductive or even poisonous work environment.   The pay-to-quit technique is worth experimenting with in those job categories in horse-racing in which turnover and employee satisfaction have been perennial problems.

Copyright © 2014 Blood-Horse Publications.  Used with permission.

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