A Counter Intuitive Approach to Reducing Turnover Costs

turnover costs

Have You Ever Considered Paying Employees to Quit To Reduce Turnover Costs?

Everyone is familiar with Amazon….right?

Amazon’s CEO Jeff Bezos just rolled out a “Pay to Quit” program – offering warehouse employees up to $5,000 to quit their jobs – even though the company is in the process of adding workers and locations.  The CEO wants to make sure that employees really want to be there – and to give those the opportunity to leave if they don’t want to be there.  The offer is made under the headline “Please Don’t Take This Offer” and it is offered once a year.  New employees are offered $2,000 to quit. The offer escalates by $1,000 for each additional year until it hits $5,000.

Pretty novel, don’t you think? Maybe offering an incentive to part ways with employees who really aren’t plugged into your company’s mission and goals may be effective at boosting morale, productivity, enhance “team-manship” and reduce turnover costs?

Consider These Five Factors that Influence Turnover Costs:

  • Separation Costs   – think continued benefits or administration costs
  • Replacement Costs – temporary labor or increased internal labor costs to distribute the workload of the vacant position
  • Recruitment Costs –  costs associated with recruitment for vacant positions
  • On-boarding Costs – costs associated with formal and informal training of new employees
  • Lost Revenues – lost incremental revenues associated with staffing shortages.


Various projections out there estimate turnover costs at 50% to 150% of someone’s base salary.  That may be a little high – but it is safe to assume that turn over costs on the low end can easily be calculated at $2,000 to $3,000 per employee.   Just food for thought but wouldn’t it be interesting if this counter intuitive concept resulted in reduced turnover, more capable, committed and happy employees and better return on your bottom line?

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published.