Learn how “pay-to-quit” programs are being used by some employers and how to launch one at your business.

While the idea of paying employees to quit might seem foolish at first glance, it’s actually an effective strategy for employers who want to reduce their workforce while keeping highly motivated employees on the payroll. That’s because pay-to-quit programs give indifferent employees an enticing reason to leave.

How pay-to-quit works

Well-known companies like Amazon and lesser-known companies like Trainual use pay-to-quit in slightly different ways.

When Amazon rolled out their pay-to-quit program, “The Offer” as they called it was available to most of the mega retailer’s workers. A payment of $5,000 was offered to employees who resigned after peak seasons. Later, Amazon modified the program so only those who graduated from the Amazon Career Choice training program were eligible for “The Offer,” and only for the three months after graduating from the program.

Trainual, an Arizona software service company, offers new employees $5,000 to quit after two weeks. Their logic is that it’s less disruptive for an employee to leave sooner rather than later.

How effective is pay-to-quit?

A Harvard Business Report article by Uri Gneezy reports that pay-to-quit is effective for identifying less-committed employees and convincing them leave. In his controlled study, 12% of employees chose the bonus to leave. A bonus for leaving also allows employees who are a poor cultural fit a smooth exit.

How to launch your own pay-to-quit program

Gneezy’s guidelines for launching a pay-to-quit program offers unique perspective on how to customize the program for business, including how to select the right price point to ensure that not too many employees opt to quit and so low that it’s not enticing enough. Additionally, the author also suggests being selective about which employees are eligible and setting a deadline for the offer.

Business Banking with Consumers

At Consumers, we don’t pay business members to quit their current bank, but you might feel like you receive a bonus when you bank with us. Our low fees and competitive interest rates help you keep more of your money. Plus, our team of Consumers Commercial Loan Officers can help you navigate everything from payroll to a business line of credit.

Do you have business banking questions? Contact our knowledgeable Commercial Loan Officers online or call 800-991-2221. We’re also available to help in person at your local office.

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