Zappos Paid New Hires to Quit Their Jobs

Sometime in the mid-2000s, Zappos CEO Tony Hsieh installed an unusual clause at the end of new-hire training. On the final day, after four weeks of paid onboarding, every employee — customer service, warehouse, engineering — got the same offer. Leave now, with no questions asked, and the company would pay a bonus of $2,000 on top of the salary already earned during training.

The number climbed over time. By 2010 it was around $3,000; by the time the program wound down into Amazon-era HR policies, it had ticked higher still. The purpose, Hsieh said publicly, was to filter. Anyone willing to take $2,000 to walk wasn't really committed to the mission. Zappos would rather pay them to leave than keep them for another year.

The acceptance rate hovered around 2 to 3 percent. For every hundred people who completed training, about two or three cashed out. On a per-hire basis the program was cheap. The average cost of a bad customer service hire — measured in churn, training time, and lost customers — was estimated internally at several times the bonus.

Hsieh wrote about the policy in his 2010 book 'Delivering Happiness,' and it became a management-literature staple. Amazon, which acquired Zappos for $1.2 billion in 2009, adopted its own version called 'Pay to Quit' for warehouse workers, with amounts scaling up to $5,000. The mechanism spread to a handful of other customer service shops.

The idea is economically unremarkable. It's just signaling theory with a check. But dressed in those terms, it stopped being management theory and started being a number on a table you could accept or decline.