16 ms·

The first (and stated) effect of this policy is to weed out the unmotivated employees. However, Dan Ariely has explained that the secondary effect is potential

by jordn 13y ago

The first (and stated) effect of this policy is to weed out the unmotivated employees. However, Dan Ariely has explained that the secondary effect is potentially more powerful. For those that choose to stay, they will forever live with their past action of having turned down lots of money to work there. So, when they're having a crappy day and hating their job, they're probably thinking "why didn't I take the money and quit?!". The only way to reconcile their thoughts and actions is to explain that, in fact, they must really love this job and therefore should work hard at it. This effect is known as ‘Cognitive Dissonance’[1] and is fascinating. Here's a link to a video of Dan explaining this[2] and a really excellent Coursera course he does on Irrational behaviour[3]. [1] http://en.wikipedia.org/wiki/Cognitive_dissonance http://en.wikipedia.org/wiki/Cognitive_dissonance [2] http://bigthink.com/videos/dan-ariely-zappos-and-the-offer http://bigthink.com/videos/dan-ariely-zappos-and-the-offer [3] https://www.coursera.org/course/behavioralecon https://www.coursera.org/course/behavioralecon

stefantalpalaru 13y ago
The mechanism at work might be https://en.wikipedia.org/wiki/Sunk_costs https://en.wikipedia.org/wiki/Sunk_costs
tgb 13y ago
I recall hearing about that for Zappos, but here the offer is repeated every year. Doesn't that ruin the effect - you know you can get (potentially even more) by quitting in a few months? And if it's only offered at certain times of the year, then there'll be a bunch of people hanging on until the offer comes around again.
- jordn 13y ago
  Well, I suspect there will be people postponing quitting for a few months just so they can cash out with the offer. That's undesirable for Amazon. But I doubt you'd have people staying in a job they dislike for another year just to get an extra $1k when they do quit. Also you'll have compounded another year of turning down cash to work there so the cognitive dissonance might be even stronger.
  - nevir 13y ago
    That's desirable for Amazon, too. This program gives them some control over when someone is likely to quit. I.e. not in the middle of a holiday rush.
  - avar 13y ago
    If the offer is annual and they add an extra $1000 per year then on average the disgruntled employee has to wait 6 months to quit and get a higher severance, not 1 year. Which means that 1/4 of those employees only have to churn through 3 more months to get an extra $1000, hardly something nobody would do. The obvious solution to fix this flaw in the system would be to raise the offer daily instead of annually, be approximately $1000/365 =~ $2.74 per day. Or more simply by $20 per week, which comes out to about the same per year ($1040).
    - SifJar 13y ago
      I think you misunderstood jordn's comment. When he said "staying in a job they dislike for another year just to get an extra $1k when they do quit." I think he was talking about a hypothetical situation were an employee has been working for Amazon for, say 2 years, and got offered the $2k. They'd be unlikely to wait another full year, just to be able to get $3k when they quit. In other words, if they want to quit, they will do so at the closest offer (e.g. $2k) rather than waiting another year AFTER that offer to get a larger one (e.g. $3k). Of course it's likely employees would wait e.g. 3 months to get the "quitting bonus". In fact, jordn quite clearly stated that also, in the first line of his comment.
      - avar 13y ago
        Right, I'm just elaborating and pointing out that this caveat only happens as long as the offer is structured in such a way that you have a massive increase to it at a specified time once a year. Then if you hate your job and you're close to that specified time it's in your interest to wait, even though the point of the policy is that Amazon would rather that you quit. If they just increased the offer with more granularity they wouldn't create that conflict of interest. You'd only get more money as a function of the time you stayed on the job, so you might as well quit right away instead of waiting a few months for a much larger payout.
- ritchiea 13y ago
  You're missing the point that every pretty much every organization has people hanging on because they need the money, this is incentive to get some of those people to move on, not to eliminate the possibility of employees ever hanging on for a little bit more money.
  - Chronic26 13y ago
    No. The point, as stated in the article, is to remove unmotivated employees quickly. Since employees will stick around until the offer is made, this dilutes its original purpose.
  - tgb 13y ago
    Actually that was the other point (the one made in the article), which I wasn't missing but was simply not commenting on. The post above mine brought up a second point, which is the one I was questioning as the circumstances between Zappos and Amazon seem significantly different.
- curun1r 13y ago
  > ...then there'll be a bunch of people hanging on until the offer comes around again. This might be the most important aspect of the program. An employee abruptly putting in his or her notice can cause continuity issues for the business, especially if they don't give them the customary 2 weeks of notice. If $5000 can buy employees leaving at predictable times during the year, the business can take steps to ensure that the employee's job functions are covered. That predictability alone may be worth $5k.
disputin 13y ago
"The only way to reconcile their thoughts and actions is to explain that, in fact, they must really love this job and therefore should work hard at it." Is my mind supposed to work like that? I'd think "I should've taken the money, oh well, I had my reasons at the time, they've turned out to be wrong, nevermind, time to go."
- sudhirj 13y ago
  That's why they're common fallacies. Not everyone has them, and not all the time, but they're common. There's also a fallacy for thinking you're not susceptible to them, and one for being too hard on yourself.
- vidarh 13y ago
  Your mind almost certainly works like that whether you like it or not, unless you're a substantial outlier. There's tons of research that attacks this effect from various angles, and pretty consistently it finds that we have an exceedingly strong drive towards consistency between thoughts and emotions and actual physical behaviour. Of course this is not an absolute: It will not work on everyone all the time. But that is not the point. There's a multitude of effects that conspire to make us easy to manipulate in this way. I'd recommend Ciadini's book "Influence" as a good introduction to this topic - it's popularised, but full of references to the actual studies, and covers a long range of effects.
  - disputin 13y ago
    I'm aware of cognitive biases, and know they get me, I just find this use really feeble. Individuals and all that. When I make bad decisions I don't reconcile anything, I swear and grumble and cut my losses and tell myself to forget about it and move on, and sooner or later I usually do forget about it. New day, new situation, new factors, new decisions. New opportunities to make new bad decisions! I'll take a look at that book, thanks.
    - azernik 13y ago
      In very obvious cases, yes, people act like you've described. What this effect manipulates is the judgment of whether something was a bad decision in the first place. People can get disgruntled at a job that is objectively quite good, and can convince themselves that they're satisfied with a situation that's actually not that great.
judk 13y ago
That's horrible. So you have miserable people doing unmotivated work because they think they are stuck here because they passes up $5 to be here. Or because taking the money makes the feel guilty, but quitting and not taking it makes them feel stupid, so they just plod along feeling angry.
- lmm 13y ago
  No, that's not how it works. If it was like that, that would make their teams less productive and Amazon wouldn't do it.
  - dclowd9901 13y ago
    You act like they've never made a mistake before.
jere 13y ago
Your theory might explain why the offer is only made once a year. Most likely, your bad day isn't going to line up with the availability of the offer. If it was always on offer, you might be more inclined to jump ship impulsively.
- sharkweek 13y ago
  I'm curious about the opposite -- I'm assuming it likely keeps dead weight around longer too; someone who isn't happy or motivated, waiting around for a few months for the 5k bonus for leaving.
  - msteinert 13y ago
    For a company like Amazon a few months probably isn't significant in the grand scheme of things. They don't operate like a startup that is constantly a few months away from failure. Plus they have a lot more employees to fill in the gaps.
  - avalaunch 13y ago
    This might actually be desirable for amazon as it likely helps them keep their employees through the rough holiday season where they probably see a larger than average quit rate. I'd be willing to bet that the choice to quit and receive compensation comes shortly after the holiday season ends, thus dangling a carrot in front of the employees to muscle through.
    - sharkweek 13y ago
      Really good point -- makes a lot of sense
dingaling 13y ago
> For those that choose to stay, they will forever live with their past action of having turned down lots of money to work there. $5,000 isn't really lots of money; it's probably about six months of mortgage payments in an average town. On a 25-year mortgage that doesn't make much of a dent. Better to keep grumbling, keep earning and keep a roof over the family.
- sixothree 13y ago
  I'm guessing for many people at amazon it might be two months salary.
  - fecak 13y ago
    $2500 a month is 30K. The average warehouse worker at Amazon is around $25K (1), so the temptation might be there for them. For engineers, that amount is not likely to be considered. 1 - http://money.cnn.com/2013/07/30/news/companies/amazon-warehouse-workers/ http://money.cnn.com/2013/07/30/news/companies/amazon-wareho...
    - joosters 13y ago
      n.b. the vast majority of Amazon warehouse workers are not actually employed by Amazon; it is unlikely that they ever get these offers.
      - Crito 13y ago
        However the offer is for warehouse workers, not for engineers.
        joosters 13y ago
        But it is for warehouse workers employed by Amazon - which isn't many of them.
  - infinite8s 13y ago
    Yeah, agreed, this is for their warehouse employees, not their software developers.
adamman 13y ago
They might also think, "What other place would offer me $5,000 to quit? I'm staying here." It's classic reverse psychology.
- SifJar 13y ago
  That thinking is completely stupid, because even if no where else will offer money for quitting, they are being offered it to quit in their current job. That offer is of zero benefit if they DON'T take it. Staying BECAUSE there's an incentive to quit is perhaps one of the most ridiculous thoughts I've heard. Then again, some people are very stupid. I also don't think that's "classic reverse psychology". (Although I'm not a psychologist).
  - CoryG89 13y ago
    You're way of calling people stupid is a stupid way of thinking.
    - jwoah12 13y ago
      Your
sp332 13y ago
Dilbert did this back in 1992! http://dilbert.com/strips/comic/1992-08-09/ http://dilbert.com/strips/comic/1992-08-09/
- RegW 13y ago
  Freaky. So ... Dogbert quit and went to work at Amazon?
adventured 13y ago
"The only way to reconcile their thoughts and actions is to explain that, in fact, they must really love this job and therefore should work hard at it" That is not the only other way to reconcile their thoughts and actions. They can beat themselves up for not taking the money / regret their choice ('I am so stupid for not taking that money, I hate this job'). I know plenty of people who beat themselves up on a regular day to day basis about all sorts of life choices they wish they had made differently.
kevrone 13y ago
From what I've heard this is really offered to employees deemed "under developed" which basically means they're shitty at their job. It's a clever way not to pay severance.
lsc 13y ago
>The first (and stated) effect of this policy is to weed out the unmotivated employees. I would argue the opposite. This policy is going to get rid of the most ambitious of your lower-paid folks, leaving you with people who have loyalty - and those who don't feel they have other options. the "lifers" who want to stay with your company long-term, even at the cost of their long-term career. I mean, those people can be good employees to have, but I wouldn't call them more motivated than the folks who will switch jobs for a 20% bonus. (oh god, do you remember when you went from $20/hr to $25/hr? you feel it in a way that you don't feel going from $40/hr to $50/hr) I mean, I'm not going to switch jobs for five grand, unless I was going to switch jobs otherwise... but that's because it's a very small portion of my yearly income as a percentage. If amazon is offering this to warehouse workers who presumably make around $25K/yr, that's 20% of a yearly salary. For a 20% bonus? Yeah, I'd probably switch jobs. Or just take a nice long vacation. But, I'm also not the sort to stick with a company if I don't think it's furthering my own career goals.
- golergka 13y ago
  Ambition for $2-5k?
  - lsc 13y ago
    If you are making $25k a year working in a warehouse, another five grand is absolutely huge. I agree that if you are giving this to people making $100K+ per year, it doesn't really have the same impact. Five grand is about what I'd expect for a "hey, you are doing okay but not stellar" annual raise within the company. My big point, though, was that ambition and loyalty are often conflicting motivations.
- ghshephard 13y ago
  From the literature, Amazon contracts out it's warehouse duties to fulfillment companies. I'd be interested if anyone knew if Amazon had any direct employees (other than Sr. Management) that worked in the warehouses.
  - lsc 13y ago
nnq 13y ago
This is so brilliant that they should be sued for doing it :)
shadowcats 13y ago
Are people really that good at duping themselves? Seems metacognition, the ability to reflect on one's own thought process, would be a really good cure for such cognitive dissonance.
jmzbond 13y ago
Fascinating thanks for sharing this. Just another example of the unintended consequences that tend to crop up and pervert original intentions.

by jordn 13y ago

stefantalpalaru 13y ago

The mechanism at work might be https://en.wikipedia.org/wiki/Sunk_costs https://en.wikipedia.org/wiki/Sunk_costs

tgb 13y ago

I recall hearing about that for Zappos, but here the offer is repeated every year. Doesn't that ruin the effect - you know you can get (potentially even more) by quitting in a few months? And if it's only offered at certain times of the year, then there'll be a bunch of people hanging on until the offer comes around again.

jordn 13y ago
Well, I suspect there will be people postponing quitting for a few months just so they can cash out with the offer. That's undesirable for Amazon. But I doubt you'd have people staying in a job they dislike for another year just to get an extra $1k when they do quit. Also you'll have compounded another year of turning down cash to work there so the cognitive dissonance might be even stronger.
- nevir 13y ago
  That's desirable for Amazon, too. This program gives them some control over when someone is likely to quit. I.e. not in the middle of a holiday rush.
- avar 13y ago
  If the offer is annual and they add an extra $1000 per year then on average the disgruntled employee has to wait 6 months to quit and get a higher severance, not 1 year. Which means that 1/4 of those employees only have to churn through 3 more months to get an extra $1000, hardly something nobody would do. The obvious solution to fix this flaw in the system would be to raise the offer daily instead of annually, be approximately $1000/365 =~ $2.74 per day. Or more simply by $20 per week, which comes out to about the same per year ($1040).
  - SifJar 13y ago
    I think you misunderstood jordn's comment. When he said "staying in a job they dislike for another year just to get an extra $1k when they do quit." I think he was talking about a hypothetical situation were an employee has been working for Amazon for, say 2 years, and got offered the $2k. They'd be unlikely to wait another full year, just to be able to get $3k when they quit. In other words, if they want to quit, they will do so at the closest offer (e.g. $2k) rather than waiting another year AFTER that offer to get a larger one (e.g. $3k). Of course it's likely employees would wait e.g. 3 months to get the "quitting bonus". In fact, jordn quite clearly stated that also, in the first line of his comment.
    - avar 13y ago
      Right, I'm just elaborating and pointing out that this caveat only happens as long as the offer is structured in such a way that you have a massive increase to it at a specified time once a year. Then if you hate your job and you're close to that specified time it's in your interest to wait, even though the point of the policy is that Amazon would rather that you quit. If they just increased the offer with more granularity they wouldn't create that conflict of interest. You'd only get more money as a function of the time you stayed on the job, so you might as well quit right away instead of waiting a few months for a much larger payout.
ritchiea 13y ago
You're missing the point that every pretty much every organization has people hanging on because they need the money, this is incentive to get some of those people to move on, not to eliminate the possibility of employees ever hanging on for a little bit more money.
- Chronic26 13y ago
  No. The point, as stated in the article, is to remove unmotivated employees quickly. Since employees will stick around until the offer is made, this dilutes its original purpose.
- tgb 13y ago
  Actually that was the other point (the one made in the article), which I wasn't missing but was simply not commenting on. The post above mine brought up a second point, which is the one I was questioning as the circumstances between Zappos and Amazon seem significantly different.
curun1r 13y ago
> ...then there'll be a bunch of people hanging on until the offer comes around again. This might be the most important aspect of the program. An employee abruptly putting in his or her notice can cause continuity issues for the business, especially if they don't give them the customary 2 weeks of notice. If $5000 can buy employees leaving at predictable times during the year, the business can take steps to ensure that the employee's job functions are covered. That predictability alone may be worth $5k.

disputin 13y ago

"The only way to reconcile their thoughts and actions is to explain that, in fact, they must really love this job and therefore should work hard at it." Is my mind supposed to work like that? I'd think "I should've taken the money, oh well, I had my reasons at the time, they've turned out to be wrong, nevermind, time to go."

sudhirj 13y ago
That's why they're common fallacies. Not everyone has them, and not all the time, but they're common. There's also a fallacy for thinking you're not susceptible to them, and one for being too hard on yourself.
vidarh 13y ago
Your mind almost certainly works like that whether you like it or not, unless you're a substantial outlier. There's tons of research that attacks this effect from various angles, and pretty consistently it finds that we have an exceedingly strong drive towards consistency between thoughts and emotions and actual physical behaviour. Of course this is not an absolute: It will not work on everyone all the time. But that is not the point. There's a multitude of effects that conspire to make us easy to manipulate in this way. I'd recommend Ciadini's book "Influence" as a good introduction to this topic - it's popularised, but full of references to the actual studies, and covers a long range of effects.
- disputin 13y ago
  I'm aware of cognitive biases, and know they get me, I just find this use really feeble. Individuals and all that. When I make bad decisions I don't reconcile anything, I swear and grumble and cut my losses and tell myself to forget about it and move on, and sooner or later I usually do forget about it. New day, new situation, new factors, new decisions. New opportunities to make new bad decisions! I'll take a look at that book, thanks.
  - azernik 13y ago
    In very obvious cases, yes, people act like you've described. What this effect manipulates is the judgment of whether something was a bad decision in the first place. People can get disgruntled at a job that is objectively quite good, and can convince themselves that they're satisfied with a situation that's actually not that great.

judk 13y ago

That's horrible. So you have miserable people doing unmotivated work because they think they are stuck here because they passes up $5 to be here. Or because taking the money makes the feel guilty, but quitting and not taking it makes them feel stupid, so they just plod along feeling angry.

lmm 13y ago
No, that's not how it works. If it was like that, that would make their teams less productive and Amazon wouldn't do it.
- dclowd9901 13y ago
  You act like they've never made a mistake before.

jere 13y ago

Your theory might explain why the offer is only made once a year. Most likely, your bad day isn't going to line up with the availability of the offer. If it was always on offer, you might be more inclined to jump ship impulsively.

sharkweek 13y ago
I'm curious about the opposite -- I'm assuming it likely keeps dead weight around longer too; someone who isn't happy or motivated, waiting around for a few months for the 5k bonus for leaving.
- msteinert 13y ago
  For a company like Amazon a few months probably isn't significant in the grand scheme of things. They don't operate like a startup that is constantly a few months away from failure. Plus they have a lot more employees to fill in the gaps.
- avalaunch 13y ago
  This might actually be desirable for amazon as it likely helps them keep their employees through the rough holiday season where they probably see a larger than average quit rate. I'd be willing to bet that the choice to quit and receive compensation comes shortly after the holiday season ends, thus dangling a carrot in front of the employees to muscle through.
  - sharkweek 13y ago
    Really good point -- makes a lot of sense

dingaling 13y ago

> For those that choose to stay, they will forever live with their past action of having turned down lots of money to work there. $5,000 isn't really lots of money; it's probably about six months of mortgage payments in an average town. On a 25-year mortgage that doesn't make much of a dent. Better to keep grumbling, keep earning and keep a roof over the family.

sixothree 13y ago
I'm guessing for many people at amazon it might be two months salary.
- fecak 13y ago
  $2500 a month is 30K. The average warehouse worker at Amazon is around $25K (1), so the temptation might be there for them. For engineers, that amount is not likely to be considered. 1 - http://money.cnn.com/2013/07/30/news/companies/amazon-warehouse-workers/ http://money.cnn.com/2013/07/30/news/companies/amazon-wareho...
  - joosters 13y ago
    n.b. the vast majority of Amazon warehouse workers are not actually employed by Amazon; it is unlikely that they ever get these offers.
    - Crito 13y ago
      However the offer is for warehouse workers, not for engineers.
      - joosters 13y ago
        But it is for warehouse workers employed by Amazon - which isn't many of them.
- infinite8s 13y ago
  Yeah, agreed, this is for their warehouse employees, not their software developers.

adamman 13y ago

They might also think, "What other place would offer me $5,000 to quit? I'm staying here." It's classic reverse psychology.

SifJar 13y ago
That thinking is completely stupid, because even if no where else will offer money for quitting, they are being offered it to quit in their current job. That offer is of zero benefit if they DON'T take it. Staying BECAUSE there's an incentive to quit is perhaps one of the most ridiculous thoughts I've heard. Then again, some people are very stupid. I also don't think that's "classic reverse psychology". (Although I'm not a psychologist).
- CoryG89 13y ago
  You're way of calling people stupid is a stupid way of thinking.
  - jwoah12 13y ago
    Your

sp332 13y ago

Dilbert did this back in 1992! http://dilbert.com/strips/comic/1992-08-09/ http://dilbert.com/strips/comic/1992-08-09/

RegW 13y ago
Freaky. So ... Dogbert quit and went to work at Amazon?

adventured 13y ago

"The only way to reconcile their thoughts and actions is to explain that, in fact, they must really love this job and therefore should work hard at it" That is not the only other way to reconcile their thoughts and actions. They can beat themselves up for not taking the money / regret their choice ('I am so stupid for not taking that money, I hate this job'). I know plenty of people who beat themselves up on a regular day to day basis about all sorts of life choices they wish they had made differently.

kevrone 13y ago

From what I've heard this is really offered to employees deemed "under developed" which basically means they're shitty at their job. It's a clever way not to pay severance.

lsc 13y ago

>The first (and stated) effect of this policy is to weed out the unmotivated employees. I would argue the opposite. This policy is going to get rid of the most ambitious of your lower-paid folks, leaving you with people who have loyalty - and those who don't feel they have other options. the "lifers" who want to stay with your company long-term, even at the cost of their long-term career. I mean, those people can be good employees to have, but I wouldn't call them more motivated than the folks who will switch jobs for a 20% bonus. (oh god, do you remember when you went from $20/hr to $25/hr? you feel it in a way that you don't feel going from $40/hr to $50/hr) I mean, I'm not going to switch jobs for five grand, unless I was going to switch jobs otherwise... but that's because it's a very small portion of my yearly income as a percentage. If amazon is offering this to warehouse workers who presumably make around $25K/yr, that's 20% of a yearly salary. For a 20% bonus? Yeah, I'd probably switch jobs. Or just take a nice long vacation. But, I'm also not the sort to stick with a company if I don't think it's furthering my own career goals.

golergka 13y ago
Ambition for $2-5k?
- lsc 13y ago
  If you are making $25k a year working in a warehouse, another five grand is absolutely huge. I agree that if you are giving this to people making $100K+ per year, it doesn't really have the same impact. Five grand is about what I'd expect for a "hey, you are doing okay but not stellar" annual raise within the company. My big point, though, was that ambition and loyalty are often conflicting motivations.
ghshephard 13y ago
From the literature, Amazon contracts out it's warehouse duties to fulfillment companies. I'd be interested if anyone knew if Amazon had any direct employees (other than Sr. Management) that worked in the warehouses.
- lsc 13y ago

nnq 13y ago

This is so brilliant that they should be sued for doing it :)

shadowcats 13y ago

Are people really that good at duping themselves? Seems metacognition, the ability to reflect on one's own thought process, would be a really good cure for such cognitive dissonance.

jmzbond 13y ago

Fascinating thanks for sharing this. Just another example of the unintended consequences that tend to crop up and pervert original intentions.