Every year, employees at Amazon's fulfillment centers get a rather odd memo. The memo is titled "Please Don't Take This Offer," and the offer is great. Employees are offered a bonus, up to $5,000, if they choose to quit the company. This annual offer is Amazon's twist on Zappos' original pay to quit idea. (In Zappos' case, they make the offer once, after a new employee has completed initial training.)
Bezos once explained the rationale for the offer this way: "The goal is to encourage folks to take a moment and think about what they really want," he wrote. "In the long-run, an employee staying somewhere they don't want to be isn't healthy for the employee or the company."
What Bezos understands is that employees might sometimes stick to a course of action that makes them miserable, showing up to work day in and day out, not because they think one day things will get better....but because they fear the consequences of leaving. They've invested too much, the thought goes, why quit know and leap into the unknown? What Amazon is trying to offer they employee isn't just money, it's a chance for both parties to start over.
As I explained in my book Under New Management, economists refer to this concept as the sunk costs fallacy. Sunk costs represent the time, money, or effort we've already invested into a course of action. Sunk costs have already been spent, and there's no getting them back whether we continue down the same course or break away and go our separate way. Rationally, then, the moment we realize we've made a mistake, we should change our course of action
But we don't.
Instead, we think about how much we've invested and how it would be a shame to quit now, even when it's obvious we've committed to a losing course of action. Therein lies the beauty of Amazon's offer, and something everyone can use to judge whether there's a rational reason for staying the course, or if we're just stuck trying to redeem the sunk costs. When Amazon offers a bonus for employees to quit, they're essentially offering to pay back some of the sunk costs.
When you find yourself frustrated with a project or plan, and your mind keeps thinking of everything you've already invested, ask yourself
"If someone paid me $5,000, would I give this up?"
If there answer is no, especially if increasing the hypothetical payout doesn't change the answer, then there are probably deeper reasons for wanting to stay the course. If the answer is yes, then your only reason for persisting is probably a sunk costs fallacy. Better to cut your losses now then to waste even more time and money.
Of course, it's even better if someone can actually pay you the $5,000, but even if the money is just hypothetical, the question offers real insight into your underlying motivation...or lack thereof.