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Paying employees to quit

paying employees to quitRef we've been inspired by this policy: http://www.cbsnews.com/news/amazon-pays-employees-5000-to-quit/. One of our officers feels that paying employees who are disgruntled to volunteer to quit is a good solution to keeping a happy staff (not the only part of the program, of course). The employees in question at our firm are typically higher level than the Amazon/Zillow employees referenced in the "pay to quit" policies. We're talking interface designers, web developers, customer service leads, etc. Not easily replaced talent. For this reason, I think it is a very bad idea, but...I'm open to challenge *and* would like to propose alternatives. In that spirit: -Does anyone have direct experience in these types of initiatives? How applied? What was the result? -What pros/cons of trying this with higher level staff have you seen? -What alternative programs have you tried at your own firms. Thanks so much for your input!

Answers

Sara Voight
Title: Controller
Company: Critical Signal Technologies, Inc
(Controller, Critical Signal Technologies, Inc) |

I have never seen something like this in practice, but I recall being at Kmart when they were offering buy-out packages. Even for staffers who hated their jobs, they knew the prospects were poor for getting another job like the one they had (golden handcuffs) and few took advantage. Others believed the downfall of the company would mean they would get unemployment which would last longer if they forced the company's hand. I would expect the amount of money you would have to offer would be significant. You might have to provide additional resources to further entice someone to leave (offer to keep their benefit costs the same for X number of months, or offer career coaching/counseling, positive job references, etc).

I think Europe has a program whose name I cannot recall (garden??) where a terminated employee has time to continue to come into work, the company can't tell others they have been let go or note such on a job reference call, and all the 'employee' does is sit somewhere and look for another job. They do no actual work for the company they are being let go from. Perhaps that concept would work better.

From a third person perspective, it is always better to get rid of the cancer. Short term pain does lead to long term success. However, having worked in the first person perspective - said individual inevitably holds a position that will cripple us short term if we do the right thing and let the go.

Good Luck.

Angela McIlveen
Title: Owner
Company: McIlveen Family Law
LinkedIn Profile
(Owner, McIlveen Family Law) |

We offer new hires $500.00 to quit at the end of the 90 day training window if they are unhappy or don't think the job will be a good fit. It's worked well so far.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

No personal experience but I have heard as much as 2 months salary for higher level employees. Let's face it, we (well, "I") have offered the same (2 months) for employees we force to resign (as a soft landing) so this is no different.

I think the offer makes sense....but not as a stand alone policy. The basis is that a disgruntled (or not happy) employee will cost the company much more than the offered "out". The employee also does NOT corrupt other individuals. The policy also offers "rejuvination" or "fresh blood" for the company.

At the top of my head....
HR should have a pipeline of qualified candidates.
Critical employees can have a longer "notice" period.

Topic Expert
Randy Miller
Title: Partner
Company: CFO Edge
(Partner, CFO Edge) |

If the employee is not happy and a morale issue, it is often best to find a way to exit them from the company. If you have a good relationship with a recruiter, one option is to use the recruiter to find them another job. I have had several cases where an otherwise talented employee no longer wanted to be there (and was creating issues), but did not want to quit because of the income issue. I would call one of the recruiters we used and explain the situation of how the employee was a good person, with talent, but needed a change (be honest with the recruiter). Within a few weeks the recruiter had new options for the employee. The employee then gets "recruited" for a new position (feeling wanted and valued), leaves on good terms; and we have solved a problem.

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

This was my gut instinct, and was what we've done in the past (when we did more than just provide separation pay). I'm not sure how it scales up in larger organizations...

Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

Top execs have had "golden parachutes" in their contracts for years. This isn't really all that different, except that, the rate of remuneration is comparatively skimpy.

Jocelyne Lanovaz
Title: Vice President - Finance
Company: CashCo ADM Inc
(Vice President - Finance, CashCo ADM Inc) |

Zappos does the same thing I understand ... I'm not sure if it is $500 or $5,000 and it appears to work.
If an employee is willing to 'sell themselves out' for a one time fairly small payment, do you really want them on your team? I know I don't. I want a team who WANTS to be here, not HAS to be here ... culture killer all the way.

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Zappos is a good case study. This is from my understanding, so take it with a grain of salt. The policy covers low-wage employees in a very constrained labor market. Basically, and employee who wants to leave may feel it economically dangerous. The purpose of the policy is so that, essentially, an employee who would otherwise have already quit (say if they were in a better labor market) gets de-risked so that they can quit. Happy employees, on the other hand, will look at the offer and determine that it doesn't make economic sense...as they'd probably need to leave town to find similar employment.

Anonymous
(Chief Financial Officer) |

We have a very small handful of people here I would LOVE to get rid of but there is no way they would leave for anything less than an obscene amount of money. The owners 'hire to retire' and are loath to get rid of a poorly placed employee.

In some instances, the company simply outgrew the employee's skills and in another instance an employee was promoted from an hourly clerical position into a very specialized manager's position for which she was completely unqualified. She has been a disaster.

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

What is preventing you from exiting them? Internal policy, govt regs, etc?

Anonymous
(CEO) |

I like the model that the sports teams use: term contracts with performance deliverables and a possibility for trade possibilities. If the player doesn't work out or the skill needs shift, you have an option to get rid of the resource in a mutually beneficial way. The 'trading' part would be equivalent to working with the resource and a placement agent to find a new home.

Down-side, this does not work for resources that are not part of the core skills of the organization as there tend not to be any discernable network to place the resource in.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

Anon (CEO).....isn't that what a TEMP (CONTRACT) HIRE is? ...without the trading (pain) part. :-D

Anonymous
(CFO) |

@Emerson:

I had a relative who owned and ran a small, world wide moving company for many years. Over those years, he was a large organization and sometimes, a small organization. His business tended to fluctuate with the flexing of U.S. military might. :-)

He even went bankrupt. Twice!

But, in his final years of ownership and running that company, he hired only through temporary agencies. He loved it. I remember him telling me that, he could just come in on a given day and fire the entire office staff if they were bickering or creating some other problem that he just didn't want to deal with. And, have an entire slate of new employees the following day from the agency.

I thought that was draconian and harsh and really poor management at the time. But, through many years of my own experience in hiring, firing and training, I can now see where it could be quite effective and workable for a small, administrative operation.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

If someone wants to "hire" to "fire" me daily, I'm all for it. But it does sound a little ludicrous...

Michael Davis
Title: CFO
Company: Private
(CFO, Private) |

I suspect that a standing offer to pay employees to quit stems from poor management.

What does it say about a company that needs its employees to self-deport in order to know who is a burden on the organization?

I think it's a trendy way of excusing lack of actual management and substituting with a fad maneuver that is too clever by half.

Greta Roberts
Title: CEO
Company: Talent Analytics, Corp.
(CEO, Talent Analytics, Corp.) |

I'm all for trying something interesting and new. However, I see a few challenges with this approach.

1. The challenge I see is that there is no guarantee it is going to snag the "right" people to accept the offer. I've seen this in place where the top performers took the bonus and left because they had other offers on the table. So, nice deal for them - while, the bottom performers stayed because they knew their prospects of a new role were limited.

2. This approach also tries to make a change at the end of the process and not the beginning. At best this is a bandaid for the problem.

Instead of trying to tease bottom performers to leave (after they're hired), I'd focus on trying to predict and screen them out before you even hire them. Many believe they need more top performers (and they're right) - but often the most expensive problem is the # of bottom performers that are hired. Predictive analytics can help to identify both and starts at the beginning of the process where you can truly fix the problem instead of applying a trendy bandaid.

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