An employee is a person who works part time or full time under a contract. The contract may be oral or verbal, implied or express.
However, hiring and retaining employees are two different things. People hire employees and do all things possible to retain them as a lot of money and energy is involved in hiring process.
But some companies pay their employees to leave the company i.e pay to quit the company.
Startling as it may sound, it was first used by Zappos in 2009 where it paid its employees $100 on accepting an offer to leave within first one or two weeks of their training. It later increased the amount.
Recently, many companies like Amazon, Riot have offered their employees similar offers. Offers like these help companies foster excellence and maintain their culture.
What are the things going in the minds of managers while doing this and what are its effects, let us have a look:-
Should You Pay Your Employees to Quit?
1. Making employees think:
The goal of such offers, as per Amazon CEO Jeff Bezos’s letter (he disclosed the fact in his letter to shareholders) is to encourage the employees to take and think a moment about what they really wish.
He wants the employees to rethink over their decision of joining the company and offer them a way out if they feel that they do not wish to stay in the company any longer.
2. Cultural fit:
Some employees, though technically competent may just not fit in the organization culturally.
An employee, even unskilled or lesser skilled can be hired if he fits in the culture of the organization.
Skills can be taught, however culture cannot be. Teaching someone to fit into a particular culture is a really hard work.
It’s a subjective thing, but at the end, it matters a lot and no organization, no matter how much big or small, can afford to have people who are culturally misfit.
If an employee doesn’t align with the company’s way of doing things, this offers them a mutually beneficial way of opting out. So, paying them to leave is a good option.
3. Ensure commitment:
The offer, apart from giving employees time to rethink, also gives the organization to continue with the people who are truly dedicated to it beyond a paycheck.
If an employee accepts the offer and leaves the company, it shows his preference of a temporary high over the organization’s long term success.
Obviously, the companies who offer such offers are in for a long haul and here to stay.
4. Offering a low stress way out:
Company interviews and the hiring process only briefs the employees and educates them about what they are getting up for.
However, neither the recruiter nor the candidate knows what kind of commitment they are making and to what level it fulfills the expectations of the other person.
Giving the employees an offer to leave, at early stage, offers the employee as well as the organization a low stress, easy way out.
Also, paying someone to leave is much more painless than the whole process of firing them. If the joinee does not like the opportunity or the culture, he can leave with some money in his pocket.
5. Is it expensive?
Companies who offer such incentives are obviously into calculated statistics and complete information about what they are offering and its consequences, financially also.
According to reports, the company Zappos, which offered this in 2009, says only 3% employees accept the offer.
Now considering the costs of recruiting the right person and the overall impact it has on the productivity of the employee as well as the organization, this is not at all an expensive choice.
6. Lowering Turnovers And Its Costs:
Employees, who leave after much time in the organization, albeit in the middle of work, often leave the organization in a bad state.
It increases the employee turnover ratio and not all people prefer to work in an organization with high turnover ratios as they are afraid about the reasons which might have forced the earlier employees to leave after so much time.
Also, finding replacement at a later stage is an expensive affair for the company. When unsatisfied employees are forced to look at other options, costs associated with such turnover, replacement, absenteeism can be significant.
7. Self identifying “mismatch”:
Companies operate on a foundation of shares values, mission, trust, passion and mutual respect.
If someone hangs around just for the paycheck and does not share the same sentiments, it would be a disservice to the company as well as employees.
Such offers help the people, “self identified misfits” to move on and be in a more open, constructive surrounding for them and their careers. Organizations need people to be with them to believe in their long term goals and visions.
8. Stopping Active Detachment:
The companies offering such schemes aim to give incentive to the people who do not feel motivated enough to excel or continue efficiently with their current jobs.
This saves the company from disengaged workers. Such policies save the company a lot of risk and money in the long run.
9. Fewer lawsuits:
All of us know that laws related to employment are very strict and non compliance of any of it could result in a legal tangle.
If unsatisfactory workers leave on their own rather than termination by the organization, the company’s risk of termination related lawsuits are reduced.
10. Low Morale Cost:
Employees with a low morale means reduced efficiency and reduced productivity. It affects the performance of the employees and costs the company its profit.
It pays for the companies to make sure that they are addressing the issues related to employees and continuously monitoring the employee morale and satisfaction levels.
Hence, people who have low morale should be allowed to leave rather than holding on with decreasing productivity.
11. Happy Employees = Happy Customer:
Apart from low morale, disgruntled employees can cause problems which vary from customer complaints to product sabotage.
No organization would like that to happen. Customers’ loyalty reduces when the employees are unhappy with their jobs.
Employees, especially in the customer relation areas, when happy and satisfied, are more likely to respond more positively and readily to their customers. All this comes down to customer retention.
12. Reputation of the Business:
Employees’ behavior, performance and actions affect a business’s reputation as employees are the face of all organizations.
Business failure is linked to a lot of factors such as economic hardship or financial distress but employees who are unsatisfied or disgruntled have a tremendous impact on the success and reputation of the organization they work for.
Employee satisfaction works wonders for the way competitors, clients, customers and future employees look at any business and hence, keeping employees happy and satisfied, even through such offers, is a positive thing.
13. Complaints and clashes:
If you leave unhappy employees to stew in their own juices, clashes of personalities happen a lot.
Co-workers not sharing the same point of view with the unhappy employee might also complain to the management about such issues.
They might not get along with such a person and the result will be that they will find ways to avoid working with that person. This affects the organization negatively. Hence, they should be allowed to exit peacefully.
14. Workforce productivity:
Employees who are unhappy with their jobs tend to spend more time with their near ones about the reasons why they are unhappy rather than focusing on their jobs and work.
Lack of interest, low morale translates to low productivity and as a consequence, companies face loss.
Employees who are satisfied with their jobs make the most of it by working efficiently producing services and goods of greater value.
15. Negative Thoughts:
Employees who are not willing to continue with the jobs or who are working only for fat paychecks do not care about the organization and the managers’ thoughts.
Even if the managers implement something for their benefit, they tend to find one or the other negative point in it.
Informal communications among the employees about such points leads to wider dissatisfaction. This makes implementation of changes difficult.
Change management becomes a major hurdle for the employers in such a case.
Hence it is better that such employees who do not find themselves benefited by such plans and policies of the organization, leave it on their own.
Terminations can crush the spirit of employees in any organization. Though they may seem fair to the survivors and the ones who remain, layoffs are morale reducers.
Avoiding them by such schemes, encouraging the ones who feel they are not devoted enough to the organization to leave, takes away a part of the risk of low morale.
Another benefit the company who adopts such practice is, it shows that the dedicated employees, the ones who stay, are the ones who share the same feeling of the company to protect its culture and are long term partners.
It also shows that the organization doesn’t favour those who don’t love their jobs. It does not need people who do not value its vision and goals. And it can bear a lot of money to prove this. All this increases the satisfaction level of the surviving employees.