Paid to quit – does it work?


Amazon recently offered employees $5000 to quit. Two HR professionals debate about whether this is an effective way of improving staff quality.

NO – says Kerryn Fewster CAHRI, co-director and co-founder of Change2020

When someone doesn’t really want to be at a company it isn’t healthy for the organisation or the employee, but offering them $5000 to leave isn’t a productive initiative. It could only work if it was mutually agreeable and the individual’s time at the company was coming to a natural end regardless.

Such an incentive risks the company losing talent they want to keep. People who back themselves and are confident they can get work elsewhere are often those who can be coached.

On the other hand, passive people who are motivated by security would most likely want to stay.

The policy also poses problems in terms of culture. It doesn’t encourage employees to engage with the company. If things get tough, people have an incentive to leave. Most employees have good days and bad days, but such a policy encourages impulsive career decisions, where in reality some employees have short periods of disengagement that pass.

Paying an employee to leave bypasses the issues around why an employee is leaving and companies may be missing systemic problems. The policy also allows leaders to ‘skip out’ on performance management reviews, which is a core leadership skill.

Some employees are happy to leave without a $5000 payment after an honest discussion, performance feedback, a payout of all legal entitlements and, where applicable, an honest reference.

Finally, from a planning perspective, such policy also makes it hard to predict attrition rates and develop realistic workforce plans.

YES – says Dr Bryan West, director of Fortress Learning

As a new business, we reached a point of growth where our employee group needed to be unified in their commitment to our journey, and I felt that offering a financial incentive to leave was the most efficient way to achieve this.

We’d undergone a period of rapid growth, during which we’d brought in a number of employees very quickly, across multiple sites. While we were by no means failing, we were not operating in a unified, holistic way.

I wanted to confirm everyone’s commitment to the company and instil a culture where everyone knew that we were all working together to effect change, so I made the offer of six weeks’ cash for anyone who wanted to leave with our best wishes.

Nobody opted to take the money. In general, it resulted in staff displaying a willingness to work together to build the business.

There was also an immediate shift in culture – it demonstrated that ownership of the organisation’s culture was something that all staff bought into, and something we took very seriously. It was like a line was drawn in the sand and we all lined up together.

On the downside, there was at least one staff member for whom I believe the shame of accepting the money was too great. That became resentment towards the company and the person left.

Would I do it again? Our organisation is now at a more mature stage, and while I cannot see it as being necessary I would certainly do it again if we needed to clear the decks and then galvanise the rest of the staff.

What is your opinion?

Share your comments below.

If you have a topic that you’d like to see debated, email us your suggestion or tweet @AHRItweets and add the hashtag #AHRIquestion.

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Aren’t there any legal implications in doing this? Wouldn’t this be perceived as bribing someone to leave because you don’t want them to be a part of the company anymore.

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Paid to quit – does it work?


Amazon recently offered employees $5000 to quit. Two HR professionals debate about whether this is an effective way of improving staff quality.

NO – says Kerryn Fewster CAHRI, co-director and co-founder of Change2020

When someone doesn’t really want to be at a company it isn’t healthy for the organisation or the employee, but offering them $5000 to leave isn’t a productive initiative. It could only work if it was mutually agreeable and the individual’s time at the company was coming to a natural end regardless.

Such an incentive risks the company losing talent they want to keep. People who back themselves and are confident they can get work elsewhere are often those who can be coached.

On the other hand, passive people who are motivated by security would most likely want to stay.

The policy also poses problems in terms of culture. It doesn’t encourage employees to engage with the company. If things get tough, people have an incentive to leave. Most employees have good days and bad days, but such a policy encourages impulsive career decisions, where in reality some employees have short periods of disengagement that pass.

Paying an employee to leave bypasses the issues around why an employee is leaving and companies may be missing systemic problems. The policy also allows leaders to ‘skip out’ on performance management reviews, which is a core leadership skill.

Some employees are happy to leave without a $5000 payment after an honest discussion, performance feedback, a payout of all legal entitlements and, where applicable, an honest reference.

Finally, from a planning perspective, such policy also makes it hard to predict attrition rates and develop realistic workforce plans.

YES – says Dr Bryan West, director of Fortress Learning

As a new business, we reached a point of growth where our employee group needed to be unified in their commitment to our journey, and I felt that offering a financial incentive to leave was the most efficient way to achieve this.

We’d undergone a period of rapid growth, during which we’d brought in a number of employees very quickly, across multiple sites. While we were by no means failing, we were not operating in a unified, holistic way.

I wanted to confirm everyone’s commitment to the company and instil a culture where everyone knew that we were all working together to effect change, so I made the offer of six weeks’ cash for anyone who wanted to leave with our best wishes.

Nobody opted to take the money. In general, it resulted in staff displaying a willingness to work together to build the business.

There was also an immediate shift in culture – it demonstrated that ownership of the organisation’s culture was something that all staff bought into, and something we took very seriously. It was like a line was drawn in the sand and we all lined up together.

On the downside, there was at least one staff member for whom I believe the shame of accepting the money was too great. That became resentment towards the company and the person left.

Would I do it again? Our organisation is now at a more mature stage, and while I cannot see it as being necessary I would certainly do it again if we needed to clear the decks and then galvanise the rest of the staff.

What is your opinion?

Share your comments below.

If you have a topic that you’d like to see debated, email us your suggestion or tweet @AHRItweets and add the hashtag #AHRIquestion.

1
Leave a reply

avatar
100000
  Subscribe to receive comments  
Notify me of
Skevi
Guest
Skevi

Aren’t there any legal implications in doing this? Wouldn’t this be perceived as bribing someone to leave because you don’t want them to be a part of the company anymore.

More on HRM