This CEO pays new employees $5,000 to quit

This Article is from Fast Company and the original is here 

This CEO pays new employees $5,000 to quit

It might seem counterintuitive, but the CEO of Trainual says it’s worth it to identify and retain top talent.

It sounds counterintuitive, but what if the key to retaining employees is paying new hires to quit? Chris Ronzio, CEO and founder of Trainual, SaaS software that helps small businesses onboard employees, says offering employees $5,000 to leave just two weeks after starting employment helps him find and retain top talent and maintain a strong culture.

“It’s important to know really quickly if we’ve found the right people,” he says. “When you’re interviewing, you really only get a glimpse of the business you’re going to work for and the role. If someone knows a week or two in that this is not their long-term place or position, it gets more expensive to replace them as they take on more work and responsibility. By offering new hires $5,000, we give them the opportunity to opt out after two weeks if they have any sense of doubt.”

Ronzio borrowed the idea from Zappos, which gave employees what it called “The Offer”: $1,000 to quit about a week into its immersive onboarding process. Zappos used the technique as a way to test commitment—something it valued in its team.

“We had one new software developer that started with us, and five days into his training, he came to us and said, ‘This isn’t really the role that I thought it was going to be when I took the position. I think I’d be better off taking this other offer,'” says Ronzio, who launched Trainual in 2018. “It made me think, how many other people feel that way but don’t have the courage to say it? When we started hiring a lot of people, I remembered the Zappos idea, and we instituted this policy in May of 2020.”

“YES OR NO” IMPROVES CULTURE

The company makes it easy by giving new hires a short quiz at their two-week mark that says, “pick yes or no.” If you want to stay at the company, simply choose “yes” and share your reasons for the decision. If you want to leave, pick “no,” provide any reason, take the money, and go.

Originally Trainual, which was recognized as an Inc. magazine Best Workplace of 2021, offered $2,500 to quit. To date, none of the 38 people hired since the policy was implemented has taken the offer. So the company recently raised the stakes to $5,000.

“We looked at our average salary when we considered changing the amount,” says Ronzio. “If somebody is making $80,000 or $100,000 a year, then $2,500 might not be significant enough. They could decide to stay while they looked for another job because they’ll make more staying. Increasing to $5,000 created more of a salary replacement, allowing them time off to find their next job.”

Ronzio recommends the policy for companies that already have a strong focus on culture. “For companies that are losing employees, I think it’s a good chance to look in the mirror and figure out why,” he says. “Is the pay not up to market or is your culture not what you advertise? If there’s things fixed about the business, I think it’s never been more obvious than right now.”

If you already have a turnover problem, paying employees to leave would be an extra financial tax on your business, Ronzio adds. “But if you’re trying to go from good to great, and you’ve had a few people turn over here and there and you wish you caught it earlier, I think that’s a fantastic technique,” he says.

EVERYONE WINS WITH THE OFFER

Paying employees to quit provides long-term benefits for employers. If someone waits until six or 12 months on the job to leave, it’s a lot more disruptive to the business than someone that leaves after two weeks when you likely have a pipeline of other candidates.

“Accelerating that decision is a real savings for the business,” says Ronzio. “After our employees have gone through training and onboarding, we’d rather ensure that we’re aligned before we invest more in them, and the stakes get higher. Once they’re here, have experienced the training, and met the people, they double opt in—first at the offer acceptance and again after onboarding.”

The technique also holds the hiring team more accountable. “They know there’s this cost to the business if they get it wrong,” says Ronzio. “There’s an internal accountability for finding great people. If they see any red flags, they know to slow down and be certain that this is the right person. That’s been a great byproduct.”

Giving employees a financial incentive and control to fire the company send a powerful message, says Ronzio. “We’re putting them in the driver’s seat and letting them know we know they’re not captive here,” he says. “At any time, they can leave and find a better opportunity. And I think the responsibility is on us to build a culture where people want to be. It’s a powerful thing for them to turn down the cash, opt in, and commit—and it sets the stage for a great working relationship.”