A start-up offers $5000 to any of its new hires who wish to walk out the door – no questions asked. Could a similar approach work at your organisation?

Despite employers’ best efforts, not every hire is the right hire.

Sometimes, a new employee realises they’re just not right for or comfortable in the role. They might reach the end of their first week feeling unsure if they love the role but push on anyway, or come to a gradual realisation over the first few weeks that the role doesn’t match their expectations.

HR might understandably work hard to retain that new hire by providing extra training or offering incentives. After all, it’s not cheap to employ someone new: the cost of hiring a new employee jumped to $23,860 last year, up from $10,500 in 2020. Having an employee leave in their first month would waste a large portion of that investment.

And this doesn’t factor in the non-financial blow to the company’s retention rate or to team morale at seeing a new hire leave so soon.

All of this is to say that sometimes you shouldn’t try too hard to retain a new hire. Disengaged talent isn’t good for productivity or morale, and can inadvertently encourage an atmosphere of presenteeism which brings its own financial concerns.

Sometimes, the smartest thing to do is to cut disengaged team members loose.

Arizona-based software start-up, Trainual, set out to minimise presenteeism and protect its back pocket in the long run, without cutting employees loose without a safety net. To do this, it introduced a pay-to-quit policy for new starters.

Here’s how Trainual arrived at what some might consider a novel business move.

Employees paid to quit

Back in 2020, Chris Ronzio, CEO and founder of Trainual, identified an opportunity  to empower his team to dedicate their energy and skills where they felt the greatest passion.  He also wanted to save on the costs that arise from replacing a new hire soon after they start.

After a Trainual software developer decided five days into their new job that “this isn’t really the role I thought it was going to be”, Ronzio introduced a policy of offering $2500 to anyone who chose to leave at the end of their first fortnight.

“At any time, [employees] can leave and find a better opportunity,” Ronzio told Fast Company. “We’re putting them in the driver’s seat and letting them know they’re not captive here.”

By allowing new hires to leave and reinvest their attention and energy elsewhere, Trainual follows in the footsteps of former retail giant Zappos, which offered employees $1000 to test their commitment in the role. (Zappos was bought by Amazon in 2008, which has since suspended the ‘Pay to Quit’ program.)

“A lot of people think they can’t talk about leaving until they put in their notice. So opening up the conversation is probably the easiest, cheapest first step before offering money to someone likely to quit.” – Sasha Robinson, Trainual

According to Sasha Robinson, Trainual’s Head of People Operations, their own version of the program is designed to reflect the company’s broader ethos of people engagement.

“Over the last three years, my talent partner and I have done quite a bit of work building our hiring process to sell employees on an authentic version of Trainual. [We aim to be] clear on what they’re walking into and vet the person against the competencies we’ve outlined,” she told HRM.

“But there’s always a chance we get it wrong. If this isn’t the right place for you – which is totally fair, Trainual isn’t for everyone – you have the financial wiggle room to find the right opportunity.”

A questionnaire sent to all new hires at the two-week mark is the opportunity to take up the offer. Anyone who does so receives what has now become a $5000 payment – no questions asked.

Robinson says $2500 was deemed potentially insufficient for those “living paycheck to paycheck” during the job search stages – and so Trainual upped the amount to $5000.

“We wanted to give people the option to go through onboarding and validate if that was what they thought they were signing up for,” she says. “Did it live up to the promise from the hiring process?”

Read HRM’s article on hiring valuable employees.

Anyone who decides to stay is invited to write a paragraph explaining why they wish to stay and what about the last two weeks has validated the assumptions they made prior to joining Trainual.

Of the 40-odd employees who’ve joined Trainular in the last 18 months, none of them have taken up the offer.

“I keep waiting to get a response saying, ‘Alright, I’m ready for the money’,” says Robinson. “But so far, no one.”

Should other companies do the same?

But what if someone decided they weren’t enjoying their job later down the track. Say, one or two months after starting?

Trainual would be open to extending the time frame to accommodate changes in employee sentiment later in the life cycle of a new hire, says Robinson.

“Within your first two weeks, you probably still feel new,” she says. “But after a month, you’ve  gotten into the swing of your role. You may have more critical feedback and you may have a more accurate representation of the team.

“We haven’t rolled out anything at the 90-day mark or the six-month mark, but I think that could be interesting. [But] we’ve had employees who ultimately were not the right fit, for different reasons, and we’ve honoured the $5000-to-quit agreement later in the employee lifecycle.”

Robinson warns against transplanting the policy into other contexts.

“If you already have issues with employee morale or turnover, this could be catastrophic,” she says, citing the people-first atmosphere encouraged at Trainual as a reason for its effectiveness.

“Chris and the early team cared deeply about their people. Even if they weren’t doing ‘proper’ HR things, they had the right intent and laid the foundation to be people first.”

Before jumping straight to offering cash to quit, Robinson suggests it might be worth simply paying special attention to the attitudes of new hires, and asking a few simple questions.

“A lot of people think they can’t talk about leaving until they put in their notice,” she says. “Opening up the conversation is probably the easiest, cheapest first step before offering money to someone likely to quit.”

That conversation could take place during a ‘stay interview‘, so called because they allow the employee to share why they’ve decided to stay at their current employer.

They’re also handy to identify potential pressure points for employees before they become a reason to walk out the door. Consider asking the following questions:

• What do you like most – and least – about working here?
• Do you feel the organisation is invested in your professional growth?
• What do you think of the learning and development opportunities that are available to you?
• What do you want to be doing that you aren’t currently doing?
• When was the last time you thought about leaving the organisation?
• What would tempt you to leave the organisation?

Improve your ability to have difficult conversations with this AHRI short course. The next session runs on 18 October.