In today's competitive talent marketplace, employee retention has never been more important. Yet many companies struggle with evaluating who their true high performers are and keeping those individuals engaged, motivated, and loyal to the organization. Traditional performance reviews and retention strategies often fail to pinpoint an employee's full potential or hidden talents.
Today we will explore a "pay-to-quit" strategy to purposefully test employees' commitment and uncover hidden skills and strengths. By offering an exit bonus for voluntary termination, companies can learn who their most motivated and productive workers really are, and focus future investments accordingly.
Spotting High Potential Requires New Approaches
Research indicates that traditional employee evaluation methods have limitations in spotting high-potential talent. Performance reviews often rely too heavily on past achievements and subjective feedback rather than future potential (Gowitzka & Timming, 2018). Retention strategies also commonly involve generalized perks or promotions rather than tailored approaches for individual workers (Markey & Townsend, 2013). As a result, companies frequently misidentify underperformers as high performers and overlook skilled employees' undiscovered talents (Wiley, 2010).
Research suggests organizations need innovative alternatives to conventional reviews that better gauge individuals' true dedication, future development capacity, and hidden strengths (Silzer & Church, 2009). Unconventional approaches like assessment centers, challenges or competitions can reveal talents not apparent through routine work (Gowitzka & Timming, 2018). Testing employees' commitment through a structured - yet voluntary - exit option may uncover similar valuable insights about an individual's motivation, adaptability and willingness to develop new skills (Perkins & Beauchamp, 2018).
The Pay-to-Quit Strategy
To implement a pay-to-quit strategy, companies would offer a one-time cash bonus (e.g. 1-3 months pay) for any employee voluntarily resigning within a set period, such as 3-6 months. Key elements of the strategy include:
Temporary Option: The bonus is only available for a defined trial period to test employee response.
Voluntary Basis: Participation must be employees' choice to avoid legal issues with forced terminations.
Clear Communication: Objectives are upfront transparency about seeking to identify hidden talents versus poor performers.
Post-Exit Survey: Exit interviews assess employees' reasons for leaving and skillsets developed elsewhere.
The strategy aims to create a "win-win" scenario where underperformers self-select out while top performers remain, gaining insights into individuals' true motivations not evident before. Used judiciously as one element of ongoing talent management rather than a standalone program, pay-to-quit can provide a fresh lens for evaluating employees and retention strategies.
Healthcare Industry Example
A large hospital system piloted a pay-to-quit initiative to address high nursing turnover costs and identify top clinical staff. Nurses with over 2 years tenure were offered a 2-month severance for voluntary resignation within 6 months. Clear guidelines emphasized the temporary, voluntary nature, and confidential exit interviews.
Of 200 eligible nurses, 12 resigned. Exit surveys found most cited work-life balance issues rather than job dissatisfaction. However, 3 nurses explained wanting to utilize advanced skills gained but underutilized in their current roles. They were interested in transferring to specialized units.
Rather than lose these nurses, the hospital created project roles blending clinical work with process improvement or education initiatives matching their skills and passions. All 3 thrived in the new roles and have been promoted, while turnover sharply declined. The strategy revealed top performers willing to develop in new areas, improving retention of valuable staff through targeted role adjustments.
Information Technology Example
A global IT services firm used pay-to-quit to address high attrition of technical consultants who gained in-demand skills but moved to competing firms. Consultants with 3-5 years' tenure were offered 2 months salary to voluntarily resign within 90 days.
Of 150 eligible, 18 took the offer. Exit interviews found many pursuing more senior roles or specialist opportunities better aligning with their expertise. However, 3 engineers expressed interest in product development if given the chance.
Recognizing their technical strengths, the firm created hybrid engineering/consulting roles for internal product initiatives. All 3 thrived in the new roles applying both domain knowledge and customer experience to help scale offerings. They have since taken leadership of key product lines, creating new career paths to retain top talent.
The unexpected outcomes revealed specialists ripe for expanded responsibilities matching their full potential, leading to targeted solutions improving employee engagement and the business.
Leveraging Valuable Insights from Pay-to-Quit
These examples demonstrate how pay-to-quit strategies can reveal previously hidden skills and motivations, yielding actionable intelligence to strengthen retention of top performers. A few key best practices emerge:
Temporary, Voluntary Basis: Ensure employees understand participation is optional to maintain trust and legal compliance.
Transparent Communication: Upfront explanations clarify objectives of learning versus penalties, reducing perceived "negative" connotations.
Post-Exit Engagement: Conduct in-depth exit interviews and follow-ups to fully capture insights on departed employees' aspirations, talents utilized elsewhere.
Targeted Solutions: Rather than one-size-fits-all perks, craft customized roles, projects or career paths applying lessons learned about individuals' strengths and developmental interests.
Ongoing Management: Integrate insights as one input of continuous talent assessment versus standalone program, to optimize long-term employee engagement and performance.
When implemented judiciously with full transparency as a way to spot strengths rather than weaknesses, pay-to-quit strategies can yield previously hidden intelligence for retaining top performers through tailored development opportunities better utilizing their total potential.
Conclusion
In today's war for critical skills and top talent, organizations require new approaches beyond traditional reviews to identify true high potentials, discover hidden assets, and strengthen employee engagement and retention. By offering a temporary, voluntary exit bonus, companies can learn powerful lessons about workers' commitment, motivations and aspirations not apparent through routine evaluation methods.
If leveraged thoughtfully through transparent communication, confidential exit interviews and targeted follow-through, pay-to-quit strategies can reveal an employee's full spectrum of talents currently underdeveloped or underutilized. The insights gained then empower employers to craft customized solutions maximizing each individual's contribution through roles better aligned with their passions, expertise and growth potential.
While unconventional, strategic use of pay-to-quit provides a fresh lens for pinpointing an organization's most motivated employees and their hidden skills worthy of investment. When applied judiciously as one tool within an ongoing talent management program, it yields benefits in both retaining top performers through fostered engagement as well as optimizing broader business performance. For forward-thinking companies seeking competitive advantage in attracting and developing critical talent, pay-to-quit merits consideration as a strategy revealing hidden opportunities for mutual growth.
References
Gowitzka, H. B., & Timming, A. R. (2018). Overviewing high potentials: Towards a contextual understanding of high potential identification practices. European Management Journal, 36(3), 353-363. https://doi.org/10.1016/j.emj.2017.07.006
Markey, R., & Townsend, K. (2013). Contemporary trends in employee involvement and participation. Journal of Industrial Relations, 55(4), 475-487. https://doi.org/10.1177/0022185613491864
Perkins, S. J., & Beauchamp, Y. (2018). A multidimensional framework of talent management: Contextual views of assessing 'potential'. Human Resource Management Review, 28(4), 374-388. https://doi.org/10.1016/j.hrmr.2018.02.006
Silzer, R., & Church, A. H. (2009). The pearls and perils of identifying potential. Industrial and Organizational Psychology, 2(4), 377-412. https://doi.org/10.1111/j.1754-9434.2009.01163.x
Wiley, J. W. (2010). Strategic employee surveys: Evidence-based guidelines for driving organizational success. San Francisco: Jossey-Bass.
Jonathan H. Westover, PhD is Chief Academic & Learning Officer (HCI Academy); Chair/Professor, Organizational Leadership (UVU); OD Consultant (Human Capital Innovations). Read Jonathan Westover's executive profile here.
