an illuminated exit sign

Exit bonus dilemma

It would really sound weird if your life partner would propose you a sum of money to leave them, isn’t it?

Well, some companies do that to their employees.

Linkedin poll

I bluntly asked this question to my LinkedIn network and realized that 2 out of 3 people would leave. I even didn’t specify any details by the way. No number of monthly salaries, not even a certain dollar amount. Two third of the people just was happy to quit if they would have received a bonus. 

At first, it really doesn’t make sense but I believe it’s purely financial and cultural from employers perspective.

Let me go through the thought process here.

True Cost of a disengaged employee

According to Gallup, a disengaged employee costs around 34% of their annual salary. Almost 4 months’ of workforce! In addition to that, a non-regrettable turnover’s true cost to the company is 1.5-2 times monthly salary of an employee. So technically we’re talking about half of an annual salary. Now, let’s consider that you can hire a replacement in 2-3 months’ time, which is quite a good estimate for a backfill, we’re still short of 3 months’ salary in terms of true cost and that’s definitely a significant one to avoid. Hence, an employer would be happy to provide a fraction of it to eliminate the risk of this overall cost.

I think we can also monetize the fact of a disengaged employee’s toxicity in the work environment and the culture but that one’s hard to predict. However, that’s also something you’d pay to avoid hence the above practice makes even more sense.

I know, it’s pretty controversial and unique but if you think about it, it might be a good lever to pull if you’re working on a hefty culture change management these days.

Leave a Comment

Your email address will not be published. Required fields are marked *