Hack:
Should employers expect a "money-back offer" on new hires?

Madhusudan -

This is a great idea!

I wish it was legal to do this in the US! Although I've seen independent IT contractors offer a 30-day money back guarantee on their work. Maybe there's a way to hack the US system to allow this to happen as well!

I wonder if we could also make this work both ways. If employer promises something but doesn't deliver, he has to pay extra. The reason I say this is because I've seen numerous cases of employee terminations where it was the employer's fault but it wasn't recognized as such. So, it's a little unfair to the employee if the employer makes the wrong hiring decision (e.g. this employee is a bad fit for this specific job) but the employee ends up paying for it (gives the money back).

The idea that people should be incentivised to keep them on their toes is under some heavy criticism today, partly but not just because of the financial crisis. I have collected some resources here: http://groups.diigo.com/group/ibs-research-alert/content/tag/incentives.

Here is a different take which I myself find quite inspiring: "Why Zappos Pays New Employees to Quit--And You Should Too" (blogpost by Bill Taylor, Harvard Business Review): http://blogs.hbr.org/taylor/2008/05/why_zappos_pays_new_employees.html

Quote: "(...) when Zappos hires new employees, it provides a four-week training period that immerses them in the company's strategy, culture, and obsession with customers. People get paid their full salary during this period. After a week or so in this immersive experience, though, it's time for what Zappos calls "The Offer." The fast-growing company, which works hard to recruit people to join, says to its newest employees: "If you quit today, we will pay you for the amount of time you've worked, plus we will offer you a $1,000 bonus." Zappos actually bribes its new employees to quit! Why? Because if you're willing to take the company up on The Offer, you obviously don't have the sense of commitment they are looking for. (...) It's a small practice with big implications: Companies don't engage emotionally with their customers--people do. If you want to create a memorable company, you have to fill your company with memorable people.”

I can't agree with this suggestion at all. There are two reasons:
1. Far too few employers are actually capable of "specifying" just what sort of employee they require. Too often they want to hire in their likeness, and equally frequently they simultaneously want someone new to do the work no one else in the organisation can do (because they all think alike!!). So when a different person arrives, possibly someone capable of making the required change, they are viewed with suspicion because the boss is totally incapable of leading this person. Ipso facto, they are cast as "weird", different, or worse, incompetent - the result is always negative for both sides. What we need is more competent leaders; leaders that can manage and even promote difference.
2. Most of the recruiters I have encountered started life as used car salesman. They are NOT "PEOPLE people". They can, and do only react to the shopping list created by incompetent managers - refer above. What we really need to do is tidy up the recruitment business and populate it with people who are capable of assessing the employer/boss/organisation culture of the business they want to serve, and who will be prepared to confront the boss if he/she is seen as a poor/intolerant leader. This is where the "reality" must be sorted before any recruitment process is commenced. What we don't want is a capable recruit entering an incapable organisation - that is all too often the situation.

Thanks Madhusudan

...what I'm saying is that the proposition of a money back garuantee targets "sameness". In that case we have managerialism, not leadership. In ensuring that a new recruit thinks just like me I'm ensuring nothing changes. However, if my business environment is constantly changing (and whose isn't?), then I must change the way my business does things to remain in fit with that environment. This requires leadership, and leadership requires the tolerance of difference. Now a new recruit may just think little differently, and may arrive with a slightly different values set, and skills, knowledge and behaviours. It just may be that these "differences" are just what the business requires to move forward! Sending the new recruit away might be the very wrong thing to do in that case.

I also think that labeling people who are "different" as not suitable for my organisation demonstrates intolerance and fear. If we are to get along better in this world we all need to be ble to tolerate different views and values...that does not mean acceeding to that difference, nor does it mean railing against them by shooting the perpetrator...it means widening our circle of appreciation, respecting different views, and working with people who are different...even customers!!!

Madusudan,
I'm trying to see the difference between this suggestion and the fairly standard trial-period that all new employees go through. Is it simply in the accountability? And if so, what prevents organizations from adhering to this standard of accountability now? My guess, based on my experience as a manager, is that after 12 months of helping a new hire climb the learning curve, you've invested so much in this person that even if they're not fulfilling their potential as much as you had hoped, it feels like the right thing to do to continue to support the development of the person you've been working with.

I'd be interesting in hearing a different perspective. There's certainly an argument to be made for not settling for anything less than excellence.
-- Dave

There's certainly something appealing about the liquidity of that: if this isn't working out for one of us, let's go our separate ways. I think what often happens -- especially in the U.S. where the expense/unavailability of health insurance can keep people in jobs until they're sure they have another -- is that many people cling to jobs rather than go through the effort of searching out another.

But I'd still like to see something like this work, and one way might be to make the first-year contract very explicit, clearly stating that employment is for one year only and that renewal is by mutual consent. No doubt this could raise other problems: employees might begin to give less effort if they felt after 9 months that they weren't going to make the cut. But it might provide a real incentive for people to achieve something great in their first year -- similar to the way academics focus on publishing to attain tenure or that junior partners work crazy long hours to make it over the hump to full partner.

Shouldn't the agreement be bi-directional, so that both the candidate and the manager can be explicit about their mutual expectations? Also, the agreement process could begin pre-employment so that both parties could be more upfront with their expectations. I realize there are some things you cannot know until you are in the role but the information typically exchanged in the recruitment process is far too anemic. I also think your post brings up a larger issue of every candidate, employee, and manager understanding that work relationships are discretionary; the work relationship is secure only when each party is the others' best option.

Thanks for the great post.