A co-worker was just telling me about his new job he just accepted. He just gave his 2 weeks notice and he’s pretty excited about the new company, more money, shorter commute, etc. He was sharing all kinds of details which, while I didn’t feel comfortable enough to ask… he just volunteered the information! In doing so, he shared some enlightening insights into both how my company handles resignations of top talent, as well as an overall HR tidbit I never considered.
HR Insider Tip: Beware the Retention Bonus
See, his wife is an HR executive and I guess within those circles, certain things are pretty well-known that may not be so obvious to the everyday worker. She had told him, “Once you accept that position and turn in your notice, there’s no going back. No matter what the company offers you to stay, you have to leave“. That didn’t make a lot of sense to me initially. I said, “What if they offer you practically the same salary boost?”. All other things being equal, you get the benefit of more money without having to turn your life upside down with a new company, new culture, new risks, forming a new reputation, etc.
He said his wife shared this statistic that was well-known and widely accepted within her HR circles:
Over 60% of employees that accept a retention package for not resigning – are gone within 18 months
She said that basically, while a company may give you that retention bonus on the spot because they realize they’re in deep trouble if you leave (NOW), they eventually find a way to lay you off or fire you for cause (you can be fired for playing fantasy football, taking home staples or complaining on Facebook!) as soon as they gain their footing with a replacement. She said it was like clockwork and very predictable. In thinking about it further and based on his description, it kind of makes sense I guess. A fired-up VP of some organization has to begrudgingly concede to pay some twerp another $20,000 this year because he threatened to leave. He figures this guy’s head isn’t in the game and doesn’t belong there, but he was forced to give him more money with a gun to his head or else suffer from loss of key working knowledge and expertise. So, when there are a couple heads to cut during the next round of layoffs, and there’s now some redundant understanding of that role, why retain the traitor? (who’s being paid much more than his peers incidentally [very easy to justify]).
This may sound overly simplistic and probably doesn’t apply to many situations anecdotally, but he said the statistic was widely accepted in HR circles and the data speaks for itself. Personally, I know of friends who have threatened to resign and accepted a salary increase to stay, and they weren’t terminated. Actually, they left on their own later for an EVEN HIGHER salary (since they were able to justify it from the new company with a higher current salary). This kind of reinforces why the company did get screwed in the end and I could see how if a company executive gets screwed enough times like this, they may start retaliating if that’s in their personality.
Think Twice Before Trying to Extract a Retention Bonus
Personally, I don’t know if this guy or his wife are correct, or whether this statistic applies to my company, but now I might think twice about accepting a retention bonus if I were ever confronted with the option of staying vs going. After all, it’s MUCH harder finding a high-paying job while unemployed compared to be currently employed (3 Signs Your Job’s About to Be Outsourced). Right or wrong (Unemployment Discrimination Law Coming?), you just have more leverage and companies don’t second guess why you’re not working. So, if you’re gonna go far enough to get that offer, you may want to be 100% sure you’re ready to close that door.
Have You Ever Accepted a Retention Bonus? Would You?