If an employee decides to quit, most managers sit down with them, have a conversation, shake hands, and two weeks later, that employee is out the door, likely never to return. So why bump up their salary if they’re leaving anyway?
According to Jon Franko, giving employees a 5% raise when they resign with up to three months’ notice is best for both employees and the company. Franko is the founder of Gorilla 76, a marketing agency with 20 employees based in St. Louis, Missouri. In a recent LinkedIn post, Franko outlined the rationale behind the policy, which he says has been successful so far.
This week, Franko spoke with Thinknum about the policy in greater detail. While replacing employees can cost his company time and money, the 5% raise incentivizes employees to turn in their two weeks well in advance, giving his company more time to find the right replacement.
“It communicates that we understand that things are going to change, and we’re okay and we accept that,” Franko told Thinknum. “We’re okay with that and we support that even. A lot of people responded to that post, ‘Why don’t you just pay them more in the first place?’ We do all those things. We give raises annually. Sometimes people are not in the right seat for them.”
The employee who prompted the post had been with the company for around eight months before realizing he wasn’t suited for the position. “Great guy, great culture fit, great in a million ways,” Franko said. “But he was a copywriter in a previous life. He decided he wanted to take on a more strategy role in our company.”
Aside from “Good for him. I can’t expect someone to not follow their passion. The last person I want at a seat in my company is someone who feels like they’re in the wrong seat. So I think more than anything, the rationale is creating an environment where people feel comfortable.”
After giving a month’s notice, Franko had plenty of time to search for someone new, which is exactly what he did — the new hire is currently being trained by that original employee. Though Franko knows it costs extra to have employee overlap, he says it makes onboarding (and offboarding) easier.
“There are going to be times when you have overlap, so you’re spending more money than you would otherwise,” he said. “We all know the cost of replacing someone, and the time period where you go four weeks without somebody in the role and you’re interviewing tons of people, that costs a ton of money in itself.”
So why don’t larger companies have similar practices? Though Gorilla 76 doesn’t have high turnover, Franko says bigger firms might inadvertently invite people to leave if they took on the policy. “In theory you are maybe encouraging people to consider leaving when they’re on the edge, but again I don’t think that’s a bad thing,” he said.
Ultimately, Franko is concerned about the well-being of his employees. After all, he says, once they move on to other roles, they’ll be talking about their previous positions and the last company they worked for. “Today, with our small sample size, it has been nothing but a positive initiative,” he added.