Trial periods and deferring premium pay

From Reinventing Hiring by Dr. Todd Dewett:

Use non-permanent initial employment.  It’s often called probation, but I’m sure we can come up with a better label.  In the US it’s fairly rare for professional roles, though more common in other countries, for example, the UK.  Zappos is really onto something in this regard by paying people to quit, but I think they could save their money by simply initiating a 6-12 month try-out period.  Nobody can hide real deficiencies or fool you by managing impressions for that long.  Over this period, you honestly get to know someone and can then make an informed decision since you’ve observed them produce work and collaborate with the team.

Defer premium pay.  Instead, go market or submarket.  Are you willing to pay top wages for top talent?  Yes.  Should you pay it before seeing what they can do?  No.  A better alternative is to agree on a much-improved second year compensation package that kicks in after they survive the probation period.  If you’re a destination employer due to overall culture, opportunity, and pay, this will work.  You’ll find the talent who really wants to build something meaningful with you over time and you’ll weed out the mercenaries who are always looking for the next jump.

Do you think these suggestions are fair and would work?

2 thoughts on “Trial periods and deferring premium pay

  1. I mostly agree. However I would pay fair market value from day one. Otherwise you are asking people to forgo gains available elsewhere for a trial period with you. You can lose many excellent people this way. You don’t want to bias your onboarding funnel only to those with big appetite for personal risk.

  2. Win-win for employer, problematic for the employees, who have lost significant bargaining power at the end of the 6-12 month probation period. The employer could renege on the raise and offer something less, take it or leave it, putting the employees in a difficult position.
    Their prior job is gone, their job search has gone cold, and if they leave they’d need to explain why they left after only a short period. Seen it happen a number of times.
    Unless there is some kind of strong mutual trust already in place, the employees need to make sure that the agreement includes terms to mitigate these risks and maintain some bargaining power or mutually balancing exit costs.
    Many ways to do this. General principles include:
    Mutually understood definitions of full and partial success or failure and what happens if some or all conditions are met. Granted, often easier said than done especially if the one or both sides are unclear about type of metric and what figure for it is reasonable
    Cost to employer to renege: For example, if employer fails to increase salary as agreed, employee paid amount equal to the amount of the raise times 12 months.

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