Could a No-Fire Policy Boost Your Business?

A no-fire policy — in which an employer agrees from the outset not to fire employees – is the kind of off-the-wall HR policy that has the potential to be both an employer branding dream and an employment law nightmare. Staff would love you, and your legal counsel would loathe you.

This kind of policy sounds completely impractical in the contemporary era of the contingent workers and disposal employees. In fact, you may be confident in saying that no company on earth could possible have a no-fire policy.

Let me dent your confidence a bit by mentioning Next Jump, an employee rewards company, with a genuine no-fire policy. And how has this policy worked out for Next Jump? The company actually saw immediate benefits. Employee turnover dropped from 40 percent to 0 percent, and the percentage of employees who said they “loved” their jobs increased from 20 percent to 90 percent.

Of course, this is a completely isolated experiment. That’s why I am not suggesting that every company adopt a no-fire policy. I am merely exploring the outer limits of HR policy at a time when the pressure on HR is such that we are desperate for innovation. This is why I believe this radical no-fire policy deserves attention.

Ironically, the innovative no-fire policy is actually a development of a much older, recently defunct concept: the job for life. As the cult of the contingent worker continues its ascendency, the no-fire policy brings back some of that job-for-life certainty and security that is missing in today’s climate.

That brings to an important question: would a no-fire policy boost your brand? Would the enhanced feeling of job security that comes with such a policy make your business more attractive to talent?

The answer, potentially, is yes. A Towers Watson study from 2014 found  that, out of 27 options, job security was the second most commonly cited driver of employee attraction to a company and the fourth most commonly cited driver of employee retention. A 2014 study from Randstad  found that 62 percent of workers said that job security was a very significant factor when deciding whether or not to apply for a job. It was third only to reliability and honesty.

If a well-constructed and no-fire policy could increase the sense of job security in an organization, then such a policy would indeed resonate with a significant portion of the candidate market. Even as employers increasing tout the virtues of contingent workforces, most job seekers still value job security. A no-fire policy could very well boost your brand and make you more attractive to potential employees.

That being said, your no-fire policy would need to come with some caveats, if only to keep your legal counsel from bursting a blood vessel. For example, you could write the no-fire rule so that it only applies with respect to employee performance. This means that, rather than firing low performers, you would invest time, effort, and resources in training, development, and redeployment. You’d of course still need to fire people in redundancy situations or in situations of gross misconduct, like violence, lying, theft, cheating, etc. Even with these caveats, a no-fire for bad performance policy still provides a heightened level of job security and shows that a company has a commitment to investing in its people.

In order to prevent the no-fire policy from sinking the ship, you’d need to have a process that didn’t just allow mediocre players to coast; you’d need a process that drove lower performers to become A-level players. Without an almost obsessive focus on employee development and performance management, a no-fire policy could backfire spectacularly, leaving an employer weighted down by fair-to-middling players.

Finally, for your no-fire policy to have the full brand-enhancing effect, you’d probably need to be an early adopter. Institute a no-fire policy ahead of the curve, and you’ll really stand out in the job market. Taking the safer option and waiting for other organizations to adopt such policies will only end up making you look like a straggler.

So, if you are interested in trying out a no-fire policy, the best time is probably now.