Researchers at the University of Waterloo, Wilfrid Laurier University, and McMaster University tested whether pay-to-quit programs work as intended. The study, published in the Journal of Management Accounting Research, examined cash bonuses offered to employees who choose to voluntarily resign.
Dr. Kelsey Matthews and her co-authors, Dr. Leslie Berger and Dr. Lan Guo of Laurier and Dr. Bradley Ruffle of McMaster, ran two experiments. The first used a controlled lab setting with more than 300 undergraduate participants assigned to work for either their own university or a rival institution. The second recruited actual employees through an online labor market platform and asked them to respond to a scenario in which their company had introduced a pay-to-quit program.
The researchers found that employees who declined the incentive increased their work effort in the period that followed. Matthews explains: "When employees actively choose the organization over the cash, that choice can sharpen their sense of belonging and translate into stronger motivation going forward."
The programs also filtered out less committed employees. Those with little connection to their organization were most likely to take the money and leave. Those who felt strongly connected were unlikely to leave regardless. The researchers identified a third group as most responsive to the incentive: moderately connected employees. This group represents at least 35% of the typical workforce, the researchers note.
The researchers flag a caveat. Because the incentive has its strongest sorting effect on moderately connected employees, organizations risk losing those who are not fully disengaged but not yet fully committed, some of whom might have developed stronger ties over time. They note that decisions to accept or decline a pay-to-quit offer will also be shaped by factors outside the study's scope, including an employee's financial circumstances and the availability of comparable work elsewhere.