Perhaps The Worst HR Idea Ever: Employee Term Limits

Another entry in the manager’s guide of “How Exactly Not To Do Things.”

A new Atlantic City casino has announced that it will set “term limits” for its front-line staff (read NPR’s coverage here).  When your term’s up, you need to reapply for your job, competing against all other internal and external candidates.

 

The casino argues that the new policy will help keep its front-line service “fresh.”

 

Or… maybe not.  This is such an awful idea, on so many levels, I’m not quite sure where to start.

 

·         It smacks of coping behavior.  Managers are notoriously bad at having difficult performance-related conversations with employees, choosing instead to turn a blind eye to below-average performers.  But with employee term limits, managers can ignore these problems and – alas! – they resolve themselves when the employee must re-apply for his/her job.

 

·         It discounts the value of institutional experience.  Provided you manage performance appropriately, there’s a benefit to having long-tenured employees interact with your customers.  They know your company’s products and services like the back of their hand, and it often shows in the quality of the experience they deliver to your patrons.  By practically encouraging turnover with this policy, the casino may keep its front-line ranks fresh, but it’ll spoil the service they deliver.

 

·         It undermines employee satisfaction and loyalty.  Happy, satisfied, loyal employees help to create happy, satisfied, loyal customers.  I can’t imagine how any employee would ever view a term limit policy as a signal that their employer cares about them and their career development.  It does completely the opposite.  It removes any incentive people might have to view the employer-employee relationship in a positive light.  I mean, seriously – you’re telling me that even if I’m a star performer I need to reapply for my job in [x] years?  Why on Earth should I then be loyal to you?  And just imagine how that attitude will seep into employees’ interactions with customers.

 

These casino executives need to role-reverse to really grasp what kind of workplace environment they’re creating.

 

Imagine if all the Atlantic City casinos agreed that, when a front-line employee completed four years on the job, the individual became a free agent and would automatically receive employment offers from any other interested casino.

 

I doubt the casino execs would enjoy operating in that kind of environment. They’d probably grouse about how pointless it is to be truly invested in the success of any employee, because the free agency rules would make it so easy for them to jump ship.

 

Now turn the tables.  Why would a term-limited employee be vested in the success of their employer?

 

If these employee term limits end up constraining anything, it will be this casino’s success. They’re gambling with their future.