The art auctioneering company, Sotheby’s, has recently seen a massive drop in revenue that scared investors, and as response to this, Sotheby’s is attempting to cut costs. Rather than laying off employees, Sotheby’s is offering voluntary buyout’s to its employees as an attractive economic opportunity.
This unordinary business strategy is reminiscent of Zappos’ (The online shoe retail company we studied in class 19) hiring strategy wherein they offer each new hire the opportunity to quit for $2,000. While Zappos’ strategy allows them to only hire the employees that truly want to be there, Sotheby’s may actually be incentivizing the wrong thing. They are at risk of having their best employees apply for resignation because of the “attractive economic” opportunity it provides, and because they fear losing their job in the layoffs that are predicted to follow the buyouts. Sotheby’s did say that they may decline certain employee’s applications for resignation; however even then, this seems like a very poor decision. The impacts on employee morale that will result from having strong employees accept the possibility that they might not have a job soon, apply for resignation out of fear, and then be denied, will certainly not benefit the company.
While at first glance this program seems like a generous option compared to layoffs, it will likely have seriously detrimental affects on the company as many fearful employees apply to resign. Thus, it can be seen that while monetary incentives to leave the company work for Zappos, for Sotheby’s this strategy is incentivizing good employees to leave the company and will have detrimental effects that likely outweigh the cost saving, and moral benefits of offering buyouts.
Article: http://www.bloomberg.com/news/articles/2015-11-13/sotheby-s-offering-employees-voluntary-buyouts-to-cut-costs
