Summary: The current ways of doing business may be nothing more than old habits that didn't work particularly well in the first place.
This is hard to believe, but apparently a technology company called NextJump has a policy that does not allow firing their employees. (NextJump manages employee rewards programs for scores of Fortune 1,000 companies and they say they have at least 100 million users.) Their no-fire policy is in alignment with their goals to make the world a better place for their customers and their own employees.
So, what do they do with employees who are not performing well? They try to help them do better, or assist them to find a different job. The people who don't fit well choose to leave.
The impact of implementing the no-fire policy was dramatic: the percentage of employees who said they love their jobs went to 90 from 20, and employee turnover went from 40% to 0.
Another positive development was that employees opened up in evaluation discussions like annual reviews, because they no longer could be fired, so they didn't perceive evaluations as a potential threat to their employment. The more open discussions allow better dialogue about problems employees are having and how the company could help address them.
NextJump CEO Charlie Kim revealed these benefits and insights in a recent interview. His company takes employee culture very seriously. In fact, they reportedly will pay for half of an employee's vacation. More importantly, they focus strongly on mentoring employees to help them improve, through coaching and peer communication.
Some of these employee benefits might sound radical, but probably only because standard business practices have been in place so long it appears to be very odd to change them. The fact they have existed unchallenged for decades does not mean they were ever the best ways of working with employees. They simply have become deeply engrained habits.
Zappos pays unhappy employees to quit their jobs, because they can damage company culture enough and drag down productivity far more than the cost of paying them to leave. Tony Hsieh has said bad hires have cost Zappos $100 million.