Reduce Payroll Cost & Improve Culture Through Employee “Free Agency”

Source:  Lindsey Gurian

Yes, your read that correctly. The same idea that is behind professional athletes’ contracts could in fact be developed to fit your organization. Would employee free-agency change the way you run your company? Would it change the value you place on your employees?

Andy Porter from Fistful of Talent discusses the potential outcomes of a free agency system for employees in a recent post titled “Why Your Company Should Adopt a Free Agency Period.” In the post, Porter argues that employees should be positioned for free agency after a three-year period, and that such a change would have positive impact in a variety of different situations and ways:

  • Sense of Value: Often after a protracted period of time working for one company a employee’s skill set depreciates. The employee develops a routine based around their limited role and there aren’t always enough professional development opportunities for the candidate to keep his or her skills current. Such a depreciation can be detrimental to the employee as well as the company.
  • Creating a Better Environment: By agreeing to a free-agency period, employers would allow employees to negotiate a better deal for themselves at a mutually agreed upon time. It would provide a natural break for employees to ask for a raise, or perhaps a different arrangement within the company. No surprises. All parties know it is happening.
  • Employees Can Prepare to Spread Their Wings / Employers Can Prepare for Them to Leave the Nest: As with the previous point, there would be no surprises when employees begin shopping around for a new role. They may find there is no upward mobility in their current role and that they would be better suited elsewhere. Employers would also have a chance to begin looking for someone to back-fill their role in a timely manner.
  • Maybe It’s Just Time: Sometimes it is just time to part ways. You, as the employer, may opt not to resign your contract with a particular employee. Again, it wouldn’t come as a complete surprise to the employee (who should be looking for another opportunity already). Occasionally, after a few years of hard work, employees peter-out. Maybe their work becomes stale, or maybe they are no-longer enthusiastic about the company. Either way, we all know that sometimes employees over-stay their welcome.

While it’s probably not realistic to imagine widespread adoption of an employee free agency model any time soon, it may be useful, however, to implement the thinking behind the model into your organization now. Every few years there should be a serious reevaluation of how an employee is performing, and how the company is meeting his or her expectations. Thinking of your employees as operating on a three year contract may help weed out the employees who deserves advancement and want to work at your company from those who are lagging behind.


About Scale Finance

Scale Finance LLC ( provides contract CFO services, Controller solutions, and support in raising capital, or executing M&A transactions, to entrepreneurial companies. The firm specializes in cost-effective financial reporting, budgeting & forecasting, implementing controls, complex modeling, business valuations, and other financial management, and provides strategic help for companies raising growth capital or considering M&A/recapitalization opportunities. Most of the firm’s clients are growing technology, healthcare, business services, consumer, and industrial companies at various stages of development from start-up to tens of millions in annual revenue. Scale Finance LLC has offices throughout the southeast including Charlotte, Raleigh/Durham, Greensboro, Wilmington, Washington D.C. and South Florida with a team of more than 30 professionals serving more than 100 companies throughout the region.