Steam Logistics is offering employees $2,000 to quit the company, avoiding the costs of layoffs even as it continues hiring new workers for its U.S. network.
The Chattanooga, Tennessee-based 3PL said it has offered the cash-for-quits program periodically for several years. But it usually attracts few takers. Employees received the latest offer via email this week.
“It’s simply an offer to anyone in the company, and it’s meant to help people move on if their heart is not in it for the long term at Steam,” President Steve Cox told FreightWaves in an email Saturday. “It’s rare that anyone opts for it. But we’ve had some take us up on it this go around, likely due to the changing market conditions.”
Paying an employee to quit differs from an employee buyout because structured plans typically include pay and benefits for a defined period of time. Layoffs can be even more expensive.
“It’s really a win-win in our view, and it’s not meant to be anything but a helpful transition for those who want it,” Cox said.
Zappos pioneered cash for quits
Zappos.com, the online shoe and apparel retailer acquired by Amazon in 2009, pioneered cash for quits. But it applied only to employees who decided after a four-week training program that they did not feel they fit in with the company.
Called “The Offer,” according to Business Insider, the Zappos’ practice was designed to weed out those who wouldn’t be as committed to and passionate about their work, thereby bolstering overall happiness in the company’s workforce.
“It helped them maintain a great culture,” Cox said. “We see it the same way.”
Layoffs can be very expensive
Avoiding the costs of layoffs can be huge. No severance payments, extension of health coverage or unemployment insurance premiums to pay. Amazon laid off 18,000 employees between November and January. The cost to the online retailer totaled $640 million.
As of November, Steam Logistics had grown to 900 employees working in 12 U.S. offices, according to the company. To accommodate that growth, Steam began renovating a 60,000-square-foot building in downtown Chattanooga a year ago.
Increased freight demand over the past few years led to a hiring spree. But a slowdown in freight rates and more freight technology requiring fewer workers, many brokers have been forced to scale back their staff. In 2023, freight brokerages cut nearly 1,000 jobs in mass layoffs.
In a Feb. 17 email to FreightWaves, Cox denied any structured staff cuts. In addition to the cash for quits, a few workers have been fired for performance.
“We are continuing to hire key positions while approaching others a bit more conservatively as we study the market volatility and plan for the future,” Cox said. “During this time of market uncertainty, we will proceed carefully, but with a lot of confidence about the future of our business. This is certainly not our first down cycle, so we feel very good about our path ahead.”
Steam added 450 employees in 2022 and plans to continue hiring as it scales its asset-lite business.
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