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Ever wish you could rent employees for a few months, take themfor a test drive and then return them—no questions asked—if thingsdon't work out as hoped? That's the strategy behind probationaryperiods for new hires.

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“Employers may find the use of probationary periods useful inoverall staffing decisions,” says Marta Moakley, legal editor forXPertHR USA in New Providence, New Jersey. Her company is an onlineservice that helps employers comply with federal, state andmunicipal law.

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“A probationary period allows an employer and an employee toenter into an employment arrangement in an effort to learn whetherthe relationship would be a good fit for all involved,” she says.“For the employer, the arrangement allows for a structuredperformance management system that has a built-in timeline foremployment decisions.”

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Probationary periods have long been used in both the public andprivate sectors, although terminology may vary.

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“Most employers do not use the words 'probationary period'; weuse the term `introductory period',” says Rick Rossignol, principalof RTR Consulting Inc. in Ventura, California.

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“We do not want anyone to think there is an implied contract ofemployment if they get past 90 days.”

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Thinking win-win

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Probationary periods are nothing new and remain fairly standardpractice for many public sector employers.

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“Probationary periods are very common in civil service positionsand can be instituted in conjunction with collective-bargainingagreements,” Moakley says. “A probationary period may allow forstreamlined terminations that do not require due processprocedures.”

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These periods also can be helpful for employees.

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“If working in a labor or government environment … the payoffcan mean increased job security and availability of a clearercareer path for an employee,” she says. “If done well, the practicecan have a very positive impact on employee retention and overallproductivity.”

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A well-structured probationary period sets up a win-winoutcome.

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“The employee and employer can test whether the relationshipmeets their needs,” Moakley says. “Probationary periods can beexcellent tools for determining an employee's cultural fit in theworkplace.”

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Rossignol agrees. “It gives management staff a chance toevaluate the employee and see if they are going to fit the companyculture and be productive.”

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Probationary periods can be especially beneficial for startupsor small businesses, which have fewer resources to compensate for abad hiring decision. Personnel costs are among the most expensiveelements of business operations, and this cost becomes multipliedif an unproductive worker is on the team. Probationary periods givesmall-business owners a higher likelihood of securing and retainingquality employees—and the ability to cut ties with substandardemployees without legal penalty.

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Alternative approaches

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Some businesses have faith in their ability to hire and developthe right employees without relying on probationary periods. Othersmodify the process to fit their needs.

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“We don't use formal probation periods,” says Kate Steward, vicepresident of Henry Wurst Inc., a marketing communications businessin Kansas City, Missouri. “We do have a `check-in' with all newemployees at the 90-day mark to assess fit, determine anyadditional training needs and solicit feedback on the onboardingand orientation process.”

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Steward believes formal probations can create the wrongimpression.

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“I believe it sends the message that we are just not sure aboutthe employee and that they have a hill to climb during the first 90days to gain acceptance,” she says. “We like the idea of a dialogueat 90 days to determine how settled the employee is, whatchallenges they might have and any advice they can offer regardingonboarding for future employees.”

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Other options are available.

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“In the current economy, many private employers are choosing atemp-to-perm arrangement using an outside employment agency ratherthan implementing formal probationary periods for employees,”Moakley says. “However, there may be increased hiring competitionfor particularly high-performing workers. In addition, although theworker may be an excellent fit for the organization, the employeeand the employer may have different goals: The worker may choosemore flexibility and a less formal arrangement, while an employermay need to fill a full-time permanent position.”

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Legal implications

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Companies implementing probations need to be aware of potentiallegal landmines.

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“You do not want to create an implied contract or imply that theemployee can only be terminated for cause,” Rossignol says.

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If an employer reneges on a promise to grant rights and benefitsto a new hire as a reward for successfully completing aprobationary period, the employer may be held liable. Such apromise may be explicit or implied; for example, many statesconsider policy manuals to be enforceable, implied contractsbetween employers and employees.

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“For at-will employers, a probationary period could result in anunintended employment contract,” Moakley says. “For example, if theemployer makes any assurances of continued employment once aprobationary period is successfully completed, there is apossibility that the employment relationship has changed from thatof at-will to that of contract.”

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How reliable are the results of probationary periods? Mostexperts agree that new employees who perform poorly duringprobationary periods seldom improve their performance significantlyafter the trial period has ended. However, each business owner hasto decide for him or herself whether the employee's performanceduring the trial period warrants continued employment

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Probationary benefits may not be for everyone, but if properlydesigned and implemented, they can go a long way toward reducingbuyer's remorse.

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