Having a Baby is Not a Good Reason to Resign
In the Slicing Pie model having a baby is not considered “good reason” to quit and, therefore, the quitter loses her slices in the Pie. This may cause some controversy, so it’s important to understand what good reason means in the context of Slicing Pie and being fair.
Good reason (aka “for cause” or “good leaver”) implies that something outside of a person’s control created an untenable situation at work. The most common circumstance is when the company’s managers make promises that they fail to keep. For instance:
- You were hired as VP of Marketing, but they want you to flip burgers instead
- The company is based in Chicago, but wants to relocate to Seattle
- You were promised a cash salary in six months, but it didn’t happen
- You’re a commissioned salesperson, but the product does not work
The person affected by these situations did not cause them and, therefore, cannot be expected to continue working. It would not be fair to remove their slices from the Pie or otherwise impose penalties. By allowing individuals to keep their slices in the Pie, Slicing Pie logic provides protection from the behaviors of others. Startup founders are notorious for making big promises—a practice that can easily mislead participants. The resignation for good reason logic forces managers to think twice before committing to unknowable future events.
Conversely, resignation without good reason means a person quits for personal reasons outside the influence of the company and its managers. For example:
- She wants to take another job for more money
- He can’t afford to work without pay anymore
- She doesn’t believe in the company’s vision
- He doesn’t like his coworkers
- She decides to become a stay-at-home mommy
If a person resigns for no good reason, he or she will lose slices from non-cash contributions and lose the multiplier for cash contributions. Furthermore, the company reserves the right to pay back cash prior to any distribution of profits or proceeds of a sale. This is a painful way to leave a company, and it should be! This forces employees and other participants to think twice before quitting.
Now, let’s get back to that cute little baby…
In many societies, having a baby is a legally protected right and terminating someone for having a baby is illegal and immoral. At its core, Slicing Pie is a moral agreement to do right by those who help a company succeed and, hence, a manager should not fire a woman for having a baby and the manager should provide a reasonable amount of time off to care for the baby and recover from the delivery (if applicable). In some countries, larger companies may be legally required to offer paid or unpaid leave to new parents, but startups are sometimes exempt from these laws. Having a key employee on leave for extended periods can have a pretty devastating effect for a startup and finding a temporary replacement may not be possible. Having a policy in place can help avoid potential conflicts. Click here to download a sample Pie Policy manual.
An able-bodied team member is expected to return to work once she (or he) has settled into a routine with the little bundle of joy. Of course, the parent has every right to decide not to return in which case he or she would be resigning without good reason. It’s not a good reason if the company didn’t break promises and the employee is physically and mentally able to work…in most cases.
Some Exceptions That Do Provide Good Reason
There are a handful of unfortunate circumstances in which there was no fault on the side of the company or the employee that provide good reason. As inconvenient as it may be, dying is a good reason to resign and the person’s slices would stay in the Pie. When the Pie bakes, the person’s designated heirs would receive the equity. Again, while it may not be the company’s fault a person dies, it would be immoral to impose a penalty for dying. The same goes for permanent or long-term disability.
There’s one more circumstance worth mentioning. Leave for personal or dependent medical care. While many startups would be exempt from medical leave laws (in the US, companies with fewer than 50 employees are exempt), it would be good to stipulate a policy outlining the company’s allowance for paid and unpaid time-off for dealing with medical issues. A startup may not survive the extended leave of a key employee and there should be a point at which the employee is replaced. In this case the employee would be terminated without good reason and his or her slices should stay in the Pie.
The Slicing Pie model always follows the logic of fairness within a moral context of most cultures. When bad things happen to good people, companies need to make the right actions to support them and their families. Resignation and termination events should be as clear as possible to avoid conflicts. Babies are super-cute, but so is a successful startup company!
Author’s note: a previous version of this post made the case that having a baby did provide good reason to resign. I was wrong and I’m sorry!