The Three Year Rule

The Three Year Rule

There are several three-year rules in society: there is section 2035 of the U.S. tax code which is known by, and only interesting to, serious accountants, there is the guideline that dating people more than three years older or younger than you is socially unacceptable until after you reach the age of twenty five, and there is the one where people who leave a job before three years may be seen as job hoppers or have some unseen character flaw. Let us talk about that last one.

Historically, Americans joined a company, or a profession, and worked at it for most of their lives; they would receive a nice watch, a pension, and a cake at retirement. There were exceptions, but most people signed on for the long haul with the knowledge that their efforts would be rewarded and their loyalty would be appreciated. Even the hyper-ambitious would stick around for years before leaving for a greener pasture. Some boomers actually remember this social construct of employment, but times changed, and the social construct changed too.

After the savings and loan crisis and recession of 1990 rules were changed and companies could no longer afford the old pension model, 401 k’s were introduced. This allowed employees to take their pension with them as they changed jobs; they no longer had to work at a single company for x number of years to be able to retire. The internet boom of the 90’s changed the nature of the workforce to more information and soft-skilled workers. The resulting .com bust changed the nature of the employer/employee relationship. Traditional manufacturing jobs disappeared in the “e-conomy” of the new millennium. Workers had no choice but to take back the total responsibility for their own career and they had the rules and tools to do so. The life-long employee concept had disappeared, but one of the social constructs of that time period remained.

It is expensive to hire and on-board an employee. Depending on the situation, it can take a year or two for productivity to be sufficient to break even on those training costs. This is one reason employers call it “investing in a new hire”; the company really does not start showing a return on their decision until that two-year mark and can really take a hit when the employee leaves early. Similarly, a new hire is not truly acclimated to the work until that time has passed and should not make career decisions until maturity in the role and organizational culture is achieved. Of course, if the fit is terrible, it should be obvious quickly and that would result in a significantly shorter than three-year stay, most likely only a few months. In general, the company and the worker should count on an informal three-year commitment as being in place, so that each party can judge the real merits and challenges of the relationship. If the employee is released or leaves before that time, it is a flag to future employers that something is wrong. It may be with the company or with the worker, but either way, it should be researched before a new company/worker relationship begins. The exception is a contract employee who is brought on with the upfront knowledge and agreement to a specific term, and employees on that type of arrangement should call this out from the beginning so the recruiter knows and does not worry about something lurking