Elite firms often hire talented individuals but later let some of them go. This practice, known as churning, helps firms maintain their reputation and profits.
Researchers explain that at first, firms have more information about their employees than clients do. Over time, clients can see employee performance, which changes how firms pay their workers.
Some fired employees are still skilled. Their exit signals the top talent. Those who stay might accept lower pay temporarily, but they gain a better reputation, allowing them to earn more later.
Difficult words
- elite — highly respected and successful people or groups.
- talented — having a natural ability or skill.
- practice — a method or way of doing something.
- clients — people or companies that receive services.
- performance — how well someone does their job.
- signals — shows or indicates something.
- reputation — what people think about someone or something.
Tip: hover, focus or tap highlighted words in the article to see quick definitions while you read or listen.
Discussion questions
- Why do you think some employees accept lower pay temporarily?
- How might a good reputation help workers earn more later?
- What are the benefits of hiring talented individuals for firms?
Related articles
Freedom of Expression in Togo
In Togo, the government limits freedom of expression, affecting online speech and social media use. Recent protests show citizens' frustration with the regime, leading to restrictions on internet access.
Street Children in French-Speaking Africa
In French-speaking Africa, many children live in the streets due to various social issues. This article discusses the problem and different terms used for these children in various countries.
Khaled Khella: Giving Voice to Egypt's Youth
Khaled Khella is an Egyptian filmmaker who focuses on the struggles of young people. His films reveal the hidden hardships of society and encourage important conversations.
How You View Uncertainty May Shape How You Vote
A study shows that seeing uncertainty as an opportunity decreases support for right-wing populist parties.
College Degrees Still Offer Financial Benefits
A new study shows that obtaining a college degree leads to higher earnings, even after considering student loans. The research highlights the importance of completing college for better financial outcomes.
Mysterious Dubai Prince Causes Stir in Hong Kong
A Dubai prince's investment plans in Hong Kong raise questions about his identity and credibility. Speculation grows over a possible scam connected to a pop star.