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Why do companies choose to lose good employees, over giving them raises?
- Thread starter entremet
- Start date
OP
OP
Everyone is replaceable, but there are "startup costs" to replacing a lot of positions. Multiply that across the org and you have inefficiencies that hurt long-term productivity.
I remember seeing many projects delayed massively due to worker turnover.
Yeah, you can replace people, but then you start from scratch. And it's not just skills to think about. It's relationships and relationship power. That takes time to develop.
Happens all the time. Top performing employees leave because the company won't adjust their pay to be competitive in the marketplace. Then they end up paying for it anyway hiring the replacement at a higher rate, training onboarding costs etc.
The company makes up for it because of all the other people who stay put every year with a 0-2% raise. Their margins on those employees go up every year. So instead of accommodating good employees with pay and potentially rocking the boat with many other employees, they just let them go.
That's why it is good to see many people quitting jobs or changing jobs. These companies bank on the majority staying put and accepting low pay. Could help tip the scales a bit.
The company makes up for it because of all the other people who stay put every year with a 0-2% raise. Their margins on those employees go up every year. So instead of accommodating good employees with pay and potentially rocking the boat with many other employees, they just let them go.
That's why it is good to see many people quitting jobs or changing jobs. These companies bank on the majority staying put and accepting low pay. Could help tip the scales a bit.
My company is reviewing it's salaried positions next month. If I don't get a significant raise my wife and I are both leaving the company. Hourly employees at non union locations have gotten about 40% increases in wages in the last year, so if they don't do something similar we are out of there.
The people that are in charge of budgets don't care about next year's performance. That's a future problem, since it's not something they have to report on immediately. There is generally very little long term thinking since those people may be on the hunt for short term gains through better jobs offers themselves. So who cares what happens 6 months from now.
For average employees (not high performers, not bad employees) chances are you'll get an equal performing candidate to the one moving on. That still costs money.
Yes, higher performers are out there, but by your logic, they aren't leaving where they are because their previous organization will counter to keep them.
It still costs less to keep your solid but non-superstar employees and just give them raises.
*shrug*
I'm not trying to logic mind-trick you. I think great employees and bad employees stay or leave companies every day for a huge number of personal and professional reasons.
I was a rank-and-file employee for the first half of my career. Now I'm entering a phase where I supervise more folks - oversee a team of 12 atm. So I was just sharing my perspective.
I've had several scenarios where an employee let us know they had a job offer and stated they would be receptive to a counter-offer.
For the top performers, we countered when we were able to. We aren't always able to, for a variety of reasons. For the rest, we didn't counter and we wished them well. That's all I'm saying. People's internal sense of their job performance doesn't always match what the other folks in the org think of their job performance. To put it another way, this is an average-performing employee basically just booking a meeting asking for more money for no reason. No promotion, no change in responsibilities or job duties. Just asking to be paid more. Hiring + training can be a pain so as a gambit that may work sometimes.
People think companies are moustache-twirling evil. I suppose that can sometimes be true. But that's not been my personal experience. I have a budget I have to stay within.
For me, if I really really want to counter to keep a top performing employee I want to couple that $$ discussion with a discussion about what motivates them in their work and their career development pathing in general. Are we the best fit for them any longer? Do we have room for them to grow? If not then we shouldn't even be *trying* to keep them.
I'm going through this kind of situation right now. Got contacted by a studio I freelanced at a while back and they are going to offer me way more than where I'm currently at. Still waiting on the official offer to be sent but I'm curious if the place I'm at will try and counter.
In my field it definitely seems like quitting to work for a different company is the best way to get a raise.
In my field it definitely seems like quitting to work for a different company is the best way to get a raise.
Appreciate the insight. For most people we only get the ground level view of things.
I'm sure it probably varies a lot, but when you see employees with better offers, are they usually lateral or non-lateral moves? If you see top performers or even so-so employees getting better offers for lateral moves, would that prompt you to proactively asses other people's (especially top performers) current pay? Or do you pretty much let things be until something comes up?
Yup. Seen it way too many times. A friend of mine quit his job and the account he was in charge of left the company after three atempts at finding the right person to replace him.
Sometimes the hassle of finding the appropriate person to do the job is something companies should be very aware of before letting people go.
Unfortunately they often dump much of that hassle on the remaining skeleton crew of a team while they leisurely look for a temp or replacement. So yeah, annoyance to the employer, but even worse for the employees.
It's hilarious when it backfires though. I remember when my old colleague left for a competitor. He actually offered to stay for LESS than his pending offer. They still said no. Just not good enough at his job, I guess. Couple weeks later, there was some buzzing around the office - apparently some of his large accounts elected to follow him and by default, now went to the competition. I talked to him a bit later, and yeah, he definitely took a good chunk of revenue with him. Glorious.