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How much does employee turnover really cost?

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Re: How much does employee turnover really cost?

#121

Post by milliondollar »

beat wrote: post #85
_yosefk wrote: post #75

Earlier quoted context omitted.

I'm guessing few would book a management consultant simply telling to pay people more money - consultants who want a job instead have to explain how to motivate for free. But the people who share a lot of the blame for this idiocy and who have no good excuse are "heterodox economists" and TED talk presenters telling us how money doesn't motivate people past a certain point, or how it actually makes people less creati…

Money doesn't motivate people past, oh, a half million or so a year, maybe.

Exactly yes. I used to make over a million a year as a big 3 partner in management consulting. I dialed back to half time and am UNBELIEVABLY happy!

Re: How much does employee turnover really cost?

#122

Post by basseq »

jventura wrote: post #100
jcadam wrote: post #82

Earlier quoted context omitted.

My last job gave me a ~2% raise the first year and a ~1% the next. I left shortly thereafter. Should have left after the first lousy raise. The previous job gave me back-to-back 1% raises. Left that job after two years as well. Should have left at the one year mark. I've been in my current job a few months. I'll stick around till the first annual raise cycle to see how they treat me. I don't think I'll give this empl…

On my last job I had made a verbal deal with the previous CTO in which I would be raised in 6 months time after being hired. So after 6/7 months, I went to negotiate a raise with one of the owners and the product manager. I said explicitely that I was quite below market rate and would consider only a raise of at least 20%. The result? I was offered 2%-3%, to be discussed on the next annual review (still some months t…

1. Did you verbally agree to the 20% with the CTO as well? Otherwise, it sounds like they honored the verbal agreement and got a raise after 6 months. It was just less than what you decided you wanted later.

2. Your conclusion is spot on. I've never seen this kind of agreement actually work: it's almost always FUD. If they're not willing to put it in an offer letter, it's not real.

Re: How much does employee turnover really cost?

#123

Post by beat »

phaus wrote: post #103
beat wrote: post #85

Earlier quoted context omitted.

Money doesn't motivate people past, oh, a half million or so a year, maybe.

Assuming you are correct, which I suspect you are, that means the group of people that aren't really motivated by money make up a tiny percentage of the work force. Therefore anyone running a business can safely disregard any idiot making the claim that money isn't a motivator, except on the rare occasions which they find themselves hiring executives that make north of $500k. For normal people, its infuriating to hea…

I was strongly influenced in my thinking by Jason Cohen's "Rich vs King" article, he talks about the S-curve of wealth utilization. Once you hit a few million in the bank, you have enough money to fund a reasonably lavish lifestyle, without working, for the rest of your life. At that point, how do you motivate someone?

Re: How much does employee turnover really cost?

#124

Post by hfsktr »

salarycommenter wrote: post #24
dtnewman wrote: post #16

Two thoughts: * It's a good idea to try to quantify the cost of losing an employee. If you at least understand what basic costs you'll incur, such as cost of hiring, training, etc. it'll give you a basis for realizing the importance of minimizing turnover (perhaps you'll even conclude that turnover isn't a big deal in your case). But it's very hard to quantify some of the largest costs such as employee moral. I was o…

Another important aspect of compensation. When you negotiate compensation with new hire make sure to negotiate the salary you can retain them at not the lowest salary you can get them to leave for. At my current job I accepted knowing I was going to be leaving at 2 years on the dot. I told the manager hiring me this verbatim. For the first time when I leave a job I will be able to simply say "Well this is what you ag…

Why/How did you know you would be leaving after 2 years? Just the money or was there a specific reason? Sorry, just super curious.

Re: How much does employee turnover really cost?

#125

Post by omouse »

Inthenameofmine wrote: post #59

It's funny. The smart companies I know are all moving away from hiring full-time devs. They want a very small core team of highly skilled devs, all with relatively high equity, combined with tons of freelancers/consultants on a call-list. By far the biggest cost to software companies is employee turnover because the second greatest cost is employee education and training. We've measured developer productivity in mult…

That's the problem, our accounting; we treat people and training as a cost when it's the intangibles that are making the most cash. That crazy cool idea that was prototyped by a software engineer in two weeks could be a cost savings of millions a year; and it was all because you chose to spend the $1000 to get them the video course or books and give them a few days here and there on the job to learn.

Re: How much does employee turnover really cost?

#126

Post by geofft »

salarycommenter wrote: post #27
matwood wrote: post #18

Earlier quoted context omitted.

It mentions that market rate salaries are table stakes. So view market-rate compensation simply as table stakes, and spend your energy focused on the next level of Maslow’s hierarchy of employee happiness: opportunities for growth, the ability to have impact towards a purpose, and a caring environment that makes them feel valued.

There is market rate and then there is market rate. Have you ever met a manager who didn't claim to pay market rate and pull out the old "salary data" yarn. Managers seem to think that just because they say something their employees believe it when the reality is the employee doesn't care and will just replace the faulty manager.

I've always wondered how employers measure "market rate". If there were a reliable public source of market rate, negotiations would be much simpler, and they aren't. And presumably the managers themselves aren't actively interviewing at other companies to see what they'd get offered.

So I think the only good source of market rate is people (either candidates or current employees asking for counteroffers), and if you're poor at being competitive for recruits on all axes other than money, or at making it safe for employees to interview and tell you about their offers, you have poor information.

Re: How much does employee turnover really cost?

#127

Post by bubblesocks »

jedrek wrote: post #56
dtnewman wrote: post #16

Two thoughts: * It's a good idea to try to quantify the cost of losing an employee. If you at least understand what basic costs you'll incur, such as cost of hiring, training, etc. it'll give you a basis for realizing the importance of minimizing turnover (perhaps you'll even conclude that turnover isn't a big deal in your case). But it's very hard to quantify some of the largest costs such as employee moral. I was o…

I've been to management seminars where they downplay the importance of money, saying that employees are mostly motivated by other factors. Then I talk to my co-workers, the ones that are quitting, and about half of them leave because they've been working for 2+ years without a raise. I worked at a company where a company decided to introduce a new management program (LEAN) into one department. That 16 person departme…

The money myth is just something managers tell themselves to justify low wages. Money IS why we work. Yes, other factors are important, but I can't pay my mortgage or feed my family on company foosball tables and all-you-can-drink coffee.

Re: How much does employee turnover really cost?

#128

Post by beat »

_yosefk wrote: post #92
beat wrote: post #85

Earlier quoted context omitted.

Money doesn't motivate people past, oh, a half million or so a year, maybe.

What also amazes me is that the same heterodox crowd critiquing capitalism goes on to say "money doesn't make you happy", citing surveys of millionaires and billionaires who all say they'd be happy with 2x-3x their current net worth! I mean, not necessarily the same people say it, but the same press outlets for sure. But if it doesn't make you happy and you always want more, that desire must motivate you, right? Make…

Talk to some serial entrepreneurs. Many of them are already rich, and don't need to work, but they do it anyway. They're motivated by the challenge, not the money.

Re: How much does employee turnover really cost?

#129

Post by marcosdumay »

_yosefk wrote: post #75
jedrek wrote: post #56

Earlier quoted context omitted.

I've been to management seminars where they downplay the importance of money, saying that employees are mostly motivated by other factors. Then I talk to my co-workers, the ones that are quitting, and about half of them leave because they've been working for 2+ years without a raise. I worked at a company where a company decided to introduce a new management program (LEAN) into one department. That 16 person departme…

I'm guessing few would book a management consultant simply telling to pay people more money - consultants who want a job instead have to explain how to motivate for free. But the people who share a lot of the blame for this idiocy and who have no good excuse are "heterodox economists" and TED talk presenters telling us how money doesn't motivate people past a certain point, or how it actually makes people less creati…

That's a very well known experiment, and well explained on the one TED talk I've seen it cited. The experiment conclusion is that thinking about money as a reward¹ makes people much less creative.

It's simply amazing how somebody can spin this into "money doesn't motivate people". Some people will only see what they want, and make any excuse for that, no matter how absurd.

1 - Does thinking about it as a problem have the same effect? Is there some data about this?

Re: How much does employee turnover really cost?

#130

Post by freehunter »

enraged_camel wrote: post #115
paulddraper wrote: post #105

Earlier quoted context omitted.

> I had made a verbal deal with the previous CTO in which I would be raised in 6 months time after being hired > My conclusion: never accept verbal agreements again. Was the verbal agreement not honored? 2-3% after 6 months is not nothing. It seems your problem was accepted an offer 20% below what you should.

>>It seems your problem was accepting an offer 20% below what you should. Yes, that was indeed his mistake. And so was expecting a 20% raise six months after being hired. That is, frankly, a ridiculous proposition.

Agreed that taking the low-paying position was a mistake if pay was a priority. Disagree that expecting a raise at the time he was verbally promised a raise was his mistake.
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