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When new hires get paid more, top performers resign first

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Re: When new hires get paid more, top performers resign first

#211

Post by itsdrewmiller »

erehweb wrote: post #2

Sounds plausible. The obvious Q though is - were the researchers able to identify a causal effect? Or could it be that the highly-paid new hire is a sign of the market being hot, so the top performers are able to get new better offers? i.e. would they have left even without the new hire?

Agreed they don’t really address threats to validity (HBR almost never does). Another objection - they claim that adjusting salary sooner rather than later has a big effect on turnover, but do they control for the general effect that getting a raise or not affects turnover rate, independent of whether someone was hired at a higher salary?

Re: When new hires get paid more, top performers resign first

#212

Post by Hammershaft »

andruby wrote: post #129
dragon-hn wrote: post #37

I just had a very valuable teammate quit this week from lack of salary progression. New-ish grads are making more than him for much lesser jobs. The business refused to do even a token salary increase because of the ‘economic climate’ Now a critical project won’t happen on time, which will cost the company many magnitudes more in revenue than it would have cost them with a token increase. Oops.

I hate this shortsightedness of business leaders. I’ve seen similar problems. Not wanting to give a raise to a critical person, and then having to replace them with 3 people. Not wanting to pay 10% more and ending up paying 300% more…

And that's 3 people onboarding & increasing the amount that needs to be communicated over that 1 person.

Re: When new hires get paid more, top performers resign first

#213

Post by musicale »

wakawaka28 wrote: post #160
Buttons840 wrote: post #153

Earlier quoted context omitted.

To be clear, Federal law is very explicit that you have the right to discuss and disclose your salary.

You have the right to do it, but your coworkers might become bitter and envious if you make more than them. You have to judge how mature your coworkers are and whether it would cause trouble for you if they made a complaint to your manager. For example, if you are on a team of like 5 people, it could be impossible for them to maintain your anonymity as they say "Why am I making less than others?" You might also imagi…

Isn't it good to know how underpaid you actually are relative to your coworkers? If your colleagues are being paid less than you are for the same work, shouldn't they direct their ire at the company rather than you?

I am 99% convinced that pay secrecy primarily benefits employers and management at the expense of most employees. It creates an asymmetric information environment that makes it difficult for employees to negotiate raises or even to be paid market wages.

The 1% uncertainty is that government jobs (which have pay transparency) tend to be underpaid, and the rare (?) private workplaces with pay transparency don't seem to have done much better than their pay-secret counterparts, with the exception of law firms, where the associate/partner model seems to have caught on. Union negotiated rates seem to have up and down sides.

Of course, you should really consider how much money the company is making, where it is coming from, and how it is being spent. In my experience, (non-founder) technical staff members are often paid very poorly compared to the money that they bring into the company, even after considering large amounts of overhead, expenses, benefits, taxes, etc.

Re: When new hires get paid more, top performers resign first

#214

Post by musicale »

kelnos wrote: post #95
onlyrealcuzzo wrote: post #50

Earlier quoted context omitted.

The problem is - historically it hasn't bitten companies badly enough that they stop doing it. On aggregate, you can get away with massively underpaying your top talent and overpaying new hires - most of which aren't good and will go to other companies before they're even moderately productive. I question why they're so obsessed with hiring so many new people to do basically nothing. That's the reason they have to ov…

> The problem is - historically it hasn't bitten companies badly enough that they stop doing it. The reason for that is the culture around keeping compensation secret. Most people (in the US at least) believe it's impolite to talk about salary directly. I do wonder how much of this taboo has been cultivated by corporations that benefit from workers feeling like they shouldn't talk about salary. On top of that, some c…

> I do wonder how much of this taboo has been cultivated by corporations that benefit from workers feeling like they shouldn't talk about salary.

I don't know if corporations originated the taboo, but they absolutely cultivate it so that they can retain the upper hand in salary negotiation, enabling them to pay below-market wages to everyone except for new hires with multiple offers.

There is an unfortunate cultural problem where people are morally valued by how much money they make. Pay is often very disconnected from economic benefit (consider the enormous economic value produced by underpaid teachers, or grad student researchers) and nothing to do with moral value.

Re: When new hires get paid more, top performers resign first

#216

Post by musicale »

musicale wrote: post #214
kelnos wrote: post #95

Earlier quoted context omitted.

> The problem is - historically it hasn't bitten companies badly enough that they stop doing it. The reason for that is the culture around keeping compensation secret. Most people (in the US at least) believe it's impolite to talk about salary directly. I do wonder how much of this taboo has been cultivated by corporations that benefit from workers feeling like they shouldn't talk about salary. On top of that, some c…

> I do wonder how much of this taboo has been cultivated by corporations that benefit from workers feeling like they shouldn't talk about salary. I don't know if corporations originated the taboo, but they absolutely cultivate it so that they can retain the upper hand in salary negotiation, enabling them to pay below-market wages to everyone except for new hires with multiple offers. There is an unfortunate cultural…

Thinking about this a bit, wealth (in the US at least) confers social status, which is taken as a proxy for personal honor, character, dignity, etc.

Re: When new hires get paid more, top performers resign first

#217

Post by wakawaka28 »

musicale wrote: post #213
wakawaka28 wrote: post #160

Earlier quoted context omitted.

You have the right to do it, but your coworkers might become bitter and envious if you make more than them. You have to judge how mature your coworkers are and whether it would cause trouble for you if they made a complaint to your manager. For example, if you are on a team of like 5 people, it could be impossible for them to maintain your anonymity as they say "Why am I making less than others?" You might also imagi…

Isn't it good to know how underpaid you actually are relative to your coworkers? If your colleagues are being paid less than you are for the same work, shouldn't they direct their ire at the company rather than you? I am 99% convinced that pay secrecy primarily benefits employers and management at the expense of most employees. It creates an asymmetric information environment that makes it difficult for employees to…

>Isn't it good to know how underpaid you actually are relative to your coworkers? If your colleagues are being paid less than you are for the same work, shouldn't they direct their ire at the company rather than you?

You would think that, but imagine you are making less than someone who does less work than you, or is clearly less skilled. Although you might initially blame the company, you may grow to resent your coworker who is getting more for less. Especially if it's a lot more. You can't really start making more demands of them because they make more, or else slack off because you make less.

I think there are situations where secrecy can be good and others where it can be bad. When salaries are public and negotiated by groups, that can lead to other worst-case scenarios. Your company can always decline to pay you more by coming up with a delusionally low pay scale, while claiming the high ground of fairness or some shit. When people can negotiate for more, they can potentially raise the bar gradually. And with the legal protection behind salary disclosure, and websites that make it easy to share your salary, I think it's better to let salaries fluctuate with the market. It might be nigh impossible to demand a raise without switching jobs, but at least the current norm lets employers effectively bid on you.

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