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How much does employee turnover really cost?

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Re: How much does employee turnover really cost?

#141

Post by TeMPOraL »

marcosdumay wrote: post #129
_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…

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…

> 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.

Almost nobody reads the original studies. Instead, they read news stories and articles, most written by professionals who are paid to spin it in amazing ways.

Re: How much does employee turnover really cost?

#142

Post by andruby »

Balgair wrote: post #90
cmdrfred wrote: post #64

Earlier quoted context omitted.

I call it the burn and churn model. Game studios and IT MSP's both engage in it habitually. The firm I work for has a 200% yearly rate of churn for IT managers. They expect 24/7/365 on call and pay below market. Really its just a place where people go until they find a new job.

I wonder how AI will affect those business models? If you can on-board and find employees so quickly that you can sustain the burn-n-churn, then I think an AI would do it better and faster and not be fired either.

The AI will need to learn people skills if it has to do the job of an IT Manager.

Re: How much does employee turnover really cost?

#143

Post by ajmurmann »

battlebot wrote: post #99
salarycommenter wrote: post #27

Earlier quoted context omitted.

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.

The biggest thing the US needs is a management overhaul.

What and from which countries in particular do you think the US can learn?

Re: How much does employee turnover really cost?

#144

Post by sytelus »

TLDR; Losing an employee has cost of 1.5X to 2.1X of his/her annual compensation.

A surprise case study here should be Amazon which has turned this wisdom upside down on its head. There have been rumors of 40% to as much as 70% churn at Amazon and despite of that company thrives.

Re: How much does employee turnover really cost?

#146

Post by TeMPOraL »

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…

> Tech companies are usually responsible for creating the turnover they complain about.

I see complaining itself as nothing but an act of trying to weasel out of the responsibility. If a company is really hurt by the turnover, it either dies or starts solving the problem - by e.g. paying people more, or reducing the impact of turnover on the business (e.g. by choosing tech stacks so that developers are easily replaceable). Complaining loudly about turnover seems to be done in hope that someone steps in and solves it without the company having to pay for it.

Re: How much does employee turnover really cost?

#147

Post by eeZah7Ux »

_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…

You confuse happiness with motivation.

Re: How much does employee turnover really cost?

#148

Post by sametmax »

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…

It's 100% true that people are motivated by other factors. But they are bound to money. Time passes and the life style change... A spouse, children, hobbies, a bigger house ?

Money is not a good motivator for one's involvement in work. But it's a decisive factor to choose a work place because it's a limited and required resource.

Re: How much does employee turnover really cost?

#149

Post by TeMPOraL »

milliondollar wrote: post #121
beat wrote: post #85

Earlier quoted context omitted.

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!

> I dialed back to half time and am UNBELIEVABLY happy!

You live my dream life.

Re: How much does employee turnover really cost?

#150

Post by ajmurmann »

battlebot wrote: post #106
sputknick wrote: post #63

Earlier quoted context omitted.

It's not about what salary that engineer deserved, but what they could command. That engineer might have done $1 million worth of work a year, and deserved a $1 million salary; but he couldn't go to another company and proclaim he was worth $1 million. He could probably go elsewhere and get a slightly above average salary, your company knew that, and that is why they paid him that.

You know what's even worse at trying to surface? When you saved your company millions of dollars! I'm not talking theoretical dollars here, I'm talking about last year X cost $Million, and this year due to my finding out some egregious mistakes and fixing them, that cost was measurably less by seven figures, and no one bothers to tell that story to the higher ups! I just wonder what these people do all day? Darn few…

Because of stories like this I am generally against publicly praising individual employees. Whenever you do that there is gonna be somebody who did something great you don't know about and aren't praising. There might even be people who think that what the person you are praising did something bad. I remember a all-hands meeting where somebody got praised for working all weekend. Later in private several people were disgruntled and claimed the person only had to do so because they had messed it up before despite being told to use a different approach repeatedly.

Just praise people in private, actually trust them and listen to them and reward them accordingly comes compensation time.

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