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How much does employee turnover really cost?

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Re: How much does employee turnover really cost?

#311
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…

Yes, I learned an important lesson about verbal agreements with my current employer. They're worthless.

If they aren't willing to put it on paper, it doesn't exist.

Re: How much does employee turnover really cost?

#312
post #267

Earlier quoted context omitted.

It only makes you independent for chunks of 6 months per month worked. You still have to work some 5-10 years before you are independent for the rest of your life.

People generally refer to that as 'retiring'; financial independence usually means, "don't need to ask parents for small loans/handouts".

I thought it meant having enough investments to live off dividends/interest/rent without having to touch your principle such that it continues growing on its own?

Re: How much does employee turnover really cost?

#313
post #75
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…

What those talks often miss is how closely linked salary often is to status and communication of value.

I may not need a raise and the money may not make a notable improvement to my life in and of itself but getting one is a clear signal of appreciation and in the opposite direction not getting one while your peers do (again regardless of whether you need one) sends a clear (if unintentional) message of undervaluation.

Unlike most other signals of status, salary is directly comparable.

Re: How much does employee turnover really cost?

#314
post #56

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…

I heard this story too, when I became a manager and received some training from the HR director, at a F500 company. The idea that people are not motivated by money was drilled into us. Yet I became a manager so I could make more money. I formed a number of impressions:

0. A caveat about the "studies" is that they typically start with workers who are already receiving market compensation. That little bit is always left out during the seminars. At the factory where I once worked, unskilled workers quit over a $0.25 per hour raise offered by a nearby factory.

1. Most HR personnel have psychology degrees, so they are trained to believe that people are motivated by psychology. Imagine if HR people all had economics degrees. For me, treating my fellow workers as homo economicus is a sign of respect, because as engineers we are paid to make rational economic decisions.

2. It's a bargaining strategy, intended to attach a social stigma to people who demand more money, and to make the money game more stressful for people by making you feel like an oddball. This is also why people are discouraged from discussing salary from one another -- divide and conquer.

3. They are also bargaining with their managers, i.e., telling me as a manager that I shouldn't ask to pay my people more -- divide and conquer.

4. Yet... I looked around and the managers who had the highest regard and most power in the department, were coincidentally also taking care of their people with promotions within the ranks (e.g., from junior to middle to senior), meaning that they played the salary game differently than what HR told us. In addition, because salary budgets for the work site are relatively inflexible, it's kind of a zero sum game, and more money for their employees meant less money for mine. I was competing with the other managers for salary budget.

5. I decided to compete hard. I somehow convinced my higher-up that my people were "special" and thus immune from stack ranking. This eliminated the zero percent raise in my group. I got one engineer a nice raise. I promoted two others, making them equal to me in rank. In practical terms, a promotion in between annual review cycles was a way to give someone a raise, since the money came out of a different pot. This kind of thing worked for a few years, then I started to run out of luck, and stopped being a manager.

The people who I took care of are now some of the most valued and loyal employees.

Re: How much does employee turnover really cost?

#315
post #65

Earlier quoted context omitted.

Did they quit because they had a better offer elsewhere? Or did they quit because they increasingly felt they've become stuck, left behind and not valued highly by their employer?

Money is a good way to tell me I'm valued.

And lack of money is a good way to definitely prove that you're not valued.

Re: How much does employee turnover really cost?

#316
post #40

Many managers have the mindset that they can find replacements easily. If you don't do the job, there are 5 people lining up for this position. They don't realize the cost of turnover, partially because it is hard to quantify the cost. In the good old days, IBM and other blue chips would spend lots of money and send employees back to school and train them well. Nowadays, everyone is considered to be replaceable.

In my experience, this is not true in San Francisco. I've never worked anywhere in the bay area where engineers were thought of as easily replaceable. Everyone knows how hard it is to hire competent engineers around here. Even if people were lined up to replace a lost employee, just the interview process for hiring people is expensive as it takes multiple people out of their role to sit and interview someone for a da…

Assuming the employee in question is an engineer of course... Not everyone has it that easy.

Re: How much does employee turnover really cost?

#317
post #85
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.

Interestingly, the remuneration model used by most big companies seems to be based on the opposite of that.

The rank and file tend to be told that we're not motivated by money, so we shouldn't expect any, whilst c-level salaries have to be "competitive to attract the best talent".

Re: How much does employee turnover really cost?

#318
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…

There's a fairly clear misunderstanding here. I think it's absolutely true to say that money doesn't motivate people. For most people, giving them raises won't make them work harder, stay longer, be more creative, etc. - at least, not long term. And if there are problems making them unhappy, throwing money at them isn't going to help much long term either. But if you're underpaying people or not giving raises, people…

The problem is that some managers appear to be confusing "studies show that in most cases extra money does not increase employee performance" with "employees do not want more money".

It's probably true that post-raise motivation boost is short lived, and people's expectations level out, and it might be even true that money could even act as a demotivator. But it doesn't mean people don't want more money and will quit if an opportunity shows up.

Re: How much does employee turnover really cost?

#319

Earlier quoted context omitted.

Now imagine you work two jobs to pay for food and shelter, you don't have a car or a library within walking distance, you couldn't afford any education beyond high school, and employers are statistically much more likely to ignore your resume because your name sounds black.

I admit that this sort of individual is particularly hard hit. There are programs that can help with different aspects of that situation, but no guarantee all will work with enough synchronicity to facilitate a full college education. That said, people who have it that rough also have nothing to lose. That's exactly the sort of person who could tolerate temporary homelessness if it means a better future. If the basel…

Of course there's a path, but it's a very difficult, not at all guaranteed path. Compare this path to a guy with money in the bank, a college degree, a decent resume, and 60 hours of spare time a week saying "just study a little and start applying to jobs, anyone can do it", and you can see why this thread seems so condescending. And imagine saying "you've got nothing to lose" to someone like this with a kid. This isn't a contrived scenario, there's millions of people like this in America. You might say it's irresponsible to have kids in this situation, but it's not quite that simple.

There's no doubt that we live in a better world than the past, but I don't think it's helpful to spread this idea that anyone can succeed if they just try hard enough. That's the goal, not the reality, and it will never be the case that everyone has an equal chance to succeed.

Re: How much does employee turnover really cost?

#320

Earlier quoted context omitted.

I admit that this sort of individual is particularly hard hit. There are programs that can help with different aspects of that situation, but no guarantee all will work with enough synchronicity to facilitate a full college education. That said, people who have it that rough also have nothing to lose. That's exactly the sort of person who could tolerate temporary homelessness if it means a better future. If the basel…

Of course there's a path, but it's a very difficult, not at all guaranteed path. Compare this path to a guy with money in the bank, a college degree, a decent resume, and 60 hours of spare time a week saying "just study a little and start applying to jobs, anyone can do it", and you can see why this thread seems so condescending. And imagine saying "you've got nothing to lose" to someone like this with a kid. This is…

Depends on the kid, the family and the market. Willing to move for the job? No? Why not? Willing to work in a related field until you can get into your first choice? Why not? Willing to switch jobs 3 times in the first 5 years? Why not?

Folks have unequal chances for sure. But a significant fraction of the differences are, what they're willing to do.

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