Forbes had a great article with statistics that will make you stop and think.
- In 2014 an employee given a 3% raise really only gets a 1% increase in spending because of inflation
- If that same employee leaves the company they can look forward to a 10% to 20% increase in salary (with some as high as 50%)
This is a call for HR to rethink their methods.
If that employee does leave consider
- The replacement costs for an entry-level employee is between 30% to 50% of their annual salary.
- For mid-level employees it could cost up to 150% of their yearly salary for replacement
- For those high level/specialized folks . . . a whopping 400% of their annual salary.
Moral of the story
- Fix your managers. People leave 9 times out of 10 because the boss is a jerk.
- It costs less to keep your employees than to replace them. Fix your training. Give new skills. None of this hurrah, feel-good motivational stuff. Educate for some serious new abilities.
- Get serious about pay raises. The person who gets the 3% increase, who also knows a departure will get them 10 TIMES MORE will just fester at the lack of competitiveness as the business values the company above it’s employees. Note: I am not saying to bankrupt the company by giving massive pay increases. I am saying, know who your talent is and take care of them. If needs be, reread #1.
Note: Kudos to Karlyn Borysenko for her great work: the Cost of Employee Turnover.