* 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 once at a company where an entire (small) team slowly left after a single person departed. Perhaps any individual's departure could have been handled without too much of an issue, but the loss of entire team and all the institutional knowledge contained there was quite damaging to the company.
* The article mentions some tips for retaining employees and I think they are spot on. But I don't think it emphasizes the importance of salary enough. A lot of employees jump ship because of the higher salaries they can get when they move around. Meanwhile, the original company they left will likely have to pay market rate to get someone with similar experience (and none of the institutional knowledge), so they would have been much better off if they would have just bumped their employee's pay to market rate in the first place. By the time it gets to a counter-offer stage, it's often too late.
EDIT: The article briefly mentions the importance of paying market rate salary, but I missed this sentence when I read it over the first time. Updating my second bullet accordingly.
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 department saw 18 people leave during my 6 months at the company, and only three of the original team was there when I left. That is to say, five people started work after I showed up and left, before I quit to be a WFH dad.
And yet, nobody blamed the brass or the people implementing the LEAN program.
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 creative, all supposedly to criticize "capitalism" but in fact to make the market work worse for employees who now actually have to argue with management that yes, money does motivate them, with the manager replying "I know it doesn't so tell me what's really bothering you" or what-not. I mean it's not like companies seek less profit having seen the TED talk, instead they learn that they can cut expenses by avoiding "needless" raises. Quite the heterodoxy, that.
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?
> 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.
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 quickly become unhappy and will either slack off or eventually leave - that's the 'certain point'! You absolutely need to keep giving good raises to keep good people there - but for most people it will just maintain their performance, not to motivate them to be better.
The management courses I've done have said that money is a terrible motivator but a really powerful de-motivator.
It is a terrible motivator as the impact of a raise is short lived, we very quickly come to believe we are worth the higher pay. See Wall Street and SV salaries. Once you're happy with your pay things like challenging work, recognising success, personal development, good co-workers become much more effective.
It is a powerful de-motivator if you're being paid less than you think you should be, to the point that the weighting between the two effects is almost entirely on the de-motivation side.
I also factor in inflation to this estimation. "The company thinks I'm worth less this year than last year, I think I'm worth more, lets see what the market says"
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.
I would probably agree that "money doesn't motivate people past a certain point"...except when the cost of housing goes up every year. It is not like the extra money most people seek is more and more vacation money -- most are just trying to keep up with rents.
I'm at this training with a developer from South America who just moved to the US, and holy moly he got screwed over. He is earning $15/hr writing PHP for this small company in an expensive area ($1350/month for 1 bed & 1 bath) with a broad non-compete and $4k that he will have to pay back if he leaves within the next 12 months for this training.
I know the training itself is free (they actually are giving us a few grand in credit for going), and hotels, flights, etc are under $1k, so this is a super sweet deal for his company.
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 hear businesses complain about turnover and a lack of loyalty when their "performance" raises amount to a cost of living increase, and their promotion raises don't bring them in line with the salaries that people getting hired at the more senior position make coming through the door. Money isn't the only reason I work, but it is one of the reasons. Its more about the principle. A company that wants loyalty should show loyalty and not attempt to nickel and dime the talent.
Tech companies are usually responsible for creating the turnover they complain about.
> 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.
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?
There's a point where salary stops meaning increased consumption, and starts meaning increased control - not control in the narrow sense that "Rich vs King" discusses, but in the broader sense of being able to push your ideas.
Want to cure polio, go to Mars, put LED lighting in every home in Africa, fund research into fusion reactors, build flying cars, or push VR into the mainstream? You'd better have some cash.
"Want to cure polio, go to Mars, put LED lighting in every home in Africa, fund research into fusion reactors, build flying cars, or push VR into the mainstream? You'd better have some cash."
That might have been more accurately stated as:
"Want to hire people to cure polio, go to Mars, put LED lighting in every home in Africa, fund research into fusion reactors, build flying cars, or push VR into the mainstream? You'd better have some cash."
It's rarely the people with the big money that are doing these things, they're just hiring people and having influence on direction. Sure, they might get credit for being a "visionary" or "innovator", but the people doing the real work rarely make the big bucks (or get much credit, unless they're very lucky).
But, in fact, the very people with lots of money who are influencing these developments are themselves influenced: often by people with not nearly as much money -- such as relatively poor authors, or other "real" visionaries.
So you could also say something like: "Want to have some really significant influence on the world? Write a book." It doesn't take a lot of money, and it's not certain that you will be influential, but if you have some really great ideas you might stand more of a chance of changing the world by writing than by trying to compete with the likes of Gates or Musk for the really big bucks.
Of course, lots of other cultural artifacts have also been hugely influential. How much of our modern world has been influenced by Star Wars or Star Trek, or by mathematics -- which really makes all those Mars journeys possible in the first place. How many people have been influenced and inspired by music? All of the arts really feed in to and greatly influence each other.
So there are plenty of ways to influence and change the world apart from being rich -- and many of them are even more effective, as these other means could influence many generations of people -- poor, rich, and otherwise.
I think it's a bit more complicated than that. Books can't travel to Mars - they can't even move - and yet without the influence of creative works such as books, far fewer people would even want to go in the first place. The relationship seems symbiotic rather than confrontational.
That being said, if Bill Gates wants to cure polio, he should spend his money on immunisations rather than artist workshops and publishing houses. Someone in the chain between thought and deed needs to apply human effort to the problem, and when the effort required is massive, the easiest way to coordinate it is by buying it.
I make low 6 figures doing network security. If I hit 200k, literally the only thing you could do to motivate me would be to treat me well and give me interesting things to do.
Fortunately, my employer already does both of those. I just wish it wasn't almost a requirement to leave in order to get a decent raise.
Note: I'm not expecting to make $200k in a technical role as a security analyst any time soon, its just hypothetical.
I see $100k USD being thrown around as a large salary in discussions, and compared to the median US household income it is. But people have been using this figure as a convenient anchor point in arguments for decades now, and if you look at inflation, $100k should not be considered a high salary today, and if you are a programmer you should demand more:
I used to think that, but now I make $500k and I think you could convince me to work on something I like slightly less well for $700k. Once I achieve financial independence, it will be different, but until then, changes that significantly impact the distance to that goal are motivating.
The interesting thing though is that you wouldn't really want to entice me that way, because I'd guess you'd get a worse product out of me. So there are different types of motivation that are important. The motivation to make a choice, versus the motivation to work hard on a choice.
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.
Hi downvoters, I don't understand why 'retirement' isn't an appropriate term, please help me grow my understanding by commenting instead. Thanks, --falsedan
1. That's not the common meaning of 'financial independence' no matter how much you repeat it, it's really closely-associated with the coming-of-age rite when you no longer rely on financial support to survive
2. I can't imagine being independently wealthy & keeping my day job but I suppose it's conceivable!
1. How do you explain that your view is being downvoted, and mine, upvoted? This is the common understanding in the circles I run in. I think you may be the one whose definitions need an update.
2. For example, all employees at the VP and up level at Google, Facebook, etc., make more than a million dollars are year. It doesn't take long at this level of compensation to have more wealth than any reasonable person could spend. Yet they still work, normally not to satisfy an unmet financial need.
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?
I would say yes. Well, maybe not dependent but not independent.
Some people with large incomes are still up to their eyeballs in debt, or at least not living within their means.
IMO financial independence requires living within your means until the point where you never need to work again to continue that lifestyle for the rest of your life.
Hi downvoter, I'm not going to increase my understanding of 'time != money' without some explanation. Could you please comment so I might learn something? thanks, --falsedan
I'm not the downvoter but I'm pretty sure the original poster meant that a financially independent person no longer has to exchange their time for money, ie they can choose whatever they want to do with their time and no longer have to work just for food/shelter/etc.
With some very basic math and assuming an expenditure of about 120k in today's value per year (millionaire remember), taking into account 4% inflation and a 4% return rate, you need about 20MM+ to settle down with 100% financial independence. I made a bunch of assumptions like you need this for 50 years and 120k lifestyle today will be worth much more like 1.2MM in 50 years and so on. As much as I would love to be proven wrong on this math, 500k per month puts you very far indeed.
Money may not motivate me in small numbers, but this goal of financial independence (what they call fuck you money) is definitely a motivator.
Yes, I have been following him for some time. He inspired me to begin saving even harder than I was already naturally predisposed to. My savings rate is nearly eighty percent these days, so we're quite close. This calculator gives me a year based on rough numbers, which is about what I had calculated. I will probably engage in the standard one-more-year thing to make things even more certain.
My number's based on cost of living. At $100k, in the area I live in, I have a good standard of middle class living but I still have to work hard to save, go on vacations, and make major purchases.
At $200k, I could maintain the same standard of living, easily pay off all of my student debt in about a year (without sacrificing anything), easily buy a house, buy a new car outright after saving excess money for 3-4 months, pay for my kid's college education outright, and save a ton of money for retirement. At $100k, I constantly have to pick and choose which of these things I work on.
If I made $200k, living in the same area, I might not be wealthy in the grand scheme of things, but I sure would feel like it. About 70% of the negative stress in my life comes from anxiety about being able to afford everything my family will want and/or need eventually.
Interestingly enough, I have already lived through the experience of having my salary double almost overnight. I used to live in a relatively low-cost area, but I was still getting paid about $25k below market. Then I moved to a higher-cost area, and took a more advanced position at a company that paid a little more than market rate. Went from below $50k to just under $100k. The impact on my life was significant. I went from feeling poor and helpless to finally being able to breathe. I used to be depressed and angry all the time because I could barely take care of my family and my household. Now I'm more or less happy.
18-year-old self would be comparing with entry level, rather than senior level, salaries. If you account for both that and inflation, the right question is "how would your 18yo self feel about $45k/y?"
Would you now take 200k job but kind of okay project not very interesting? That is what we are talking. BTW, You can make 200k soon depending on how good you are in the security domain
The situation I'm in now is that I'm very good at several aspects of security, but I'm not an rock-star at any of them (although in many ways I feel just a step or two away). In a way, being a jack-of-all trades is very useful for my current role, which involves a lot of incident response type things: network forensics, host-based malware forensics, log analysis, etc. I get great performance reviews in a company full of talent, but its hard to accurately assess yourself (and like many I struggle with impostor syndrome). This year, I'm focusing on getting better at programming and going beyond the basic aspects of reverse engineering. Basically, I'm trying to find a path to specialization in order to progress. I could probably easily land a job making ~50k more than I do now, but I'm planning on attempting to negotiate for a decent raise the next time I get promoted. I like everything else about the company,so if we could come to some kind of an acceptable situation I would love to stay.
However, if someone offered me $200k today for a full-time position at a private company, I would almost certainly accept. I can deal with less than ideal or even boring work as long as there's a good work/life balance that lets me keep working on projects at home. And even if the work isn't glamorous, I'm the type of person that enjoys all kinds of work, physical or mental. Before I got into security I did everything from shovel half-rotten fish into buckets for a living to running network cable. As a caveat, if its a government/contracting job, it would probably have to be $300k (which is probably unrealistic). There are aspects of government work that are interesting, but from my experience the negatives almost always outweigh the positives.
I'm gonna go out on a limb and say that some 85% of people reading this do not have 1 million in the bank, let alone a few. So that's just worrying about a problem that most are never really going to encounter.
That being said, motivation is a complex thing, and most people are motivated by many different things at once. Money itself may not be the only motivator, but it's definitely one of them, and an important one. Trying to skimp out on it is a recipe for failure.
- the one meaning "the stuff that will get you involved";
- the one meaning "the stuff that you'll want to get".
The first one will drive you enthusiasm to work, your professionalism, the quality of what your produce and your loyalty. It's a "motor" kind of motivation, and money can't buy it. Only a sense of purpose can.
The second one is just bound to the reality of life : you need money for food, shelter, logistic, health, hobbies, then a growing family, and an evolving lifestyle. This will make you choose something. It's more a "motive" kind of motivation.
You can get a lot of people with only the second one. You can get some people for some time with only the first one. But to get the best, and for them to stay, you need a balance of both.
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 up your mind!
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.
"Many of them are already rich" -- I think lots of behaviors change once someone is rich. You can choose what to work on, you can walk away from bad situations. I dont think the behaviors of the rich apply to the non-rich.
Anecdotal, but when I left my last big law firm (to start my own company), I was making around 3/4 million dollars per year. None of my peers who left ever went to jobs that paid more--they all went "in house" for a lot less money and maybe some moonshot equity, but mainly they sought a less horrible lifestyle.
Having dialed back to 3 days/week, I believe that "how much time I'm willing to spend working" is a somewhat orthogonal question to "what motivates me during the time when I'm working." Not entirely orthogonal but also very far from the same question.
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".
Yes it does, actually. Not because it leads to any noticeable quality of life improvement, but because at those levels it becomes a pissing contest with other high-earners. Some rich people care a LOT about making more than other rich people in their social/work circle.
Yes but if you have the intestinal fortitude to check out of those pissing contests you can really create your own life. That is, if you are lucky enough to be at level to start.
I did note that many of my peers where COMPLETELY freaked out by my decision that I mentioned above. My choice to step back from the game freaked them out. No over aggression but a mix of outright confusion as well as somewhat confused jealousy.
To your point, I remember 50cent (the rapper) talking shortly after he made $400 million on his Vitamin water investment.
He said he ran into some Coca-Cola executives after they purchased the company and he was sort of crowing about all the money they had just made him. I guess two of the executives were like, "Huh, $400 million, not a bad start Curtis. Let us know once you get in the $800 million or even the billion dollar range."
He said it made him a little more humble, but at the same time, he said there's a sort of pissing game when you're at those income levels with people like that.
Hmm, at first I thought: If you have a billion dollars you can get 50,000 people in a stadium screaming your name. I mean, you could get me to scream your name for $20k easy, and I don't even like stadiums that much.
But, ok, that's a fairly prohibitive expense. Musicians can get that and have the audience pay for the privilege. They can do so repeatedly, which certainly qualifies as some kind of asset.
So call it a type of capital, a social capital, maybe... ability to muster crowds?
It would be interesting to see a graph of how much "muster" varies across a given population.
Follows Zipf's Law like everything else, I'd wager. Most people would have to buy an audience. A tiny few can get audiences to pay. There's a growing middle-class sitting at the zero-pivot--emerging indie bands and popular academics--they pull in audiences, but only for free.
Once we formalize all that we'll of course need some sort of exchange rate for muster, USD:MST, before we can get down to the important work of comparing the relative capital of a superstar and the super-rich.
Take note young econ grad students: the to-be-written papers on the liquidity of muster are the stuff careers are made of!
Yes and no. If you're unhappy with your job, having a big bucket of money thrown at you is unlikely to make you suddenly happy at your job. But raises also usually come with the recognition that you're doing a good job; that the company is wanting to keep you around. Not getting a raise in 2+ years gives the impression that the company doesn't care about you, and what you do doesn't really matter.
And yet isn't it just slightly odd how software consulting rates were the same 17 years ago as they are now? And there was all that inflation in the interim...hmmm...
as the other reply said, supply has increased non-linearly while the number of companies has increased linearly. Even with all the companies out there, you're getting lots of mergers and acquisitions and consolidation.
In terms of consulting, credit/loans are harder to get for smaller businesses and most software ends up being targeted toward large businesses, and so do most consultants.
It's harder to be a small business than to be a large business; therefore it's hard to pay more and since you're already as efficient as possible it's harder to get those rates up.
(Also there was wage suppression by Google and Apple and other big companies for around 5 years, that's a HUGE damper on the maximum salary which also translates into a damper on consulting rates.)
+1 anecdote, had 4 years as embedded systems engineer, quit to be a junior django dev making way more. If there's one fucked up industry that's called Embedded systems :D
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.
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 employer a second chance if they screw up the first one (Hint: if your raise doesn't at least cover inflation + offset the costs associated with your annual medical benefits cuts -- I consider it a pay cut, and I'm not going to be happy. In fact, getting a "Congratulations on your (1%) annual raise" email from corporate HR is probably not going to get the reaction you were anticipating).
I actually had one employer that gave me an 8% raise at the two-year mark. So they got another year out of me (until the mass layoffs came).
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 to go), and the PM said strictly that it would depend on my performance. That happened on a Friday, and I quit the job next Monday. My conclusion: never accept verbal agreements again..
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.
Verbal agreements rarely work out. Even among well-meaning parties, it's far too easy for someone to misremember or misinterpret the agreement. If you do enter a verbal agreement, write it down in an email and send it to the other party. That way there's a paper trail to clarify any disputes.
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.
The agreement with the CTO was to have a raise after 6 months. There was no previous agreement of a specific number, just a "raise".
After 6/7 months I went to talk to one of the founders about that specific issue, i.e. that I was promised a raise, and that I wasn't expecting anything below 20%. I came to know during the time that I work there that was being paid well below my coworkers (and the market rate in general for my position).
Their response was that I would only get raised on the next company review (still some months to go, but note that I was promised a raise after 6 months), the raise would be around 2%-3% (note that I said to them, quite direct, that I was being underpaid, at least 20%), and the project manager even said that I would be subjected to a performance review before they would give me a raise.
So they failed me at least with 3 things: no raise after 6 months as agreed (still some months to next review), would not raise me enough so I would still be underpaid, and I could even not get raised because I would have to be reviewed first..
Basically, I quit on the next working day, and one or two months later, most of the team got laid off, so there was bigger problems on that specific company..
Expecting employees to stick around when they find out they're 20% behind peers is also ludicrous.
I can't imagine the majority of managers fixing it and I can't imagine an employee doing anything other than finding a new job. Everyone loses this one.
He was expecting to be paid the same as his colleagues and the industry standard. That sounds like a fair expectation, irrespective of the percentage raise that implied.
Then he shouldn't have taken the low offer to begin with. That's on him at least as much as the employer. He's free to leave of course, but complaining about it after the fact?
I don't feel complaining about being paid under market rate is a strange thing. 20% raises are not ludicrous in any way, if this prevents an employee from leaving.
I didn't say he should have stayed, he did the right thing, but going in at x and expecting x+20% in six months is ridiculous. If he was expecting that then he should have got that pecific number negotiated up front.
The company has more information than the candidate when making salary offers. If they negotiate in bad faith, that burns up goodwill. It's their decision to do it! I've never heard someone ask if their salary is in-line with the other members of their team (adjusted for performance/experience): it's a given assumption that _the company isn't going to pay you massively less than your peers_.
Plenty of companies do, because HR does the negotiations & their motivation is to minimise employee costs. If you're not negotiating with the recruiter/hiring manager, you're likely to get a poor offer.
If you read the statement again, it sounded like they gave them a review after 6 months, but told them the raise would come after a year review. So he did have a review, but no raise.
Always leave a paper trail. E.g. after your verbal agreement you should have sent an email to the CTO (and others) summarizing the contents of the agreement.
Well, I did try talking to my boss at my last job, but he replied with "Sorry, I tried to get you more, but corporate wouldn't budge."
Which was probably an honest statement. Raises were centrally managed by 'Human Capital Management', and individual supervisors had pretty much zero say in the size of their employees raises.
As it happened, my departure was ill-timed (for them) and I'm pretty sure it cost them far more than it would have to just give me a decent frickin' raise (seriously, 3-5% and I would have stayed).
It's funny to be in this situation where interest rates are low, and returns on investment are usually low (at least for consumer accessible investment vehicles), but then businesses and the owners/executives are making bank.
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.
Love of the job, professional pride, curiosity, ambition, etc. are why I work in this field. Money, perks and career progression are why I work at this company.
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.
Money is a factor - weighted differently for different people.
E.g. person A generally wants to be happy in their job, but needs $100k to maintain their lifestyle, pay the mortgage, not worry about bills etc. If paid $100k they wouldn't jump ship.
Later, person A has a baby. Well guess what happens next.
Person B also wants to be happy in their job, but they also want to invest in stocks for an early retirement. They get an offer at a stressful trading job paying 3 times their current salary. They think it is worth it in the short term so they go for it.
Money isn't a motivator for doing better work. Once people are being paid 'enough', the studies showed increasing pay lowered performance.
The part they didn't mention is that money is a major factor in choosing who you do the work for. Of course you are going to haemorrhage employees if they get a much better deal to do the same job for someone else.
Companies that pay more will get to pick the best people from the talent pool, who may perform worse due to being overpaid, but the company still comes out on top because underperforming top tier employees still perform better than the remainders working for a 'standard' salary. And thus wages are driven up in industries where talent is at a premium.
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.
I quit when I had a better offer elsewhere because I felt undervalued by my employer.
I went from a local company with overseas offices paying poorly for my niche into an international company paying nearly double without even flinching at negotiation. That was eye opening to me as a signed up 'what matters is autonomy, mastery and purpose' guy. Not only that but the company matched salary raises to a local unions pay negotiations which meant that my until then roughly cost of living raises suddenly doubled. I also ended up getting an annual bonus bigger than I was contractually entitled too as well. All in I more than doubled my salary which let me do things like rebuild our family home.
I realised that not only did I feel my work wasn't recognised at the previous company but they were actively taking the piss. I also realised that whilst I didn't do anything I did for the money reward (I genuinely felt this bonus scheme would have been as worthless as others) the actual monetary demonstration of value in raises and other rewards really makes your value apparent in a manner very meaningful to the rest of your life.
I still think the competition for bonuses and raises can lead to all sorts of degenerate behaviour from the POV of the business and stress on an employee but I really see the absolute value of monetary rewards now when they appear out of your expectations.
It seems to me that the money question confounds two factors. As I recall (possibly incorrectly), studies find that increased pay doesn't correlate with increased work / productivity. That's probably true. If I'm working on a problem that I want to be working on, it would take relatively large swings in pay to motivate me to work more or less hard than I otherwise would.
And yet I'd bet that money does have a significant correlation with retention and satisfaction. Perception of insufficient raises will certainly lead to dissatisfaction. Offer of meaningfully more money at a different job --> who wouldn't want that if the work is otherwise as good?
raise doesn't always mean money. It's counterintuitive, but from my experience, it's more the act of being passed up or not cared about than the actual $$ count that matters.
Like, you might still make less money than you would elsewhere, but if your employer at least makes an effort, people are much happier.
I suspect that the key thing is making an employee feel valued or valuable (based upon the employee's motivations) rather than making them happier.
An employee that feels as though they are not valued by the company or feel as though they company does not feel that their contributions are valuable will probably see their job as insecure and will look for better opportunities.
Being motivated and not quitting are very different things. I like the work I do, and I work hard at it. However, other places have interesting problems too, and if I could find a place that pays me more than I make now, I'd jump.
> I've been to management seminars where they downplay the importance of money, saying that employees are mostly motivated by other factors
Classic example of telling stories that the audience wants to hear?
WHAT management consultant will tell CEOs that they need to pay their employees high enough salary to the point that they won't leave for another company?
Don't mean to be a cynic, but it's all about money.
"By the time it gets to a counter-offer stage, it's often too late." - so true!
Also made me think of the Netflix HR/culture document [1] - pay the max you would be counter-offering for an employee right off the bat, don't wait unitl you actually have to give a counter offer (which would probably be too late anyway)
That gets into a murky definition of "performing" though. Performance is often limited by other people, many of which may be long gone. It can also create a culture of people unwilling to admit mistakes. It doesn't take long for these behaviours to produce massive amounts of technical debt.
The policy doesn't seem to be working for their UI team either.
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 agreed to when I joined."
Perfect example of cutting of your nose to spite your face IMO.
It's just the money. For a 30% raise there isn't a job I would stay at. It's fine by me for a company to be just one more 2 year step on the ladder.
A bit of experience, a bit of pedigree, a bit of pay bump, and a good job while it lasts.
I'm not going to stop switching until people stop offering me 30% raises. Once equilibrium is reached I'll start evaluating them on merits, but the jobs that pay better have also been better in all dimensions. At least that was how it has gone during my career progression.
The problem with salary and market rate is that the current rule is: in order to get a raise you need to change jobs.
In many companies (I worked in one) you need to get CEO approval to give somebody raise more than 5% ("CEO approval" means - no way). But there was a trick: you can re-hire valuable employees after a year with 20% to 50% increase in salary. And they will not even lose 401k matching or other benefits they have accumulated.
And system seems to work well: re-hired employee would be much more experienced and they came back like nothing happen.
Not sure what you mean by rule but that has not been my experience. I'm unsure how up the ladder my raises have been but I've gotten 16%, 18% in the past year and half.
Maybe CEO approval just means the company is belt-tightening.
I would guess it's common for a team to be in a disfunction environment but stick together for the sake of the team and friendships. Once one person leaves though, everyone then leaves in succession.
I'm in that position now. If a PM who I highly respect leaves I'll probably leave as well because I wouldn't want to deal with the stuff he protects us from. I also wouldn't want to abandon this guy, so I probably won't leave as long as he is here.
I've been through this once and it was enough for me.
In retrospect, I should have left way earlier. I urge you to consider whether, by staying, you are just enabling the sort of disfunction you dislike :)
Camaraderie is great and if there is actual friendship/respect then the relationship will continue even after you quit.
> Camaraderie is great and if there is actual friendship/respect then the relationship will continue even after you quit.
I can attest to this. Half my team has left over the past year, the other half all seem to be (and talking about) actively looking. We all still manage to get a poker night together every few months, as well as having a quite lively group text chat.
Yep, been there. To be honest, nothing much changed when I left. The org was big enough that by leaving I wasn't doing catastrophic damage, so I had no leverage there. By staying, I was just allowing them to bleed me dry a bit longer. Took me too long to realise that and get out.
Employees, Bersin explains, are appreciating assets that produce more and
more value to the organization over time, which helps explain why losing
them is so costly.
And yet in a ten year career in the valley, I've really only gotten significant raises when changing companies. I've had lots of bosses try to talk me out of quitting, but none with at least $15k attached to that request.
I think when you see the entire world ignoring your wisdom, you probably need to question the wisdom.
This is a great point. I've seen companies that are great and companies that are horrible about substantially increasing the compensation of their top performers. It makes a huge difference and should be an easy decision to make if companies take the time to think about it.
> It's a good idea to try to quantify the cost of losing an employee.
Yes! But this is difficult. But beyond the easily computable costs (e.g., $x that the company spends on recruiting / total number of people recruited per year) there are significant costs that involve a lot of assumptions to quantify (e.g., effect of drop in team spirits). Those estimates often get discounted by bean counters exactly because they are based on some personal guesses.
In general I find the article somewhat disappointing: it refers to the need to quantify the cost of turnover and IMO does little to help people get defensible estimates. On the other hand it goes on (and on) on why it is important to keep employees. No contention, but I thought the goal was to get to this conclusion by independent, numerical means.
On 2: Ok all, why do diagonal promotions occur? I understand the issues around promoting when there is no room in the org chart, but I don't understand the issues with pay. Employees will shop the resume around, that is expected these days. And as the article points out, there are massive costs to a firm when those good employees up and leave. So why not just give a raise? Maybe you don't have the budget, I get that, but you certainly aren't going to have the budget when those key employees up and leave either. You will be forced to pay the market rates for good engineers upon hire and then also suffer the downtime and on-boarding time. What am I missing here?
HR is a fucked up profession with lots of weird thought processes.
Raises are subjective judgements, which are scary things. Word gets out that raises were given and everyone is looking for something. Also, HR often doesn't trust the managers. Is the manager rewarding good work? Or building an empire?
Incentives are always aligned with short term goals. If you give someone a raise, you're fucking up some KPI the HR guys cares about. If an employee quits and the company spends more, its either the former employee or the manager fault.
Well put. Not to mention the disconnect between market rate ("the average of salaries for similar positions in Market X") and individual rate ("the amount you can get in Market X given your skills and experience").
Fundamentally, you are worth whatever someone will pay you. If you can negotiate an offer for 20% over market rate, congrats, that's your personal market value. Conversely, if you're currently paid 20% under market value and can't find another job, the same applies.
I've noticed that many companies fail to recognize this, and hire two types of employees 1. Good ones who take the job for some reason, realize there are better options and leave shortly and 2. Bad ones that stay
Rinse and repeat, and the cycle gets shorter, and the problems get bigger
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 was hoping that the article would get into this kind of business model. There are also a lot of low-end jobs where a good employee is simply wasted because their business model relies on cheap workers who quit after a few months. There is a sub-economy where these people travel on a carousel of new jobs, never having to deal with boredom setting in. So there's always plenty more of them, and you never have to match their 401(k).
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.
I do see that a lot. I see it on the other side too, however. Employees that jump ship without doing the right research, and finding out the raise wasn't really worth it, for various reasons.
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.
We buy market data from two sources every year. They get their data by collecting it from the companies that buy their data. Obviously that's not perfect, but it's more objective than most other methods.
That hardest part is figuring out which generic categories match our specific positions, since every company in the survey has different definitions and requirements.
Our employees seem pretty happy with the results, and we've had very few offers rejected for salary range reasons. So it seems like we're pretty close. If anything, we're probably a bit above our local market.
Do you use The Employers' Association by any chance?
I used to work for a company that used their data. The reports they provided did not have any technical positions included. There was no transparency on their process.
Comparing those numbers to the Bureau of Labor Statistics, the salaries for anyone doing technical work were below market rate. https://www.bls.gov/bls/blswage.htm
BLS data is transparently provided and very specific.
I worked at a place which got the salary data, and then announce that everyone was underpaid and that salaries would be adjusted 'soon'. When is 'soon'? Why, it's inaudible mumbling.
The article states: "Multiple studies show that while under-compensation can definitely contribute to employee churn, over-compensation won’t make up for a bad workplace."
Does anybody have links to these studies? The under-compensation seems to be in wide agreement but I am curious as to what studies have been conducted that show that the preferred points (Growth, Impact, Care) are preferred over higher compensation.
> By the time it gets to a counter-offer stage,
> it's often too late.
This is something that has to be taught to all HR / management people. I can't count how many times I've seen this during my career; it was one of the most, if not the most, recurring tendency everywhere I was working.
Truth be told, HR/managers are people like everybody else: when things go smoothly, they don't proactively analyze if somebody is unhappy (but they're not showing it right now). However, I think this should be a part of their job.
HR/management really can borrow some wisdom from us the programmers: we not only ask why something isn't working, we also ask why something is working. They should adopt similar approach and never get too comfortable and automatically assume people are the happiest they can be simply because they are quiet.
I just left a job that was paying about 85% of the current market for an offer way above the market. However, if I had been at or just above the market average, I would not have gone looking.
I've often been shocked at how a theoretically rational profit seeking business will happily throw millions down the drain rather than compensate an individual based on value. Ultimately I've concluded that although they may be greedy, most businesses don't make rational profit seeking decisions. They make decisions that stroke their ego, and sometimes their ego can't accept the value that certain employees bring to the table. They are just coders right? /s
Nowhere was this more apparent than at my first big job. The company's first full time engineer was still working there, and still extremely essential to the operation of the business. (It was actually bad that he was so essential, but that's another story). This company made several hundred million dollars a year. Online. And almost daily this individual used their tribal and historical knowledge to keep the site up. He left. I doubt he was paid a million dollars, but I have no doubt that paying a million dollars to keep him around would have been a cost saving measure.
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.
This comment isn't against you, because you are right that a lot of companies calculate this way. It is also undeniably short sighted. Because value in this case is literally in the eye of the beholder. If they were worth at least million and mission critical, market rate was 100k-200k. Pay 400k-500k. Guarantee employee knows they are valued and no other company would match because the person isn't worth as much to the competitor.
There was an article a few years ago about a Google employee. Competitor interviewed, offered what they thought was a great package around 500k, found out candidate was making 3mil at Google. Failure on the recruiter part not getting that info beforehand, but can understand more senior folks not discussing till the end.
yes, exactly the one. personal note, it's bad form to have published the candidate's salary. at the 3 mil level, not even Google has many employees making that. probably narrowed it down to a dozen or so people since they even mentioned that it was a "programmer" (which I interpret as high IC level).
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 managers I have ever worked with seemed able to even tie their shoes properly.
Meanwhile, I had to sit through an all hands meeting where some dingy broad got a 5 figure award for cooking up an Access database that some asshat manager used for like a week!
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.
> 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.
This sounds like every tech company ever. I used to excitedly watch youtube videos about the extreme measures startups took to scale to "massive" amounts of traffic while undergoing huge growth spurts.
Now I just kind of roll my eyes and think "Yeah, obviously a message bus in a relational databse using rails wasn't the optimal solution for scaling that app".
In the real world emergencies happen. The unexpected happens. But the truth is that if you actually prepare and have been around the block once or twice, they don't happen all that often. And when they do, there's usually a handy little knob to ameliorate the issue.
Well, "they just didn't know," is different than, "they were directly warned and didn't listen because they though they knew better." In the latter case, working all weekend to fix the mistake isn't necessarily praise-worthy.
I don't think I agree; I think that your examples show that it's important to know your employees' accomplishments, and to praise people accurately. Public praise matters; I like it when my managers and coworkers acknowledge good work I do, and it's nice hearing that my coworkers are doing good work, too. Why should we all labor in the shadow? Why should we be afraid of praise?
I don't think that this means that we have to labor in the shadows. Typically people notice pretty well who is competent, who puts in effort and who actually gets work done. In a healthy organization that also will get acknowledged organically in all kinds of ways. High performers will be asked for help by others, people insist that they will be invited to meetings or that their opinion will be asked on certain matters.
We shouldn't be afraid of praise but of awkwardly praising a subset of people in a all hands meeting where we might miss people who did good work and now will feel that their work isn't acknowledged. This also easily gets political. You have one manager who judges their employees wrong and their reports who did questionable work get praised at the all hands. Maybe they were recommended for praise although there manager knew they didn't really deserve it but needed done if their reports to also be mentioned.
It frequently also leads to a hero coder culture. Someone who stays up all night and implements a feature that management wants really badly in a hard to maintain and buggy fashion will get praised at all hands. People who end up fixing the mess won't. Very frustrating for people who fixed it. Obviously this will kick off a feedback cycle leading to more and more all nighters producing crappy code.
Sounds like your manager didn't do his or her job. As a manager of people, you have to own these kinds of metrics and be prepared to wield them whenever the "value of an employee" question comes up.
There are multiple ways for firms and employees to value contributions. The 'how much can the employee command on the market' method that you outline is a commodity model of valuation, and it seems to have been a poor fit for this situation on the part of the firm, since the employee held enormous non-commodity value to the firm.
Employees aren't worth the market value of their job title on the open market. They are worth the cost of replacing their contributions to the company's bottom line plus any gap in contribution that the market is unable to replace. Often early employees (regardless of objective skill level) hold tremendous non-commodity value to fast growing companies. It is ultimately very costly behavior to think of these employees as commodities.
[late note: the bottom line oriented valuation method that I outline, can of course be negative. If we take the gp's assertions as given, then the employee in question is clearly worth more to the firm than his/her 'commodity' price on the market. But it is possible for the commodity value to be higher than the value of a given employee, even once the transactional turnover costs are taken into account. In such cases, it may be preferable to allow the employee to seek his/her fortunes elsewhere. I note this to make it clear that this sort of valuation model doesn't unduly bias the firm toward retaining low or negative producing employees. By the same token, it frees the firm to recognize value in excess of 'replacement value', as any reasonable worker productivity model should]
Is it rational for a a company to risk losing $1mm+ while training his replacement rather than pay him more? Assuming he would have stayed if they offered him more money. And if the same situation repeats itself with his replacements, maybe it's a matter of $1mm every (say) 6 years, which would justify paying $166k more per year (surely enough to keep him on indefinitely).
Interesting. Often I hear that you are only worth what value you can provide in any one role. Like for me working in bioinformatics, I am paid much less than if I took my skills to pure tech. There is only so much value my skills can provide in this industry, but if I went to tech my skills could provide 3-4x the value.
Despite being able to show I could get paid much more at a tech-company, my company will not pay me more. However, you are claiming that the opposite is also true. You are not paid based on the value you can provide to an organization, but based on how much you COULD provide to other organizations.
So I think you are wrong. These are all just attempts to justify why companies are averse to highly paid employees, but will happily spend 10x a key employee's salary on a new machine or on a month worth of consultants.
I think the point is that line of reasoning is pretty self-defeating, because the guy left. But if they had paid him in line with what value he was bringing to the company, he might not have.
The free market hypothesis is that these companies will ultimately be unable to compete with companies that preserve that value.
What has yet to percolate into the consciousness of a lot of managers is that "web delivered" products are essentially constantly drawing on the engineers who keep them running and available. When they do, they will be able to more accurately assess revenue at risk based on personnel and losing valuable people will become a good reason to let a manager go.
Software development has some “special” traits that are not necessarily covered by this analysis.
For one thing, you can’t just measure what a developer has done; you need some sense of how easy maintenance is going to be. Given two brilliant solutions that required an extraordinary developer to create, one may be an indecipherable mess and the other may have been built in a way that makes typical maintenance tasks very straightforward. From the outside they may look the same but the cost difference is huge.
Some people are really good at writing solid code, and replacing them may mean introducing headaches that you didn’t have before. Also, a particularly weird bug may cost your team tremendous amounts of time (and possibly more), and you may not have the right people to deal with that quickly.
Also, “cost of hiring” probably isn’t referring to the cost of having a really bad hiring staff. If those people are not doing a good job of filtering résumés or otherwise finding the right people, or if they leave good candidates dying on the vine due to slow response times, there is a big cost. It is extremely important for companies to look good from the outside to attract candidates.
Maintenance (and maintainability) are definitely key questions for software development.
The first point, about keeping people who write maintainable code, I agree with 100%.
The second one, about keeping codebase expertise, seems complicated.
On one hand, we all know there are weird bugs and edge cases best handled by knowing the code intimately. What's 20 hours of QA and engineering for an unfamiliar team can be a 5 minute tweak for the guy who wrote the method, even with clear code and good tests. Weird bugs do happen, and just knowing that what it isn't can help with finding some awful probabilistic issue.
On the other hand, I wonder if this is a "controlled burn" kind of issue. Everyone's heard of systems that work fine for 20 years and then explode as soon as the expert leaves. Normally that's a design and maintainability issue, but at some level we're talking about bus factor here. You're definitely trading fewer crises for worse crises, but I don't know the rate on the tradeoff.
Obviously unplanned turnover is still a huge issue, but I do wonder what the right balance is on "just knows how to fix it" versus "institutional knowledge is safer than personal".
It's possible to write bug or enhancement requests against the system if it takes too long for new contributors to come up to speed. I do this from time to time.
It's important to remember that specify specific exit criteria, like "it should take one command instead of fifteen to add a new request to the XYZ endpoint."
I'd venture to say this is not limited to software. If you design some hardware, or mechanichal machine or whatever, future maintenance const is a key factory. Just look at e.g. cars.
Here is a strange thing I have seen: Turnover is bad for a company overall, but good for H.R. HR teams are more important the more there is a need for recruitment. I have seen them be the part of the company that says "we are a team like a sports team, not a family," implying churn is OK. That is good for their productivity, particularly if their workload is on boarding and "culture" as well as recruiting.
Turnover is not always bad by any means. Often a company accumulates (bad hires, acquisition, good apples going stale) people who would be better off gone for everyone's sake.
True, but how often is the guy producing awful, half working, over complicated code "good" for the company? That person is typically the last to leave. And we've all seen management reward the firefighter that is also the arsonist, they are never "good" for the company, but the company thinks they are.
Doesn't the military have a deliberate policy of ensuring high turnover environments by relocating all of its staff every couple of years?
Maybe there is something to be said for preventing people from getting too comfortable, or even establish trust relationships outside of the designated bureaucratic channels.
Exactly. In this article I was focused on regrettable turnover (when you wish the employee didn't leave), as opposed to non-regrettable turnover, which is very healthy.
In my experience, almost every time someone leaves someone regrets it and someone doesn't. The manager who supervised the person will usually say it is for the best. I have worked with great managers who clean house and terrible managers who drive people away, or treat them as scapegoats. In either case it may be identified as healthy turnover.
So HR has a vested interest in doing a poor enough job in hiring people that will not stay long (i.e. churn) so that they maintain their need to hire more people? Interesting thought.
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 day. When you lose someone, you end up with an empty position for at least a month, as even if you do hire someone right away they have to quit their current job and leave notice.
There could be a disconnect between hiring managers and HR and upper management. The hiring managers you know probably do understand the cost of replacing a lost employee and how hard it is to hire. The HR department that's actually in control of this, and of salaries, doesn't, or just doesn't care.
I have a theory that a lot of the terrible mismanagement we see with modern American corporations comes directly from HR. Didn't W. Edwards Deming say that companies would be better off just eliminating their HR departments altogether?
People are humans and human nature nearly always leads to political behaviour (i.e. behaviour not optimal for the organization as a whole) in any organization of more than a few people.
Pressed on all sides, dealing with unreasonable demands from above, and with internal competitors and naysayers to fight off, even the most enlightened manager may sometimes behave in ways that treat people as easily replaceable.
I agree. I switched to working remotely for a Silicon Valley division of a major company, and I definitely feel the difference in appreciation. I'm not by any means treated as a special snowflake, but rather I very much feel it's a two way street, I feel lucky to work there, they feel lucky to have me.
This is in stark contrast to when I was consulting in LA/OC, where I was constantly having to justify my not so high hourly rates/fixed bid projects.
If a 'mission that matters' is important enough to spend 3 paragraphs on, but salary only deserves a single dismissive paragraph, then why exactly do we never have enough teachers?
If people really had such a great preference for mission over compensation, then the public sector, and non-profits could be 'selective'. I mean, the public and non-profit sector usually don't even have to do bullshit PR vanity projects (cough Microsoft-Google-Facebook-Amazon-Exxon-GE-BP) to convince people that they are not evil on balance. Still, it's the massively profitable companies that have the luxury of selectivity, not the ones with the best missions.
Like so much in 'management methodology' literature, there is such a willingness in this article to prefer anything (like small ungeneralizeable psychology studies[1]) that confirm clearly absurd magical beliefs (e.g. there are easy cheap scalable alternatives to compensation for retaining employees) that it is impossible to take the advice therein remotely seriously.
I feel like the tighter your developers are with each other, the higher the impact of turnover. I personally know from experience that when my high performing friends move onto bigger and better things, they constantly encourage me to go with them or find something new myself. Entire teams can end up leaving through a sort of snowball effect.
The article goes out of its way to mention 'regrettable employee turnover' which is a polite way to identify the group "people who left you wanted to stay" vs "people who left and you are happy with it." However, that requires that you also understand the impact of an employee on the organization.
There are people who have been "let go" because their manager had no idea what they actually did, and that caused a huge impact on the organization overall. There are people who have been "retained" because their manager felt they were key to the success of the group/project but didn't realize the toxic impact they were having on the organization.
These are the "inverted" cases where you really need to keep the person having high impact and manage out or move the person who is creating stress on the rest of the team.
Another example in this vein is Henry Ford's $5 work day – wages dramatically above then-market rates prompted outrageous enthusiasm and loyalty from workers.
>The $5-a-day rate was about half pay and half bonus. The bonus came with character requirements and was enforced by the Socialization Organization. This was a committee that would visit the employees' homes to ensure that they were doing things the "American way." They were supposed to avoid social ills such as gambling and drinking. They were to learn English, and many (primarily the recent immigrants) had to attend classes to become "Americanized." Women were not eligible for the bonus unless they were single and supporting the family. Also, men were not eligible if their wives worked outside the home.
This article missed the fact that the cost to the company in trying to keep the employees who will leave every year might be greater than the cost of losing them. For e.g., in the example given in the article, the company loses 1.57 million due to employee turnover. However, who knows how much the company might have to spend to keep those employees from leaving. The cost would be high because the effort spent on employee retention is spread over all employees, even those who won't leave. Hence, even a small expense per employee, might end up costing more than the cost of losing certain percent of them.
That's a valid point, that it could potentially be more expensive than it's worth. In other words, it is possible to spend too much on trying to make your employees happier.
I wasn't trying to argue that the optimal amount to spend on employee turnover is infinite, but I do think most companies dedicate less than the rational/optimal amount of effort on it.
I totally got your point. I am playing Devil's Advocate to those who are recommending going to the other extreme and spending enormous amount of money for employee retention, including a significant increase in per employee salary.
Assume that the company loses 10 employees and loses $1.57M as a result.
This means that it would be better off if it spent less than $157k on each employee, on the average, to prevent the loss.
$157k is a yearly salary of a senior developer, or maybe the entire yearly cost of a senior employee outside the hotbeds like SV or NYC.
We can cautiously suppose that a company could retain the employees with measures less drastic than paying them twice as much for a year. OTOH paying them +20% for 5 years would be the same. So, if they can keep hiring cheaper developers, even while losing productivity due to onboarding issues, maybe they can actually save money!
The money that they can spend per employee is 1.57M / # total employees. Not, 1.57M / # of employees who left. They don't know who will leave. Their cost of good initiatives will be spread over all their employees.
While yes, it's important to quantify, I'm not sure the article is that actionable for most startups, or even businesses that don't have large HR departments. Most software development managers I know would just pull estimated values out of their ass, instead of actually creating a formal model for tracking things like "cost of onboarding and training".
It sure would be nice to have some case studies, perhaps? Has anyone worked at a place that tried to calculate required onboarding costs for high-skill, salaried positions? I've only ever seen places just create random budgets for online programs like Linda.com, but these programs never seemed relevant to the positions that, well, were the most significant to the company, to put it nicely.
I just suspect unless you had a quant in an HR department, this sort of thing just will never get calculated correctly.
I commented above, but I don't think you need to get this perfect. What you want is a baseline number, even if it is low. If that number is $X to replace this person (fully, including estimates of rampup time and lost productivity), and they want a raise of $Y, and $Y < $X, the rational employer will give the raise. Heck, the rational employer would give $X-1.
Now, is the world full of rational employers? Nope.
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 multiple ways and time to full productivity within any new team/project generally is 3-6 months. Average empployment time at any single company in the tech industry is now 18-24 months. It makes more sense to pay 3-4x for most work, rather than have to deal with HR, education, and retention overhead.
No, but they can adjust much quicker than regular employees. Adapting to new environments is a skill that can be trained. Freelancers who do a lot of different jobs for different companies have a lot of training.
But you are missing the point. The idea is to have a small core of highly skilled devs who can chop complex tasks/systems into bite sized chunks that can be outsourced.
I've seen it work, but it's very difficult to pull off. I've seen it fail more often.
As a dev employee turned freelancer, the onboarding is still there but much different. Much more focused on learning just enough to work on specific tasks vs poking around for a week or two and figuring out the whole system. I'd say I spend 1/4 the time onboarding as a contractor vs as an employee.
With freelancers you can just stop paying them after day 1 if they don't and try another. In some verticals of software development there is a ton of supply.
> Average empployment time at any single company in the tech industry is now 18-24 months.
The devs who are ok with this have no idea how bad this will bite them later when they're older and nobody wants to employ them. Hope y'all are good at saving money.
Tech, for better or worse, is moving so fast that working on the same codebase for 5+ years is likely to greatly reduce your marketability for a new job. While that loyal individual may have been very valuable to his former employer, much of what he learned/specialized in is specific to that company and provides little value to someone else.
One can always blame the individual for not spending his free time staying current, but not everyone is at the life stage where they have the ability/energy to end a 10 hour day at work by coming home and spending another few hours coding.
Personally, I agree with you someone with a string of 18 month jobs would put me off as an employer. However, if you find yourself stagnating in your job, you must move on.
It really astounds me when I see resumes for people who spend 6-12 months at a job before moving on. Sure, where it's contracts, that's often out of the individuals hands and I pay no attention to the duration.
A remarkable number of these are people who have taken full time jobs and moved on soon after. The only thing that results in is the resume going in the trash.
I think it's a different generation. Companies don't invest in people, people don't stay long term in companies. You can also get big pay jumps early in your career - spending 2+ years in your first company is just pouring money down the drain.
I'm kind of in this position. My first job out of university was a 3 month contract, then I had a 9 month "permanent" position which ended when they closed the office, then two back to back contracts at the same place spanning 12 months, and now another permanent position which I am 6 months into. Before this most recent position I had the most interest of potential employers to date.
I suspect you are right in one sense - as you get further into your career the length of time you stay in positions should be longer, or you should move into contracting. I certainly plan on staying at my current position for at least 24 months. But I feel like 5 and 10 year tenures will start to be the exception rather than the norm.
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.
employee turnover is why enterprises rarely build any useful software and have to buy startups to more forward
projects or operations with fragmented continuity because of turnover contribute near zero additional value and existing value decays quickly over time - each time a role is replaced more knowledge is lost - to the point the project is permanently on life support
paying people more and more to stay isn't enough - you also have to remove all the oxygen stealing layers of bureaucracy to create a bearable working environment - but that isn't usually possible in an enterprise as everyone senior tries to avoid being responsible for anything which almost always leads to more management and compliance layers until someone soils the bed over cost
I take my hat off to Microsoft over the last couple of years - what those guys (Scott Guthrie?) have done with .NET, SQL etc. appears, from the outside, to have reversed that trend
Years ago I left a great job that I loved working at a Fortune 200 company because I had to make a family-related move. The company I worked for also had a significant presence in the city I was moving to. My boss gave me a referral to someone there with the logic that I was already known to be a reliable contributor, and at the very least it would be lower risk for the company to move me there rather than hire a new unknown person.
I got several job offers in the new city including one from the same company. Problem was...the company was 20% lower than the best of my other offers! Apparently there was a company policy limiting how much of a raise could be given, so they straight-up couldn't compete. I got the distinct impression that I could have taken a job with another company, then come back 6-12 months later and gotten a much higher offer. Basically mandated turnover. Talk about an awful policy.
One place I worked couldn't possibly give me the pay rise I asked for, yet they are now using 1 and a half employees to do my job (one full time, one part time).
Money I'll give you, but the vast majority of software is not going to be "interesting" or progressive. There are tons of major corporations doing "boring" work.
Much like raises, Devs can get strung along by promises to clean up or rewrite in the future, or often by their own thinking that they can slowly fix things (been down that road enough myself).
Also, it makes it possible to get to the point where you are retaining people for 2+ years. If there is a lot of turnover under that then it's probably the companies fault.
There was a guy who tried that, he wrote code so bad that no one else could understand it. In the end, the company fired him and hired someone else to rewrite his code from scratch. It's not worth it, just write good code.
I wonder if taking such a view can be short-sighted. While it is true that employee turn-over can be costly, perhaps that is also one of the ingredients that make tech successful. The valuable employees that you hire have gained their skills at a number of other companies and the employees that have left are contributing to other companies. While this isn't on your balance sheet, it is contributing to the tech community as well. I wonder how you would go about quantifying this.
From my experiences, those in tech for the most part have come from the tech community and stayed in the tech community. Employee mobility is creates a mixture of ideas and also lets individuals to be trained in certain disciplines by those that are most capable at it. In return, companies get employees that were well trained by other companies thus increasing the value of tech companies as a whole. I wonder if this becomes a trend and companies try to close their borders tighter (somewhat reminiscent of U.S. politics right now, huh?) that companies will see short term gains, while the entire industry would suffer in the long run.
I've never heard of a manager being reprimanded for high turnover. I would guess that this metric has to bubble up to the level of investors' analytics to make a difference in management performance assessment. Perhaps Glassdoor sees a market for such a product. The stakes are high enough that it would move the needle at an organization like YC.
Since a lot of tech companies employ young talent (relative to other industries), this video by Simon Sinek on "Millennials in the Workplace" can be enlightening:
I've seen this talk before, and he makes a ton of assertions mostly backed by often-repeated cliches rather than data (e.g. participation trophies). This is a really good talk I've seen posted in response to this very video before, so I'll post it again.
Sinek relies on a healthy heaping of anecdotes and unfounded assertions to shake his fist at an ill-defined generation just like _every previous generation has done since the dawn of time_. O tempora! O mores! indeed.
What is the cost to companies of letting demoralized employees stick around to wait for options/RSU/bonuses to vest? I'm in the process of leaving a company now where I've been watching this happen for the better part of two years, and I keep wondering how much more productive and successful we could have been if those people had been let go and filled with some new, motivated recruits.
In my business I do try to minimise turnover for almost purely emotional/moral reasons. It's good to have a team that as close to friends as possible. The technical cost of staff turnover is minimal because systems and processes should be designed in a way that anyone can leave without impact to the business for obvious reasons (illness, relocation, family circumstances)
In my studies of history, I'm finding this current thrust of individuals as stores of wealth over firms and nations to be quite interesting. Back in the colonial period, everything revolved around national wealth. The crown alone sanctioned and funded expeditions, chartered corporations, and fought wars.
Over the last few centuries, power gradually shifted to the firm, then to markets, and now finally to individuals. Used to be, you had to pick the right parents, pick the right industry, and hope the political winds don't shift against you to earn a decent, livable life.
Now, all you need is intelligence and mental fluidity to weather hardships. No longer is a job loss catastrophic. Just about anyone born in a Western nation can, if he decides to, gain an education and make his way up the social ladder.
This is completely unprecedented from a historical perspective. The ability of the not-well-off to earn and enjoy the benefits of education was far and away only the province of the extremely gifted, the John Rockefellers of the world. It's easier than ever for someone born dirt-poor to become a CEO or politician.
Soon the world will turn completely on merit. It'll be fascinating to watch the way our societies go next. Certainly affluence will continue to push out into the developing world. But how will modern Western societies evolve? Will we conquer aging and produce scions of unimaginable ability? Death is the ultimate limiter of the power of individuals.
>Now, all you need is intelligence and mental fluidity to weather hardships. No longer is a job loss catastrophic. Just about anyone born in a Western nation can, if he decides to, gain an education and make his way up the social ladder.
What Western nation do you live in?
Because in the Western nation I live in, both job loss and education can be catastrophic for many people.
If it's catastrophic, you're probably not taking advantage of the resources available. I know many people who feel pigeon-holed or trapped simply because they are unaware of how insanely easy it is to drop what you're doing, go to school, and get hired elsewhere. There are so many resources and options out there if you're willing to weather the change. Most people are just too scared to consider it and they misinterpret that as a problem with the market itself.
> I know many people who feel pigeon-holed or trapped simply because they are unaware of how insanely easy it is to drop what you're doing, go to school, and get hired elsewhere.
There's quite a few people that you don't know then. The median personal income in the US is $30,240 for all workers over age 15 with income.
That means half of all working people in the US have less than $30k a year in income. What percentage of your "know many people" sample make less than that?
I made about 22,000 a year when I quit my full time job in retail, went back to school, and now I make far more. It's hard being poor, but much of the struggle is brought on by a lack of awareness. I know this because a huge portion of my sample were people that worked alongside me. There is a lot out there to help people get from the bottom up, they just have to look for it in the right places. With an income as low as mine, I paid essentially nothing for college and qualified for all sorts of assistance and tax breaks. It can be done, you just have to be willing to work hard at it and get the help that's already there.
How were you able to pay for your education, housing, utilities, food, health insurance, and other necessities when you quit your job to go to school? The way welfare works in most states is that you need to work a set amount of hours before getting any assistance.
There is very few "no-strings attached free government money" for people living below poverty.
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 baseline goal is to improve their financial station, they should be going after trade skills, not full college. Trade skills could get them a stable career, a car, and solid resume. After that, they can consider going further, but there is definitely a path.
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.
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.
These questions are still from the perspective of someone with money, education, and options. Imagine you're talking to someone below the poverty line, not your friend with a comfortable but unsatisfying job.
> Willing to move for the job?
Sure, how? What if I have no money and no credit? You're asking me to come up with a down payment on an apartment, transportation to another city, some kind of rental van or moving service, and a landlord who will take someone like me.
> Willing to work in a related field until you can get into your first choice?
Related field? I can't get anything above a minimum wage job. My "first choice" would be literally any job with predictable pay and hours.
> Willing to switch jobs 3 times in the first 5 years?
I'm working three jobs right now so my family can eat.
Again, this is not a contrived example. Millions of people live like this.
My buddy from down south moved to Silicon Valley, with his wife and newborn baby. They camped in the State Park in a tent while he interviewed. It took moving, taking an entry-level job and doing whatever was asked for him to succeed.
That's great, but you're essentially describing the last steps of a successful transformation. How did he get the skills and experience to qualify for entry level jobs in Silicon Valley? How long was he interviewing, and how did he pay for food during this time? Did he have any savings or fallback plan in case he couldn't get a job? If so, how did he prepare that? How much did it cost to get his family to the valley, and where did that money come from?
I'm not sure if you've ever been without money based on your questions. If you aren't making much money to begin with, there is no fallback plan or savings. It doesn't exist, whether you are going for a better job or not. You save just enough to do what you need to do and you risk everything to go. You pay for travel the cheapest way you can, usually on a bus of some sort. It's not a clean process.
I'll readily admit that there is a certain reprehensibility to those who insist that the poor are just lazy. Most poor people aren't lazy, they're just depressed, misinformed, and without hope. They are fundamentally disadvantaged.
However, that's not what is being said here. No one is contradicting that. What I'm saying is that despite their disadvantage, there are ways to escape. It's never going to be easy for them. They are never going to go from poverty to a six figure developer job, but no one in history has ever jumped directly from the bottom to the top without an extraordinary event or miracle.
John Adams said - "I am a soldier so my son can be a shop-keeper and so his son can be an artist."
The American dream is not overnight wealth. It's not wealth in even a single generation. It's the chance for more. Someone who is very poor can make the most important leap of all fairly easily: unskilled to skilled labor. They can go from the guy with nothing to offer to the guy who can run electrical wiring or the guy who can fix pipes and they can do this very cheaply in a very short amount of time. From there, they can earn enough to either go to college themselves, teach themselves, or pay for their kids to get ahead.
I really feel like you're ignoring the substance of most of my comments. Friction is often a factor for people who have the means to do this, but do you understand that many people don't have the means? At the absolute minimum, your friend needed several hundred dollars in the bank, and a resume that included more than high school and minimum wage jobs. I think you're taking this for granted, but it's nearly insurmountable for, again, millions of people in America.
> Now, all you need is intelligence and mental fluidity to weather hardships. No longer is a job loss catastrophic. Just about anyone born in a Western nation can, if he decides to, gain an education and make his way up the social ladder.
This still only applies to people who have picked the right parents and the right industry.
I get that the historical trend is toward social mobility and equality, but "all you have to do is decide to succeed" is still an idealistic cliche, and probably always will be.
My money is on general AI and widespread sustainable fusion reactors before that happens. The crab mentality is strong, and those who can merely talk a good game will do their best to maintain the status quo.
- Salary is VERY important for most engineers - most of us are making incomes where making a little more money might be important. That said, consider the incentives that drive the decision makers (managers) who decide on salaries. The managers who say "Yes we can keep these people but no we don't have to pay them more" are much more likely to succeed than the ones who say "I need more money for the same headcount". Unless you've put serious institutional capital in the bank in the form of previous success, you won't win this argument with higher management. (By the way, I agree with the general premise that turnover is really expensive and most companies, including their upper management, don't take it seriously).
- I think that this is another example of the "Hard to measure, easy to measure" divide in otherwise scientific management that defines most companies today. It is easy to measure salary. In fact, you are usually required to report it in most accounting schemes. Measuring cost of employee acquisition is easy for some parts only. On-boarding and training costs can be relatively well quantified. But what about lost productivity? What about lost innovation? Trying to measure "what isn't there" has never been easy. Managers will make decisions based on the hard data at hand. There is almost never enough hard data to justify greatly increasing their salary, and most managers won't go out on a limb (lacking hard data) to try and justify this. I can't say I'd do differently in their situation...
It depends on a lot of factors including but not limited to: age of company, industry, how much tribal knowledge this person possesses and estimated ramp time. As an example: a 2 year old tech company, an employee that's been around since inception and possesses a lot of quirks and random information in their head, it's going to cost the company a shit load of money.
The problem is that these costs don't explicitly show up anywhere or get improperly allocated. It's not like HR comes in and says to someone that has a P/L "we're allocating a whole bunch of expenses to you because of turnover"
Notice the article starts by talking about the mythical "superstar" instead of the more common "sub-performer" or "redundancy". Employee turnover FUD is all over, when existing dysfunction is ignored. I interview and hire in 3 days. I run through tens (if not hundreds) of interviews and the commensurately large resume pool. 1-2 hours every day, is barely a chore for the ability to hire someone smart and interesting to work with day to day who has the skillset we need. Employee turnover is expensive in tech, but not replacing specialized workers that are no longer useful, is worse for both sides.
I agree completely with this. I was writing about turnover of high performing employees, which is crazy expensive. Turning over low performers is valuable and important for companies to do.
This is one of those areas that would be amazing for academic study, but I doubt any company that would tell an interesting story would allow it. I would love for someone who had started with studies of tribes with an oral tradition to go into a software company and study how they work. I get the feeling that several similarities will show through even in a company that expects good documentation.
> Anthropologists don't commonly live in mud huts, that's just a prejudice.
Where the heck did that come from. I'm well aware of cultural anthropology and have worked with a couple on academic grants. I just think those more familiar with oral tradition of tribes would have an amazing time in a software company.
Also, just for your information, not all tribes live in mud huts, that's just a prejudice.
The mud hut was intended as a sideswipe at the fairly large HN faction that believes that only the hard sciences are a worthwhile pursuit and that the arts and humanities are for penniless losers. Also, Nigel Barley's Notes from a Mud Hut. (Yes, now I realize how the previous comment can be misunderstood, sardonic groans don't translate into written text.)
I probably wouldn't have taken quite the offense if I wasn't actually typing this from a reservation in the US. My first vision of tribal is a bit different.
> When a capable person on your team wants a role bigger than her past experience, do you give her a shot or do you simply hire someone with more experience?
This spoke to me the most as I've seen this happen at multiple places. lack of growth seems to be the most common reasons for employees leaving (apart from stagnating salaries) and that's something a company can easily invest in
Reading this made me think - maybe the work to live / live to work personality divide isn't actually real. Maybe people are divided more into two categories of those who are pessimistic that work will help them achieve self-actualization, and those who are optimistic about achieving self-actualization at work, or perhaps have already found it at work.
Does a work-to-live kind of person become a live-to-work kind of person if his workplace is genuinely happy? Does he forgo attempting to find happiness at work because he doesn't have the expectation of finding it, thus being more likely to accept poor work conditions in exchange for higher salary?
There should be some further study in this area. I'm skeptical of the quoted costs of replacing employees and missed productivity ie.. 213%. Not to mention replacing poor performers can often be a value gain not loss. About cost, we're talking managers' time - but maybe hiring is most valuable thing they can be spending time on, other than directly generating revenue.
I think this is predicated on the idea of replacing an employee who leaves of their own accord, that you would have preferred to hold onto. Not of one you let go, or are glad to see leave. Basically, just the employees who are worth the amount you are paying them, or more; not those who are worth less.
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.
I have more than one data point about that. Amazon burns people out at a furious pace. It seems like long term survivors strike a balance between not caring and careful career management. People find a way to live in such systems, and until they face a crisis, like attracting people after their explosive growth phase, companies can hold on to bad practices for a long time.
I don't know how Amazon succeeds if those rates are true. My experience has been that any company with a turnover like that is going to have a ton of tech debt.
I think you missed the forest for the trees - the author clearly states that a quantitative approach to understanding turnover is needed and that everyone knows "The costs are high, so try to minimize turnover. It's simple." but it's hard to take action on a qualitative indicator. He then presents what appears to be a reasonable equation to estimate how much turnover costs a company.
The "quantitative approach" here is hardly worth considering. Maybe I should write for Medium. I could just as easily throw a bunch of crap together and call it journalism and provide some random numbers and factors and call that an equation!
I wouldn't consider Medium "journalism." I've written an article or two on the platform, but I don't recall anybody doing any fact-checking or editing on my work.
Medium is just a place where people go to say stuff, and should be valued accordingly.
* 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 once at a company where an entire (small) team slowly left after a single person departed. Perhaps any individual's departure could have been handled without too much of an issue, but the loss of entire team and all the institutional knowledge contained there was quite damaging to the company.
* The article mentions some tips for retaining employees and I think they are spot on. But I don't think it emphasizes the importance of salary enough. A lot of employees jump ship because of the higher salaries they can get when they move around. Meanwhile, the original company they left will likely have to pay market rate to get someone with similar experience (and none of the institutional knowledge), so they would have been much better off if they would have just bumped their employee's pay to market rate in the first place. By the time it gets to a counter-offer stage, it's often too late.
EDIT: The article briefly mentions the importance of paying market rate salary, but I missed this sentence when I read it over the first time. Updating my second bullet accordingly.