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Two thoughts: * It's a good idea to try to quantify the cost of losing an employee. If you at least understand what basic costs you'll incur, such as cost of h

Two thoughts: * It's a good idea to try to quantify the cost of losing an employee. If you at least understand what basic costs you'll incur, such as cost of hiring, training, etc. it'll give you a basis for realizing the importance of minimizing turnover (perhaps you'll even conclude that turnover isn't a big deal in your case). But it's very hard to quantify some of the largest costs such as employee moral. I was 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.

matwood 10y ago
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.
- salarycommenter 10y ago
  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.
  - battlebot 10y ago
    The biggest thing the US needs is a management overhaul.
    - ajmurmann 10y ago
      What and from which countries in particular do you think the US can learn?
      - willhslade 10y ago
        Germany, Japan, and the UK. Managers not MBAs is a good book that summarizes the problems with the current management culture. Basically, by having a class of people who have never done the grunt work of a particular job, you ruin what the Army calls "Unit Cohesion".
        megablast 10y ago
        Sure, Japan. Where you work 6 days a week and don't leave before the boss does, at 10pm. The UK was no different to the US.
        ajmurmann 10y ago
        Maybe there are things one could learn from Japanese managers other than the work hours?
  - geofft 10y ago
    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.
- dtnewman 10y ago
  Thanks. I edited my comment accordingly.
salarycommenter 10y ago
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.
- hfsktr 10y ago
  Why/How did you know you would be leaving after 2 years? Just the money or was there a specific reason? Sorry, just super curious.
  - salarycommenter 10y ago
    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.
Balgair 10y ago
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?
- rbcgerard 10y ago
  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
  - cmdrfred 10y ago
    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.
    - Balgair 10y ago
      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.
      - andruby 10y ago
        The AI will need to learn people skills if it has to do the job of an IT Manager.
Buttons840 10y ago
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.
- mildbow 10y ago
  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.
  - irishcoffee 10y ago
    > 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.
  - jamiepenney 10y ago
    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.
henrik_w 10y ago
"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) [1] http://www.slideshare.net/reed2001/culture-1798664 http://www.slideshare.net/reed2001/culture-1798664
- JamesBarney 10y ago
  This is the best candidate ad I've ever seen. This makes me really want to work at Netflix.
  - rennir 10y ago
    Yeah I just read their HR document yesterday and I really like how the company culture is described on paper.
  - thomasrognon 10y ago
    Wow, same here. I relate to every point, which has never happened with any "culture and values" brief before.
  - softawre 10y ago
    Same with their presentations at conferences. They hire really good people, pay them a ton (300k+), and fire them when they stop performing. It's a good way to get great people, if you can afford it.
    - flukus 10y ago
      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.
ptero 10y ago
> 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.
- mooreds 10y ago
  At the least you can set a lower bound, right? And if that number causes you to quail, that should be food for thought.
jedrek 10y ago
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.
- std_throwaway 10y ago
  Did they quit because they had a better offer elsewhere? Or did they quit because they increasingly felt they've become stuck, left behind and not valued highly by their employer?
  - Swizec 10y ago
    Money is a good way to tell me I'm valued.
    - PeterisP 10y ago
      And lack of money is a good way to definitely prove that you're not valued.
  - meheleventyone 10y ago
    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.
x0x0 10y ago
To your second point: I read claims like 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.
- jackaltman 10y ago
  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.
- draw_down 10y ago
  I don't see any reason why the world can't be wrong. Especially when what you mean by "the world" is really management in tech companies.
thecardcheat 10y ago
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.
- mooreds 10y ago
  http://www.ted.com/talks/dan_pink_on_motivation http://www.ted.com/talks/dan_pink_on_motivation (I know it isn't a study, but this was the one video I remember mentioning that more money doesn't equal more motivation)
tlogan 10y ago
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. So I do not know...
- dmourati 10y ago
  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.
grigjd3 10y ago
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.
pdimitar 10y ago
> 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.

matwood 10y ago

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.

salarycommenter 10y ago
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.
- battlebot 10y ago
  The biggest thing the US needs is a management overhaul.
  - ajmurmann 10y ago
    What and from which countries in particular do you think the US can learn?
    - willhslade 10y ago
      Germany, Japan, and the UK. Managers not MBAs is a good book that summarizes the problems with the current management culture. Basically, by having a class of people who have never done the grunt work of a particular job, you ruin what the Army calls "Unit Cohesion".
      - megablast 10y ago
        Sure, Japan. Where you work 6 days a week and don't leave before the boss does, at 10pm. The UK was no different to the US.
        ajmurmann 10y ago
        Maybe there are things one could learn from Japanese managers other than the work hours?
- geofft 10y ago
  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.
dtnewman 10y ago
Thanks. I edited my comment accordingly.

salarycommenter 10y ago

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.

hfsktr 10y ago
Why/How did you know you would be leaving after 2 years? Just the money or was there a specific reason? Sorry, just super curious.
- salarycommenter 10y ago
  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.

Balgair 10y ago

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?

rbcgerard 10y ago
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
- cmdrfred 10y ago
  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.
  - Balgair 10y ago
    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.
    - andruby 10y ago
      The AI will need to learn people skills if it has to do the job of an IT Manager.

Buttons840 10y ago

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.

mildbow 10y ago
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.
- irishcoffee 10y ago
  > 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.
- jamiepenney 10y ago
  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.

henrik_w 10y ago

"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) [1] http://www.slideshare.net/reed2001/culture-1798664 http://www.slideshare.net/reed2001/culture-1798664

JamesBarney 10y ago
This is the best candidate ad I've ever seen. This makes me really want to work at Netflix.
- rennir 10y ago
  Yeah I just read their HR document yesterday and I really like how the company culture is described on paper.
- thomasrognon 10y ago
  Wow, same here. I relate to every point, which has never happened with any "culture and values" brief before.
- softawre 10y ago
  Same with their presentations at conferences. They hire really good people, pay them a ton (300k+), and fire them when they stop performing. It's a good way to get great people, if you can afford it.
  - flukus 10y ago
    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.

ptero 10y ago

> 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.

mooreds 10y ago
At the least you can set a lower bound, right? And if that number causes you to quail, that should be food for thought.

jedrek 10y ago

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.

std_throwaway 10y ago
Did they quit because they had a better offer elsewhere? Or did they quit because they increasingly felt they've become stuck, left behind and not valued highly by their employer?
- Swizec 10y ago
  Money is a good way to tell me I'm valued.
  - PeterisP 10y ago
    And lack of money is a good way to definitely prove that you're not valued.
- meheleventyone 10y ago
  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.

x0x0 10y ago

To your second point: I read claims like 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.

jackaltman 10y ago
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.
draw_down 10y ago
I don't see any reason why the world can't be wrong. Especially when what you mean by "the world" is really management in tech companies.

thecardcheat 10y ago

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.

mooreds 10y ago
http://www.ted.com/talks/dan_pink_on_motivation http://www.ted.com/talks/dan_pink_on_motivation (I know it isn't a study, but this was the one video I remember mentioning that more money doesn't equal more motivation)

tlogan 10y ago

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. So I do not know...

dmourati 10y ago
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.

grigjd3 10y ago

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.

pdimitar 10y ago

> 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.