3 ms·

Yeah sorry, I was writing it on the fly right before a meeting and just dumped my thoughts out. I think I was thinking something like this: If you spend money

Yeah sorry, I was writing it on the fly right before a meeting and just dumped my thoughts out. I think I was thinking something like this: If you spend money internally on promotes, you'll have less money to compete in the market for new hires. Therefore you might get some indicators that things aren't working, for example you might lose out on desirable candidates in the short term. Also retention might be a lagging indicator, because maybe some of your people already have their foot out the door, so it may look like people are continuing to leave in response to the old incentives before they realize things have changed. Ideally you exist in an organization where everyone is on the same page about your strategy and anticipates those kind of negative indicators, but maybe understanding is fragmented and a bunch of stakeholders push back when they see those negative signals.

flavius29663 5y ago
> you'll have less money to compete in the market for new hires Why would that be the case? We already established that the company would pay industry level salaries to new hires and existing employees alike. Moreover, because you have less turnover, you need to hire less, so you have less wasted money on hiring and training. All in all, I just fail to understand why companies don't value existing employees more. I think it's the fact that they take advantage of people's aversion to change and interviews. They rely on people NOT going to interviews.
- planet-and-halo 5y ago
  It's all relative, though. If you increase salaries for retention, it has to come out of some other pot. Maybe that isn't your new hire pool, but you're going to see a negative metric of some kind somewhere. Now don't get me wrong, I still think it's better in the long term. But my point is that you'll get some kind of negative signal by pulling back funds elsewhere, and a firm at that point has to have the discipline not to freak out and stay on course.
  - flavius29663 5y ago
    If you're correct, and it costs more money to keep people, then we are wrong: it's not cheaper to go for stability. Maybe it's like in the prisoner dilemma: you can't go lower than the market peak because no-one will come to you, even if you offer more on average than the industry average. This way, we reward the job hoppers with the peak salaries. Peak salaries means over time the average goes up too. I guess it's how free markets operate.
    - planet-and-halo 5y ago
      It depends on how retention interacts with other variables. I would argue that you can make exponential gains in things like product quality over the long term by retaining a critical mass of experienced personnel, which translates to higher earnings etc. But yes if you view personnel costs as a line item in isolation and on a quarterly basis, you might not see those effects.

flavius29663 5y ago

> you'll have less money to compete in the market for new hires Why would that be the case? We already established that the company would pay industry level salaries to new hires and existing employees alike. Moreover, because you have less turnover, you need to hire less, so you have less wasted money on hiring and training. All in all, I just fail to understand why companies don't value existing employees more. I think it's the fact that they take advantage of people's aversion to change and interviews. They rely on people NOT going to interviews.

planet-and-halo 5y ago
It's all relative, though. If you increase salaries for retention, it has to come out of some other pot. Maybe that isn't your new hire pool, but you're going to see a negative metric of some kind somewhere. Now don't get me wrong, I still think it's better in the long term. But my point is that you'll get some kind of negative signal by pulling back funds elsewhere, and a firm at that point has to have the discipline not to freak out and stay on course.
- flavius29663 5y ago
  If you're correct, and it costs more money to keep people, then we are wrong: it's not cheaper to go for stability. Maybe it's like in the prisoner dilemma: you can't go lower than the market peak because no-one will come to you, even if you offer more on average than the industry average. This way, we reward the job hoppers with the peak salaries. Peak salaries means over time the average goes up too. I guess it's how free markets operate.
  - planet-and-halo 5y ago
    It depends on how retention interacts with other variables. I would argue that you can make exponential gains in things like product quality over the long term by retaining a critical mass of experienced personnel, which translates to higher earnings etc. But yes if you view personnel costs as a line item in isolation and on a quarterly basis, you might not see those effects.