5 ms·

Companies are happy to compete with each other in the market for people when hiring, but they forget that they are still competing with the market to retain the

by sime2009 5y ago

Companies are happy to compete with each other in the market for people when hiring, but they forget that they are still competing with the market to retain their existing employees. The situation is even dumber when you consider the costs incurred by on-boarding new employees and the knowledge lost when employees leave.

alecco 5y ago
More like the CEO/CFO are only expected to have a churn rate similar to competitors. Above: raise comp. Below: slow down. Source: I was involved in comp decision meetings in previous jobs. They don't say it explicitly but the expected rates lead the discussion. Blame investors and boards whose goals are never past a year or two. This is the same in startups and in large companies.
- hammock 5y ago
  >More like the CEO/CFO are only expected to have a churn rate similar to competitors. Above: raise comp. Below: slow down. Honest, curious question- What exactly is it that's wrong about that? Doesn't that exactly reflect the point that "they are still competing with the market to retain their existing employees"?
  - alecco 5y ago
    It's a path to mediocrity.
tootie 5y ago
I'm dealing with this now. We pay low end of the market as a policy because of the nature of our business. We lure employees with "good vibes" of a positive mission and a low stress environment. After a rough year we've had to freeze raises in the face a a feeding frenzy for talent. Hiring is still done at market rates but retention is locked in to the low end of the 2018 market. I'm stuck pleading to HR that if we don't give out best people at least another 10% we'll be spending +25% on a backfill.
freewilly1040 5y ago
It’s weird.
VLM 5y ago
Which employees? Its like the old claim that only 10% of the money spent on advertising is worth anything but nobody can figure out which 10% it is. So the corporation knows that 99% of the employees showed up for work the day after their $10K paycheck, and the replacement for the guy who quit won't show up for less than $11K. Well, if they give no one a raise next payroll will cost 99 x 10 + 11 = $1001K, and if they give everyone a pay raise then no one will quit but payroll will cost 100 x 11 = $1100K. That's an extra $99K and that's gonna cost some HR exec her bonus. So you can guess what strategy they pursue. Companies also have a political/cultural/religious view that individual contributors are instantly interchangeable cogs and they have MASSIVE cognitive dissonance if you point out thats not true and the recruitment and onboarding process are staggeringly expensive, so everyone job hopping all the time would cost like 25% the total labor budget so you're paying (in the example above) $1001K but who cares whats outgoing, you're only getting at most $750K of work out of them when they're hopping vs you'd get $1100K of work out of them if they didn't hop. And you're financially in the long run far better off paying $1100K for $1100K worth of work output than paying $1001K for $750K of actual work output. But like I said that goes against their political/cultural/religious views so they'll slap hands over their ears and chant "nah nah nah" when you point it out. You get more of what you measure, and cutting productivity by a hard to measure 25% is worth it in a corporate Dilbert sense, if it saves an easy to measure $99K.
- sime2009 5y ago
  > Which employees? Tech companies known damn well which employees they should retain and which ones they are happy to have leave.
  - surajrmal 5y ago
    I would argue that meritocracy in the workplace doesn't lead to happiness. Job security does however. There are still aspects of meritocracy but someone performing at 2x of their peer will be er get double the pay, and that's okay. The division that would result from that situation leads to unhappiness and therefore lower productivity. Pay tends to only double for every order of magnitude of increase in impact instead.

alecco 5y ago

More like the CEO/CFO are only expected to have a churn rate similar to competitors. Above: raise comp. Below: slow down. Source: I was involved in comp decision meetings in previous jobs. They don't say it explicitly but the expected rates lead the discussion. Blame investors and boards whose goals are never past a year or two. This is the same in startups and in large companies.

hammock 5y ago
>More like the CEO/CFO are only expected to have a churn rate similar to competitors. Above: raise comp. Below: slow down. Honest, curious question- What exactly is it that's wrong about that? Doesn't that exactly reflect the point that "they are still competing with the market to retain their existing employees"?
- alecco 5y ago
  It's a path to mediocrity.

tootie 5y ago

I'm dealing with this now. We pay low end of the market as a policy because of the nature of our business. We lure employees with "good vibes" of a positive mission and a low stress environment. After a rough year we've had to freeze raises in the face a a feeding frenzy for talent. Hiring is still done at market rates but retention is locked in to the low end of the 2018 market. I'm stuck pleading to HR that if we don't give out best people at least another 10% we'll be spending +25% on a backfill.

freewilly1040 5y ago

It’s weird.

VLM 5y ago

Which employees? Its like the old claim that only 10% of the money spent on advertising is worth anything but nobody can figure out which 10% it is. So the corporation knows that 99% of the employees showed up for work the day after their $10K paycheck, and the replacement for the guy who quit won't show up for less than $11K. Well, if they give no one a raise next payroll will cost 99 x 10 + 11 = $1001K, and if they give everyone a pay raise then no one will quit but payroll will cost 100 x 11 = $1100K. That's an extra $99K and that's gonna cost some HR exec her bonus. So you can guess what strategy they pursue. Companies also have a political/cultural/religious view that individual contributors are instantly interchangeable cogs and they have MASSIVE cognitive dissonance if you point out thats not true and the recruitment and onboarding process are staggeringly expensive, so everyone job hopping all the time would cost like 25% the total labor budget so you're paying (in the example above) $1001K but who cares whats outgoing, you're only getting at most $750K of work out of them when they're hopping vs you'd get $1100K of work out of them if they didn't hop. And you're financially in the long run far better off paying $1100K for $1100K worth of work output than paying $1001K for $750K of actual work output. But like I said that goes against their political/cultural/religious views so they'll slap hands over their ears and chant "nah nah nah" when you point it out. You get more of what you measure, and cutting productivity by a hard to measure 25% is worth it in a corporate Dilbert sense, if it saves an easy to measure $99K.

sime2009 5y ago
> Which employees? Tech companies known damn well which employees they should retain and which ones they are happy to have leave.
- surajrmal 5y ago
  I would argue that meritocracy in the workplace doesn't lead to happiness. Job security does however. There are still aspects of meritocracy but someone performing at 2x of their peer will be er get double the pay, and that's okay. The division that would result from that situation leads to unhappiness and therefore lower productivity. Pay tends to only double for every order of magnitude of increase in impact instead.