The differential is to avoid hostaging. Recruiting is n=1: overspend b/c the need is immediate and well-defined. Retention is n=M: underspend b/c the risk of

The differential is to avoid hostaging. Recruiting is n=1: overspend b/c the need is immediate and well-defined. Retention is n=M: underspend b/c the risk of everyone threatening to leave once someone successfully threatens to leave and gets a pay boost is incalculable. My guess is that companies do spend extra on retention when confronted with the thread of someone leaving, so long as that threat is quiet and implicit. Likewise, incoming salaries might be suppressed to the extent that overpaying if published could stir resentment.