5 ms·

What incentive would an employee have to leave company A just because company B also offers the same "nice" salary and work environment. The advantage of offeri

What incentive would an employee have to leave company A just because company B also offers the same "nice" salary and work environment. The advantage of offering the training in the first place is you GET the employees to come to you, then as long as they're compensated they will have no reason to leave after training is complete. It's a win-win for the employee and employer. You for some reason seem to hold the idea that after training, some other company can just come in and offer more money. Why?

yummyfajitas 11y ago
Scroll up for the arithmetic of how company B can pay more money to the employees.
- vectorjohn 11y ago
  The arithmetic is wrong, unless it's just not fully explained. "there is nothing stopping another employer from offering $90k in salary after training is complete" Sure there is, and many people have pointed out the flaws in this comment. If $90k is the market rate, then there is nothing stopping the company that provided the training from paying that too, and there would be no more advantage to offering $90k. In addition, as others have pointed out, there will still be some ramp up time and training at any new company. If your point is that the first company can't expect to under pay their employees after providing training, well, that's obvious and nobody suggested it.
  - yummyfajitas 11y ago
    So to keep the same set of employees, a company must pay $20k for training + $90k for employees = $110k. Alternately, a company can just pay $91k and let someone else pay for training. Do you not see any reason why a company might prefer to be in the second category?
    - vectorjohn 11y ago
      No, I don't see any reason why a company would prefer to be in the second category. If you're in that category you'll be trying to hire employees for the same salary they're already being paid by an (intelligently run) company, in addition to having to retrain them for your company.
      - jasode 11y ago
        >I don't see any reason why a company would prefer to be in the second category. The 2nd company doesn't have to bear the costs for training. >If you're in that category you'll be trying to hire employees for the same salary they're already being paid by an (intelligently run) company, For the first company, it doesn't matter how much they (intelligently) increases the salary because they still have to add in the expense of the training. >, in addition to having to retrain them for your company. Not necessarily. A common example would be IT consultants. It is very common for Oracle and SAP have their consultants spend 4 to 8 weeks of training and then boutique firms would poach them with higher salaries. The boutique firms didn't have to pay the $20k to $40k for the 8 weeks of classes and they also don't have to retrain them. The Oracle DBAs' skills are ready to be put to use on day 1. If one thinks Oracle/SAP can simply increase the salary to what the boutique firm was offering, the math doesn't always work out because the total higher compensation has to include the training they already paid. If we use following placeholders: s=salary, t=training, i=increase to market salary rate Category 1 company total expense = s+t+i Category 2 company total expense = s+i Because "t" was a non-zero amount that can't be magically erased, it means that for all values of "i", "s+t+i > s+i" In other words, for Category 1 company to "match" a higher Company 2 salary, they must always pay more than that salary because the "pay more" includes the training $$$ they paid. Hopefully, for Company 1, they have other non-monetary advantages that outweighs the absolute mathematical disadvantage the above equation shows.
    - log_n 11y ago
      Companies in the second category are going to be in the market for lemons. Company A has inside knowledge of how each employee is performing and can easily match a price increase for employees that are worth it while letting go of those that aren't. Company A is paying a bit more to purchase an option on skilled employees, Company B is hoping that they don't just get lemons.

yummyfajitas 11y ago

Scroll up for the arithmetic of how company B can pay more money to the employees.

vectorjohn 11y ago
The arithmetic is wrong, unless it's just not fully explained. "there is nothing stopping another employer from offering $90k in salary after training is complete" Sure there is, and many people have pointed out the flaws in this comment. If $90k is the market rate, then there is nothing stopping the company that provided the training from paying that too, and there would be no more advantage to offering $90k. In addition, as others have pointed out, there will still be some ramp up time and training at any new company. If your point is that the first company can't expect to under pay their employees after providing training, well, that's obvious and nobody suggested it.
- yummyfajitas 11y ago
  So to keep the same set of employees, a company must pay $20k for training + $90k for employees = $110k. Alternately, a company can just pay $91k and let someone else pay for training. Do you not see any reason why a company might prefer to be in the second category?
  - vectorjohn 11y ago
    No, I don't see any reason why a company would prefer to be in the second category. If you're in that category you'll be trying to hire employees for the same salary they're already being paid by an (intelligently run) company, in addition to having to retrain them for your company.
    - jasode 11y ago
      >I don't see any reason why a company would prefer to be in the second category. The 2nd company doesn't have to bear the costs for training. >If you're in that category you'll be trying to hire employees for the same salary they're already being paid by an (intelligently run) company, For the first company, it doesn't matter how much they (intelligently) increases the salary because they still have to add in the expense of the training. >, in addition to having to retrain them for your company. Not necessarily. A common example would be IT consultants. It is very common for Oracle and SAP have their consultants spend 4 to 8 weeks of training and then boutique firms would poach them with higher salaries. The boutique firms didn't have to pay the $20k to $40k for the 8 weeks of classes and they also don't have to retrain them. The Oracle DBAs' skills are ready to be put to use on day 1. If one thinks Oracle/SAP can simply increase the salary to what the boutique firm was offering, the math doesn't always work out because the total higher compensation has to include the training they already paid. If we use following placeholders: s=salary, t=training, i=increase to market salary rate Category 1 company total expense = s+t+i Category 2 company total expense = s+i Because "t" was a non-zero amount that can't be magically erased, it means that for all values of "i", "s+t+i > s+i" In other words, for Category 1 company to "match" a higher Company 2 salary, they must always pay more than that salary because the "pay more" includes the training $$$ they paid. Hopefully, for Company 1, they have other non-monetary advantages that outweighs the absolute mathematical disadvantage the above equation shows.
  - log_n 11y ago
    Companies in the second category are going to be in the market for lemons. Company A has inside knowledge of how each employee is performing and can easily match a price increase for employees that are worth it while letting go of those that aren't. Company A is paying a bit more to purchase an option on skilled employees, Company B is hoping that they don't just get lemons.