The number of employees in the workforce deciding to take the proverbial hike to greener pastures has just, as reported by the AP, reached a startling 17-year high.
While workers leave jobs for a number of reasons (such as dissatisfaction with their supervisor), pay is a top consideration. In fact, a 10% higher base pay is linked to a 1.5% increase in the likelihood that workers will stay at their current company (more here). That’s why there’s no time like the present to check your bearings on employee compensation, its impact on employee retention and the bottom line as planning starts for 2019. Additionally, testing the underlying assumptions of your approach against the following data points related to replacing departed workers may either validate staying the course on compensation…or cause you to take an entirely new direction:
- Unemployment has tracked steadily at 4.5% or lower over the past 15 months, resulting in ever more shallow labor pools in many industries
- In this environment, replacing departed employees is expensive. Several sources estimate replacement costs at 20% of annual salary for a mid-range, $30-50K per year employee; upwards to 213% of annual salary for highly educated executive positions. And those calculations are not inclusive of intangible costs, such as lost revenue while the position remains open. (For more, go here)
- Yet, salary increases have remained relatively stagnant with businesses reporting increases in the 3-4% range over the last several years
Given this scenario, I believe that many organizations are at a crossroads and need to make critical decisions – very soon – about compensation as they budget for next year. Help us test our hypothesis by participating in this quick, anonymous poll. While Yogi Berra, in typically enigmatic fashion said, “When you come to a fork in the road, take it”, we want to take a market pulse on which direction businesses are headed in their quest to hire and retain the best people. We promise we’ll share the results. Thanks in advance!
About the Author
Rick, the CEO of TalentRISE, is charged with executing TalentRISE's business plan and leading the development and implementation of its longer-term growth strategy.