The other day I came across a friend I had barely seen since he started doing a pretty important job at a big bank.
“Hello!” I rushed, eager to hear about life in a company that, even with investment banking standards, had an ability to create news.
“Oh,” he said. “I have left.” He had in fact gone several months ago and united with the millions around the world in a major resignation that would have been a temporary pandemic but has lasted and even deepened.
Figures this month show that 4.4 million American workers, or 2.9 percent of the workforce, quit in April – an increase from a record four million, or 2.8 percent, the same month last year.
It’s not that different elsewhere. Here in London, it’s starting to feel remarkable to come across someone who still does the same job at the same organization with the same phone number they had before Covid.
Threatening economic uncertainty can change things, but at the moment, employers in many industries are struggling to hold on to workers in a thriving labor market.
In response, managers do what I did in a previous life when fate briefly threw me into a job in management. They do their best to throw money and promotion on future redundancies to convince them to stay.
But should they? The answer is not as simple as it seems.
A counter-offer obviously works for a measurably proven star, especially if they are also stable, gracious and leadership-creating, which many stars are not.
When it comes to how much money people should be offered to stay, it is worth considering the cost of replacing them.
A British study in 2014 showed that the cost of finding, interviewing and temporarily replacing a new worker – and getting them up to optimal speed – cost an average of £ 30,600.
If the newcomer joins from a company in the same sector, it can take less than four months to reach optimal productivity, this Oxford Economics survey shows. But it can rise to eight months for someone from another industry; 10 months for a recent graduate and one year for someone entering the labor market again.
With that said, fashion deals can also backfire if they are not handled with caution.
Offering a swag money to someone who has been serially underpaid can have the opposite of the intended effect if it makes them simmer over how much salary and recognition they have lost for several years.
It underlines a deeper question: are people tempted to leave because of money alone? Or is it due to major structural problems such as lack of attention to career development; inflexible work patterns; bad managers or severe staff shortages and overtime?
If it’s not just the money, beware. A salary-based counter-offer that seems to have worked in January may have failed in April if the recipient receives another proposal from a more skilfully managed organization. The bidder will only have paid out money to postpone a problem instead of fixing it.
It is obviously smarter to find out what drives departures and, if possible, anticipate them by, for example, setting up a system to warn of flight risks about internal job opportunities. Some companies that have tried this claim that they have slowed down and retained estimated staff that might otherwise have quit.
Finally, generous fashion offers can annoy other employees, especially if there is ever a hint that the flight risk offer was not as solid as advertised.
In the past, I think it was probably easier to dismiss this type of reaction as sour grapes. In a hot labor market, however, it is more dangerous. There is a good chance that people are already sitting next to new but less experienced job jumpers who earn more money for the same work.
In other words, they pay a “loyalty tax,” says Adam Grant, the United States’ organizational psychologist and author. He thinks there is reason for employers to offer “retention increases” to reward commitment. It is by no means an easy option for all companies. But it highlights the need to think very carefully about who is rewarded for staying – and why. – Copyright The Financial Times Limited 2022
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