Employee Turnover Causes

Employee Turnover Causes and the Role of Compensation: Two Opposing Viewpoints

By Barry MacLean and Stacey Carroll

In today’s unstable marketplace, retaining your most seasoned and talented employees helps ensure your organization’s strength. It’s more important than ever to put strategies in place to avoid the overarching costs of employee turnover causes, and keep skilled, high-level producers motivated and invested.

But, which strategies will provide the results that you want? Barry MacLean and Stacey Carroll share their opposing viewpoints on the role of compensation in employee retention and employee turnover. Barry begins with his perspective and then Stacey responds. Let’s see what these experts think.


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Employee Retention Requires Top Compensation

By Barry MacLean

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It is often thought that employee turnover causes can be prevented through growth and development opportunities, positive organizational relationships, the nature of the work performed, and respect for the organization and its values. While these environmental factors are important, a leveraging factor for employee turnover is monetary compensation; a point that employers often miss. When employers only draw a direct correlation between traditional motivation theories and employee turnover, they underestimate the complexities of employer/employee relationships. Salary can accentuate the positive or negative aspects of other contributing factors–it’s much easier to put up with a micromanaging boss if you are extremely well-paid.

According to a Spherion Emerging Workforce Study, “Only 49 percent of employers rate money as an important issue in retention but 69 percent of workers believe it is.” This difference suggests a gap between the employer’s traditional approach to motivation theories and actual employee turnover causes.

Current traditional merit-based compensation programs mean a three or four per cent raise for mid-level employees which is equal to one extra latte per day. This will not retain high-potential employees in a competitive market or drive business performance. So, employers must determine how much they’re willing to pay for employee retention or suffer the greater costs of employee turnover. According to The Business Advisor, employee turnover costs between 150 percent to 250 percent of an employee’s annual compensation.

Employee Retention Requires More than Top Compensation

By Stacey Carroll

I agree that we need to compensate employees fairly in order to ensure that we retain them. The costs of employee turnover would skyrocket if we didn’t ensure that we were paying a fair wage. But, salary alone will not keep top performers around. In fact, I believe that the cost of employee turnover would go even higher if we didn’t give top performers the opportunity to learn and grow within their job.

Top performers want to work in jobs where they add value to the organization and are rewarded for doing good work. Those employee rewards can take many forms, including increased responsibility, a flexible schedule and opportunities to attend conferences and networking events.

Also, beyond rewards, top performers need a work setting that offers them certain conditions, such as working for and with other top performers, being free from micro-managing and doing a job that adds value to the organization as a whole.

So, why is it that when employees leave they say they are leaving because of money? Why, when asked, do employees say that money matters? The answer is that income is simpler and more quantifiable than all of the other reasons they leave or are dissatisfied. Most employees are concerned about what their boss or what the organization will think of them if they talk negatively about how they were managed. So, it’s easier to say they are leaving for money reasons.

Chances are most employees really are leaving for a position that offers them more money. But, they are often presented with a job that has new and expanded opportunities. Therefore, the higher dollars are more representative of the new responsibilities that they have and not purely based on the company down the street having more competitive compensation.

So, while I believe that we have a responsibility to compensate employees fairly and that it will make a difference if we don’t do that, I believe we need to focus more on those things that will attract and retain our top performers. I don’t believe that any amount of money can make a top performer put up with a dull job or micro-managing.

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