At my company’s most recent town hall, they talked about retention. How do we keep good talent, and all I could think of was, pay people more. When a new person joins the company, they are likely to get paid more than those who have been here longer. It costs more to hire new people, so if you're already paying them more, why not allocate that money to your existing people? Wouldn't that help with retention? What do y'all think?

likesmart
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I definitely think this would help with retention/loyalty. Speaking from experience, I was at a job for a few years and unprompted the C-levels got together and gave everyone a "market rate" bump in addition to merit bumps and yearly bonuses and it went a really long way to improve company moral and making people want to stay. We shouldn't have to bounce around left and right to get paid what we're worth in the current market. It's not good for either party.

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I recently noticed our HR app has a metric “how long since last pay raise” for managers so there really is no excuse to not address it

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Money is always a good incentive to keep talented people on your payroll. I am currently looking for a new position because of this very reason. A 3% raise just doesn’t cut it these days

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Would paying people more help? Yes. This is pretty obvious.

Is "pay people more" the answer that your company's leadership is looking for? No. They are looking for ways to increase retention without meaningful impact on company finances. Your leadership is aware that paying people more would help, but they're looking for answers more like pizza parties, meditation sessions, appreciation emails, or no meeting Fridays. Leadership is aware that these things will be less effective than a big pay boost.

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Paying more is important, and one thing to consider is why are they NOT paying more?

Example in my case, the small company has a thing for hiring VPs that we really can't financially support. Our rates are high in the market, so the additional overhead of VP (and CxO) salaries are effectively holding our pay down. The worst part is "leadership" is not honest about the issue (they'll blame it on everything else - staff development, conferences, expenses related to a PPP loan - never to the fact that we have very expensive administrative leadership for a company of our size).

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The answer is knowing your staff. Not everyone will care if they get a pay rise. They might care though if you told them they can do a 4 day week instead.
It’s working out what makes people tick and giving them that. Blanket policy of pay rise and pizza Friday may work short term but some people don’t like pizza. Some people may lose other benefits if their pay goes up so be in a worse position.

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oh my jeebus! Can we knock it off with the 'pizza fridays' or 'ice cream lunches' as a legitimate reward for office work!? We are not children. This is how you incentivize children, not adults. Its insulting, really.

Compensation is how a company rewards good performance by the individual. The most fair compensation programs I have seen are Company, Division, Team, Individual based. The more of these that are performing well, the better the compensation reviews should be.

Did they say retention without mentioning pay/bonuses/stock?

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