Low Raises, High Turnover

Rick Raimondi

At a recent CommNexus Special Interest Group (SIG),  Employment and Benefits specialists provided an overview of the technology workforce  and  the corporate challenges related to  employee retention in today’s global market. Companies are now budgeting approximately 2.5% to 3% in pay raises, and this has become the “new” normal for wage increases.  Historically, this is low but workable, because, until recently, we were in a zero inflation economy.

Since the employment market has stunk, people have endured  job insecurity, stagnated or reduced wages, longer work weeks, and the demand to produce  more with fewer resources.  I know people that are at their office 6 days a week and work remotely the 7th day. Others at times sleep in their office to meet crazily demanding deadlines.  Does this sound familiar?  With the uptick in tech employment market (Google, Facebook, Linked-In have sucked up all the talent in the Bay area), compensation specialists from Radfor, and KeneXa Compensation/Salary.com, expect the turnover rate for companies to be as high as 40% to 50%.

So how are companies being creative in dealing with the new norms of a global market? What strategies do they implement to retain their good employees and stay on budget?  The general consensus was that compensation has taken on a holistic approach.  Once you move past the base salary, what is it that’s most important to the individual? Performance bonuses, Paid Time Off, Benefit Plans? What about a corner office for your top performers and the recognition (ego gratification) that comes with it?  Today’s executives are on the road for months, Hewlett Packard makes their sales managers meet with their sales force at Denny’s to save money, and stressed  software engineers need to open a beer at home to calm their nerves before they put in several more hours banging out code.

By coming up with the right combination of components that are the most important to employees, companies hope to tailor a pay for performance approach that motivates and meets the needs of their MVPs.  It’s a formidable challenge, because  the problems are more systemic.  The era of employee entitlement is over.


Our staff is here to assist you. Please fill out the contact form below and we will be in touch as soon as possible.

N-Able Now Solutions