Industry churn: stop feeding the beast with money
It’s the start of the year, budgets are set and plans are being ironed out, but there’s something else bugging you. Something that grinds you down every year, and yet never seems to stop, change or resolve itself.
Hands up if you’re hiring… again.
People are moving on. Some might have resigned ahead of the Christmas break, while you fully expect others to throw in the towel in the next six months. It’s the way things always work, right? This is the merry-go-round of the Creative, Sales, Marketing and Technology sector. Talent - even the most senior professionals - don’t have the same longevity in the job as they once did.
But job hopping isn’t a trend - it’s the new reality, you say.
We work in a dynamic industry where people like to move around a lot, you say.
We managed to get 18 months out of that person, so that’s good, you say.
Just stop for a second and think about those statements that we hear almost every day.
How did we get to the point we where we have just accepted that people don’t stick around in jobs for long? When did we decide to shrug our shoulders and resign ourselves to high turnover as the norm?
And why, oh why, when we’re on the hunt for talent do we constantly find ourselves in the position of having to pay 15-20% more to hire someone, for no other reason that people are switching roles? You don’t want to increase the salary much for someone making a sideways shift - or for someone who hasn’t displayed a track record of being able to grow your business enough to warrant the salary jump - but you feel backed into a corner. You need roles filled, and you need it now, because the work doesn’t slow and the world doesn’t stop turning.
We know it’s tempting to throw out higher salaries during the recruitment process, but from a long-term perspective it’s only doing our industry and the talent harm. Employing the best talent often comes at a price, but that higher price should garner higher returns – after all, that’s what you’re paying for.
You believe people need more money to switch jobs
And it’s simply not the case. I can’t count the number of times an employer has stated they should be paying an additional 15% on top of the candidate’s disclosed current salary to lock them into a role. When asked why, they simply say something along the lines of, “because they expect it”. Candidates often switch roles to get a higher salary because they know they can, but is it really necessary to pay significantly more for someone to perform the same role? Probably not.
You’re paying more but getting less
An inflated salary can often cause more problems than solutions. On top of feeding the beast of misalignment, the candidate suddenly becomes unaffordable, or finds themselves in a situation where their salary doesn’t match their abilities. It’s natural to assume that a higher wage comes with higher expectations of performance, but so often this isn’t communicated entirely well.
We often see scenarios where mid-level or junior candidates are being offered wages well above our recommendations, and it ends up backfiring on the employee. They weren’t prepared for the increased expectations and couldn’t deliver, and so they end up leaving - stressed and burnt out. You’re back at square one, and the cycle continues.
Instead, we tend to propose a more modest salary in line with their current role - perhaps a small bump - and then a very structured performance review process, as well as a supportive learning and development strategy. Driving a performance culture where salary increases and advancement comes from delivering results should be the norm. Then, if people chose to leave just to earn more, then they are unlikely to be your top performers, as otherwise they would have been earning their increases.
Big salaries don’t equal big results (necessarily)
Sometimes a very senior hire with a huge salary is worth it. They bring with them years of experience, actionable insights to help operate your business better, connections and networks for you to tap into, lucrative deals, more client, et cetera. But while paying the big bucks for a very talented professional could lead to bigger, better things, it’s not a given. It’s never a given.
Be very careful with your ROI calculations. Can you afford that high salary while this new talent brings new clients in the door? Are you writing a giant cheque on the promise that he will “bring client X and Y with me”? A lot of big talk is bandied around during recruitment negotiations, so just do your due diligence and ensure you’re going to get back what you put out.
At the end of the day, money is important but it isn’t everything - especially when it’s the reason behind the ongoing churn we have been seeing for years. Every time people move and we fork out more dollars, we are feeding the beast, regardless of whether that talent is bringing in anything extra than the previous employee.
Instead, give them a career path. Give them a reason to stay beyond dollar signs. Don’t fall into the trap of offering more just because your competitors are. There will always be someone willing to shell out more than you, and a candidate’s main motivator is often going to be money anyway. It not wrong to focus on money, it just must be tied to performance. After all, no one is opposed to rewarding good performance.
If we want to truly address the issues of churn and salary inflation, then we need to address the root causes of why people are leaving - not just throw money at it.
Jacqui Barratt is APAC CEO of Salt.