Too many times in my career have I seen an employer lose an employee, who has a ton of institutional knowledge and performs adequately or even excellently, only to replace them them with someone that ends up costing much more money, and then takes a lot of time to get up to speed (which also slows the folks who help get them up to speed).
It is like they haven't taken the time to even make a rudimentary calculation on the costs involved in keeping the employee versus replacing them.
This is a common response to this issue, but I think there is a logical flaw in it.
Employers don't know ahead of time which employees will leave and which will stay. In order to improve their employee retention, employers have to pay _all_ of their employees more, not just the ones that eventually will leave. This changes the math entirely.
For example, suppose it costs 50% extra to replace someone who leaves. In retrospect, sure, giving the sole employee who leaves a 10% raise each year to retain them makes sense. But if you have to give all of your employees a 10% raise per year, just to retain that one person, it doesn't make financial sense anymore.
To be clear I'm not endorsing this system at all! But from a pure financial perspective it makes sense to me and is why, I suspect, it persists.
Well obviously it isn’t necessary to pay them ‘appropriately’ (as I assume you’re suggesting that many don’t. It may also be the case that the cost of losing a key employee times the expected number lost is less than the cost of paying them all enough that they’re paid ‘appropriately’).
But I think the more important question is: who are these key contributors? It’s perhaps easy to identify some of them, particularly those who are louder, and perhaps it is also possible to identify those who appear important but are, in some sense, bluffing. But there are also likely those who are key but whom the system for evaluation overlooks. It’s probably better for those people if they leave as they may find an employer who can better recognise their talents (and leverage them and pay them for it). I don’t think I’d do a great job at recognising such key people even among those I work closely with but maybe I’m just bad at that sort of thing.
I think peers in a team always know who is the one who gets almost everything done. Maybe people in managament or in leadership positions don't know, but me in an individual contributor role always know who is the most productive and the one with the most business knowledge of my team.
Obviously identifying key people is hard, or everyone would get it right. Most important things are like that.
(I don't think it's quite as hard as you're making it out, though. Who are the people you go to first with questions about how stuff works?)
Maybe we have a mismatch on what "appropriate" pay means. If the expected cost of losing someone is less than what you're paying them, maybe you're paying them more than what's appropriate. But it does sound a bit like you're falling into the same trap as GP in assuming you have to pay everyone the same rate; I could be misreading you.
Easier said then done. Firstly it requires for you to know what you’re doing is both a key project and something in which paying more would be more likely to result in its completion.
Is it though? I've never worked as an actual employee, but I'm working in long-time contracts as a freelancer with companies. I've always found it pretty easy to tell who was carrying a project and who was dead weight. Might be different and harder to calculate for new projects, but for existing ones that are maintained, observing who gets asked when weird things happen and who solves the strange issues usually identified the people who were instrumental. If someone is off a week and nothing moves, that's someone you probably want to keep (and probably also a situation you want to resolve, because that's not a good thing).
Managers responsible for promoting usually aren't in the trenches and getting honest feedback is actually hard.
When asking people about the performance of their peers, you usually get equally positive feedback unless folks are fucking up.
You have a good point though. Perhaps managers shouldn't be asking for feedback on specific individuals, but ask individuals who they go to for help and mentoring.
"Employers don't know ahead of time which employees will leave and which will stay."
That is their fault. I used to work in a well managed company. It was never a surprise when someone left as career progression was always an open topic between colleagues and supervisors.
You don't know when people are going to disappear if they are crouching and ducking around every corner to avoid management.
I disagree related to the SF Bay Area and the Tech world specifically. It is usually written in the wall who is going to leave if things do not change. Now you could say the upper management can't read the wall, and the middle management might not want to share what has been stated -- or they kid themselves.
Good managers and HR leaders will recognize when people are teetering on leaving. Not always, but I've known a few who have given raises to keep people around and knew that others were planning on leaving before they announced it. In a healthy organization you can have frank conversations. Or even ambiguous ones. It's just rare.
> For example, suppose it costs 50% extra to replace someone who leaves. In retrospect, sure, giving the sole employee who leaves a 10% raise each year to retain them makes sense. But if you have to give all of your employees a 10% raise per year, just to retain that one person, it doesn't make financial sense anymore.
Yeah, so basically this argument is realpolitik, machiavellianism, game theory -- things that work 9/10 years, bring in profits but have enormous hidden costs that ravage companies/economies/countries in that 1/10, 1/50, 1/100 years.
The argument is "be a dick as much as you can get away with, because people are sheep and being a dick is a virtue actually". Until a lot of people start being dicks, then we cry about the long lost art of not being dicks to eachother.
>Employers don't know ahead of time which employees will leave and which will stay
I may be a bad example, but I can assure you every employer I have ever left new I was unhappy in my role before I left.
I always have frank and open conversations with my managers about my expectations for growth, wages, etc. These are not Ultimatums, but more "In 5 years I would like to be" type conversations.
Now as a manager I have gotten similar feedback from people that work from me, sometimes you have to listen closely to understand what they are saying in reality as many are not as direct as I am, but the feedback is there
I think managers just simply ignore it in most cases
Yes but sometimes they do - at my last job at a large corporation I was paid 80% below the median rate for an engineer in my area/YoE/etc. - I threatened I would quit and showed them a counter offer that was 30% more than what I was currently making and they said "sorry nothing we can do" so I quit and found a better job.
This is exactly how we look at it. Those who are more valuable get larger annual raises.
Also, during a high turnover period around a year ago, we even bumped a few people up mid year when we normally do salary increases at the beginning of the year. These folks were very happy and I think it earned a lot of trust that we looked at the market rates, determined they were underpaid, and made sure they were at least getting what they'd get paid elsewhere.
There is nothing like an unexpected raise to make a person feel some serious company loyalty. I started a position at a new company a few years back, run by a friend and senior colleague of mine. He had been with me at the previous company and had observed while I fought and fought to get a raise to market rates in that position.
He called me a few months into the gig and told me that he felt I should be making more than my starting salary and that I was getting a fairly substantial raise effective immediately.
I can't describe how good that felt, after having had to struggle to demonstrate my value at the previous gig only to be met with bureaucracy at every turn. I'm still with that company and genuinely love working with them. I make a pretty nice salary, and though I'm sure I could easily get a 20% raise to jump ship, I'm finally in a place where I can say "nah, I'm happy where I am" and not feel like I'm giving something up.
Oh, I've quit 3 companies where I was the CTO/lead engineer where they had to replace me with 5-10 people (backend and frontend devs, QA, devops, plus a manager or two, etc.) costing them enormous amounts of money.
Many times they've hired me as a consultant where I make 5-10x my hourly rate for several months after bringing the new hires up to speed.
Companies place very little emphasis on retention and retaining institutional knowledge. They don't seem to understand that employees who have worked at a company for years developing systems and architecture know where all of the secrets are.
Though it may cost more, spreading functional knowledge across a greater base of people would be more resilient. Even if a company needs to pay an individual 10x salary consulting for a year, it would be in their long term best interest to spread a fraction of that knowledge across a larger employee base and document what is tangible.
There is a limit (different for different people) across which an individual cannot cognitively support an operation. With years more growth every person would eventually reach their personal limit or lose interest.
It helps to have teams of people that are smart enough to work through new problems and document procedures, playbooks, current states and retrospective reports and rely on institutional processes to maintain a coherent operation.
Sometimes money isn’t the singular factor at work.
In most companies, it's good to let you leave, if they need 5-10 people to replace you. You take this as a point of pride, but I see folks like this as organizational bottlenecks.
When I leave an organization, my goal is for them to either directly replace me, or for them to not need to replace me at all. I do this by ensuring that I don't silo my work (by ensuring others are working with me, or under me), documenting everything I work on, and occasionally changing roles.
My specific goal is to help a company grow, not to make them depend on me.
I'm prioritizing myself. My value isn't based on how dependent people are on me, it's based on how well I scale the company. They could fire me whenever they wanted and the business would continue running, but they don't want to fire me, because my value is high. My approach has landed me consistent promos, raises, and out of band stock grants.
If you think you're safe because the company is so dependent on you, you're misguided. You're the kind of folks that are actively targeted.
Ignoring money, I'm also prioritizing myself, because by removing myself as a dependency, I also make it possible to take vacations, and my stress levels are low.
You think you're making yourself indispensable by making the company dependent on you, but you're doing the opposite. You're a bottleneck, and when companies are trying to become more efficient, you'll be top of the list to make disposable.
Growth is understanding that you become indispensable by removing yourself as a dependency, because you uplift everyone around you. At higher levels of seniority, this is what orgs actually care about.
Not to mention the social load on integrating a new person to a team. Depending on the depth, breadth and number of interactions with other individuals, this causes others to have to also get up to speed on the new person's strengths, weakness, quirks, etc.
I am seeing this recently. Imagine a place that hired dozens of really good developers in 2020. Now imagine that instead of focussing on retention and paying well, they focussed on ignoring the waves of developers leaving and instead on exclusively hiring graduate developers. Now imagine all that domain knowledge that left months ago... compounded by the fact there is only five developers left from 2020...
It is like they haven't taken the time to even make a rudimentary calculation on the costs involved in keeping the employee versus replacing them.