Your employees’ and applicants’ talents aren’t equal so neither is attrition. Also, compensation studies only tell part of the story, so that’s not ideal either. While it’s critical to provide fair and equitable compensation for similarly situated employees, comp studies end up inflating overall compensation for companies.  They’re inherently circular in nature.

Ok, let’s start with the stupidity of attrition percentages.  Let’s assume that voluntary attrition at a company is 11% but the goal was 9%.  Seriously, what does that even mean?  What if voluntary attrition was 8% and below the 9% goal? Should we celebrate? Who knows?  How can we equate one employee to another employee?  Why is everyone in the group studied considered to be identical?  The reality is that not all voluntary attrition is the same. Voluntary attrition hurts. But it really hurts when the exiting employee was a key member of the team – whether that’s because of skill, experience, culture or some other factor. 

Moving on to compensation studies, think about it this way: say I run a company, thinking I’m paying my employees 75% of the top market rate.  Low and behold I find out that I’m actually somewhere between 50% and 75%.  What should I do? Increase salaries to get to the 75% rate.  Sounds great, huh? Well, my increases have actually bumped up the compensation levels so now the supposed companies that were paying at 75% will increase their salaries even higher.  The vicious cycle begins.  

In our effort to hit numbers, we miss the point. The wrong person in an important role is worse than no person at all most of the time.

So, what do you give up when you’re only looking to fill headcount versus hiring quality people for the right role? 2 months of delayed development? 3 months of additional training? 6 months of product delay? How much time is wasted when that new hire turns out to not be the right fit and you need to let them go and start the hiring process over? That time is money in the truest sense. Could that process have been started differently from the beginning, to minimize those negative outcomes and wasted spend? 

I have first-hand experience with this struggle from growing my previous company, Kabbage. With 600 employees at one point, I lived this scenario every week – trying to convince “A” players to join our team, prevent great employees from leaving, or managing the internal and external disruption when good employees did leave. As CEO, this typically consumed at least a third of my time and some weeks as much as half of it. 

The challenge for many companies is that the highest-quality employees are harder to attract and retain because they typically get multiple offers when looking for a new job – and are actively recruited by poachers when they have a job. 

Complicating things even more, there’s the cost of loyalty. A high-performer is often ‘penalized’ in a way by staying with the same company, given they’re likely to only get standard salary increases each year versus a large jump in salary if they move to another company (another incentive for folks to leave). 

The root issue with many aspects of attrition comes back to a legacy view of compensation – typically a salary with annual adjustments. Keep’s vesting cash bonuses were designed to give companies a new way to address the attrition equation, by standing out to high-quality prospects through differentiated offers. The perfect people in the right spots at the right time will equal a more productive and smaller overall team. Incent the best talent to join, stay and perform.  “A” players beget more “A” players, while “B” players will bring you other “B” players or, often, the dreaded “C” players.  

What’s a “vesting cash bonus”?  They’re signing bonuses, spot bonuses and other similar forms of compensation paid up front, but earned over time.  Compensation packages supported by Keep recognize the impact and value of key employees. This cash can be used immediately to improve employee’s lives and increase their potential for future financial freedom. This is a reason to join or stay at a company.  

Find out how Keep can help you attract and retain your best employees –