New Survey Says Compensation Is The Top Reason For Employee Turnover

Posted by’s annual Employee Satisfaction and Retention survey reminds employers to address how they manage employee performance and understand reasons why employees switch jobs. According to the survey, the most common reasons employees leave their current job are: • inadequate compensation, • lack of career advancement, • insufficient recognition, boredom, • inadequate opportunity for professional development. “Compensation is the number one reason for job turnover because employees want to be paid what they are worth. There needs to be a clear understanding between employers and employees on what it takes to get to the next level and then employees will be more satisfied,” says Maura Pallera, global research analyst at While employees were 57% likely to look for another job within the next three months, including updating their resumes, surfing online job postings, posting or e-mailing their resumes, and networking with colleagues and friends, 38% of employees surveyed said they would need a 16-30 percent increase in pay to leave their current jobs. “In general it’s cost effective to keep an employee on board. The cost of hiring, training, plus relocation costs can add up for employers,” says Pallera. According to the most recent statistics from the Bureau of Labor Statistics the turnover rate in the professional and business services industry which includes the information technology field is 4.7%. “For the third year in a row, survey statistics reveal that companies are most likely to lose employees who have been in their current job for 3 to 10 years. Since this is considered to be a point in an employees’ tenure when they are most productive, this can represent a significant cost to employers.” 62% of employee respondents in their current position 1-3 years were interested in looking for a new job, 63% of those in their jobs 3-5 years, and 59% of those with 5-10 years in their current position were interested in looking for a new job. What does losing an employee mean for employers? Leaving a job often leads to a higher cost for the employer. According to the survey, this year employers estimate the average cost to replace a typical employee due to turnover will be $21,000, which was up 40% from last year’s results. Employers in the biotechnology field also estimated the cost to replace an employee due to turnover as a percentage of the replaced employee’s salary to be 38% of a $46,250 salary. “People in the biotechnology industry are more in demand and at higher leveled positions. Often times it costs about 50% in salary to find someone to fill the position. The time people stay and the volume of people leaving drives up the cost and leads to higher turnover,” says Pallera. Pallera thinks that the cost of turnover can be reduced if employers interact and give more feedback to their employees. “Employers can reduce the cost of turnover by being aware of their employee’s satisfaction. There needs to be discussion and mutual understanding of what you need and what has to be done to get to the next level and so you can be fully sufficient. Employees need to be engaged and there needs to be open communication to develop an employee. If there’s no training, and no movement, that leads to a high turnover,” says Pallera. Employers underestimate the possibility of their employees switching jobs. According to the survey, while employers acknowledge the cost of replacing employees due to turnover, on average, they will offer a 7% increase to an employee to stay in their current job. “Employees want salary increases but with the economic situation and the possibility of being laid off, less than 1/3 of those surveyed said they needed a 7-15% increase in annual pay. They are tentative to move because of job security. And the survey shows that even if they are unhappy, ½ of them stay in the job,” said Pallera. Pallera cites the state of the economy and job security as reasons why employers are more likely to believe that their employees won’t switch jobs. “The time and effort it takes the employee to update their resume and actually interview and apply for positions takes time. There could be a false sense of security, but the employee should never be underestimated,” says Pallera. The survey also stated that employees are more likely to stay in their current position based on “good relationships with co-workers, good relationships with managers, desirable working hours, attractive compensation and attractive benefits were the most common responses given by employee respondents.” Pallera advises employers to look at who’s in the workforce and compare it with their budget. “Employers want the best in their employees. Often times there might be a lower salary but more benefits given. You have to look at overall compensation, including flex time and life balance issues. Women especially are often times willing to take less pay in return for managers who offer flexible schedules.” The bottom line is to figure out what’s best for you. Should you decide to be apart of the 4.7% of employee turnover, make sure you are being fairly compensated for your skills and time in your new position. If you decide to stay in your current position initiate conversations with your employer about your job performance and compensation. The more mutual understanding between you and your employer the more satisfied you will be with your job.

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  • Susan Fox
    Susan Fox
    The brain tells the story.  Believe it or not each person's brain contains a proprietary design. That means that each of us is designed from birth with specific preferences and natural expertise in at least one skill area.  This natural expertise is our passion.  We feel most fulfilled pursuing our passion in work and our daily lives.  Employers who deny people the opportunity to express and fully develop a person's passion and the people go elsewhere to work.When employers begin to mismatch employee skills to jobs that need to be done to fulfill corporate needs without considering the dissatisfaction level experienced by employees when this is done to employees, that is just plain arrogant, rude and greed talking.  We know it.  The bosses know it but they don't care.  Ridiculous!When managers begin to treat the employees like inanimate property to be used according to their personal business agenda, those who are employed object...and rightly so.  People are PEOPLE with dreams and aspirations.  When employees feel used like inanimate tools to satisfy an employer's business goal ONLY, well, the obvious result speaks for itself.With all the jobs that have been and continue to be outsourced overseas, American corporate business better wake up.  Employees demand to be treated like people.  Our feelings DO count.  We are enough.  We do enough and we're done allowing ourselves to be used and then discarded like we are expendable.  I agree with this article.  Corporate employers better be prepared for a rude awakening or they're going to be doing all the employee work themselves!
  • Sherry
    I totally agree with JJ.  I was with the same company for almost 8 years and was treated as if I was a little pee-on.  I had knee surgery last year and couldn't go back to my full-time schedule.  I wasn't getting paid nearly what I was worth with my 15 years of exerience in that field.  I asked for a raise several times and didn't receive one.  I hadn't had a raise in almost 2 years.  The owner of our store is a multi-millionaire and can afford to pay more but is very greedy.  I finally up and walked out with no notice because I couldn't handle being degraded and bullied any longer.  Your article is right on.  Thank you.
  • Stevename
    Laid off after 26 years, a fellow from a competitive company told me..."It's hard to love a company that doesn't love you back." Never assume loyalty from a company. Employment is a contract between you and them, nothing more.
  • Wendy Landers
    Wendy Landers
    My last job was bait & switch.  I was brought on board to do one thing that I was exceptionally well qualified to do, and then after a couple of months moved to another job that anyone could do.  The reason they gave me was that their funding didn't come through.  When I interviewed, that was a question I specifically asked about, and was told that they had already gotten funding for multiple years.  So basically I was hired for a job that never materialized, and then moved around as long as I was there.  The people who lied to me have a good reputation, so I still feel used.  I think that the main reason that they did it was so that internally managers can officially say that they manage a staff of so many, when in fact they are not in charge of any staff at all.
  • Marie
    I quit a job one month ago that was the worst job I have ever had in my life. The management was nonexistent, and they did not have a clue what to do. The medical director was arrogant and demeaning to the staff. The hours were horrible. It was to be a WAH, 8-5am, no weekend’s position, which ended up being 10-14 hours a day M-F and at least one day on the weekend to keep up. No compensation for any overtime, because it was “exempt”. There was not one bit of gratitude for anything the staff did, we were just expected to work more, each time they changed their minds until I had to resign as it was affecting my mental and physical health. When I quit and did my exit interview , I was told by HR “they had the right to make me work 24hrs a day , seven days a week if they wanted to , because I was a nurse and I was exempt”.  Just as the others have commented, the company benefits were also awful; I did not get any of my 90 hrs of PTO, nothing – it has been a nightmare. I am 58 yrs old and I have worked all my life. Times have changed and I find that now the people in management for the most part (99%) are people who have been promoted to their next level of incompetence.
  • David
    The number one reason used to be bad bosses. Well, now the bad bosses are running the company.
  • Cathy T.
    Cathy T.
    I fully agree that the American Companies are all about the bottom line. I recently was part of a "downsizing" from a major company. They said it was based on tenure, however, I feel it was due to the fact that they would have to compensate me for the job well done. I would rather work for someone who treats me like a human being rather than the "bottom line". Where has all the compassion gone in the American work force?? America is headed down the wrong road to financial security if it continues to view nothing but the P&L in their companies. Loyal employees are what makes the "American Way" a way of life, without that where will American businesses be in the upcoming years! I am searching for employment with a company who really cares about its workforce and wants to build a team that will profit them and the company. America needs to put compassion, care and stability back in the job market to be successful industry!
  • Kornyo Oliver
    Kornyo Oliver
    I am very happy about this idea about employers and since we employees have said that, we should have a stronge working force for employers to know that it is not a favor but rather we are interested in economic development of the nation through high productivity and not that we  are desperately in need of jobs and without us, they have nothing.Thank you
  • James McWhorter
    James McWhorter
    A very wise person I know told me to never just "take a job". If your doing something that you have a passion for then the money will come on it's own. Being the critical thinker that I am I decided to put it to the test.  I have come to realize that my friend is correct.  When you love what your doing people can see that.  Here's the fun part...  If you love what your doing is it still work?
  • J. J.
    J. J.
    I have to say that this article is right on the money.  I worked at a company for the last 6 years that was all of the above. They were greedy and only thought about the money lining their pockets.  I only stayed at the job because the money was ok, I was really good at it and the schedule met my needs at the time.  It was not something i enjoyed everyday.  I loved it at first.  But they beat the love for it right out of me.  The benefits were too expensive, the pay was ok.  The personal time was almost non existent. After 6 years 2 weeks vacation was ok,.... but not getting 3 weeks till 10 years of tenure was not something to really look forward too. I was overworked underpayed, bored, I felt like i would rather be unemployed than work for a company that treated me like a nobody.  After years and years of my time and skill and expertise put into their company ,... i was still expendable.  And even still so are all the co-workers i left behind. Thanks for writing this article i hope all the companys like the one i worked for will get to read this,.... and think long and hard about how they choose to treat their employees.  I would rather take lower pay than i was making with better benefits, opportunity for advancement, and a management team that treats me like a human being. I am no longer employed with them and looking for an employer that supports my need to grow and feel like part of a team or even a part of their family!!
  • SS
    Companies are so money hungry that they make goals unattainable. What they do is work you hard. If you can't obtain those goals set, they keep your commission. If you can't reach those goals you leave or they discharge you. What happens then is they keep all future profit without having to pay anyone a dime. This should be monitored. Companies should be fined and or it should be illegal. These companies are hurting the economy and putting employees into hardship situations and in some cases bankruptcy.
  • Lisa LaRosee
    Lisa LaRosee
    Excellent article with a lot of research. I was wondering if I might use some of it for some research on job satisfaction. I am doing a paper for grad work on job satisfaction and respectively am asking permision to do so. Thank you.
  • D. B.
    D. B.
    Employers have become far too complacent in thinking that they are 'doing the employee a favor' by creating a job and only offering low pay, mistakenly thinking people will take the position.  What employers are discovering is that people won't.  Not with the spike in gas, food, energy and other costs.   Lists keep appearing of future 'in demand' professions and over half are poverty level wages.  Well, they're going to stay 'in demand' because people won't be able to afford to take them.  Neither are college gradutes taking sales jobs anymore for the simple reason one can't pay the bills on nothing.So, when the employers change their minds and get off the kick that the stockholders and their bottom lines are the most important thing and put the priority on their employees, it will be a better day for all. Their attitude of 'you're replacable' is killing American business.  Who wants to work for a company that is selfish and greedy?So until businesses change, employees are going to continue to look for 'greener pastures'.  Who wouldn't?  

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