By Mike Hoban
Last week Google announced it would increase its employees’ pay by 10% to help ensure it can attract and retain the best and the brightest talent. The company has had some notable talent defections to competitors such as Facebook.
Perhaps that slightly fatter paycheck will bolster retention. It sure can’t hurt and it should at least bolster morale, although early estimates also indicate that it will add $400 million to Google’s operating expenses for 2011. There are many factors besides money involved in peoples’ individual decisions about the question “Should I stay or should I go?” (and yes, that is an old song by The Clash), so the jury is out about the ROI of Google’s decision.
However, it does re-surface in a very public way the old debate about what motivates people to not just stay with an employer, but to stay with an employer and be productive and innovative and engaged. Oh yes, and loyal. Is money the key to what we might call “deliberate retention?” That answer to the question is absolutely unequivocal: "it depends."
Seriously, it really does depend. For individuals just trying to make ends meet, money might be the most important element in that person’s “hierarchy of needs” structure. Personal growth and interesting, challenging work are not likely to be on the short list of “gotta have’s” for such an employee. (you can listen to Dan Pink talk more about this idea).
Yet, for many of us in this knowledge work world and as Daniel Pink opines in his book Drive, there are other factors besides money that inspire us and which help drive our decisions about where to cast our professional lot. He suggests the key factors are autonomy, mastery and purpose (of course, Maslow called it “self-actualization”).
Our choices are based on our values and since everyone’s values are sui generis, it’s not going too far out on a limb to suggest that with retention, there is no one size that fits all. There’s no silver bullet. Yes, “It depends.”
Google made its decision partly based on internal employee survey data and I’m sure they know what they’re doing and admittedly, the company’s market cap is somewhat greater than my own. But I’ve come to believe in what I call the “20% Rule.” That is, few professionals will leave a job for less than a 20% pay raise even though most employees get a pay raise when they change employers. People leave for other reasons (the jerk boss; the dead-end career path; the toxic culture) and just happen to make more money in their new job.
So if someone was looking to move to a different company, would a pay increase be the clincher to stay? (see survey to the left) Everyone has to answer that question for themselves but I think overall the answer is no. All of us would welcome a generous pay increase (ahem, boss – are you reading this blog??) but if we were truly unhappy, I think the corporate tithing would not be a compelling reason to stick around if there were other options. Look at all of the “Best Places to Work” data. What makes them the best is not that they pay the best.
People who base their choice of employers strictly on the size of the paycheck run the risk of becoming unhappy mercenaries. Traditionally, the “golden handcuffs” philosophy bought retention, but didn’t necessarily buy commitment. And retention without commitment is a formula for mediocrity.