Is a Pay Raise Enough to Save Retention Risks? Unlikely. Here’s why.

It is true: a fair amount of employees leave their organizations in pursuit of higher wages. In fact, the “Great Reshuffle” is largely credited to millennial workers demanding compensation and benefits that they feel reflect the value of their work, energy, and time.

While this is justified motivation (worthy of appeasing) it is also true that a higher wage will only fulfill a small percentage of overall workers for the long haul.

In fact, the leading rationale for employees leaving their current post is actually the pursuit of a better work/life balance, ahead of higher compensation. Still, when you are sitting in a position of leadership, watching your best employees burn out and window shop, it is tempting to go for the quickest, shiniest fix: more money.

Though at the time upping salaries might feel like a respectable “save” (and perhaps even overdue), payroll often proves to be a bandaid for a much larger bullet wound. Without looking at the bigger picture, organizations may end up eating the value of that wage investment and then some in attrition costs.

A Pay Raise is a One in a Million Move

In today’s economy, higher wages are virtually inevitable. Compensation is inflating because the cost of living is inflating. Which, for employers, means that in order to ensure the financial health and viability of their workforce (and thereby employees’ mental capacities and respect for the organization), bumping up wages is no longer a gesture of personal recognition or appreciation, but a global requisite for retention.

Put plainly: your employees can most likely land a higher salary somewhere else (if you haven’t already given it to them) – some might even need to – so what makes staying on your team so special?

Perhaps you can drum up a few answers – workplace culture, brand recognition, growth opportunities, etc. But for each item you list, you also have to ask yourself:

Is this still a competitive feature? 

Are these things tangible or lip service? 

Do these things stand true for everyone on the team? (Be honest.)

Money Doesn’t Motivate

Today’s workforce is interested in more than just “a bigger buck.” Point blank: they want fulfillment from their work.

Organizations can’t afford to ignore the cultural education brought about by the pandemic and viral social justice movements such as Black Lives Matter, Stop Asian Hate, Amazon unionization efforts, the IATSE strike, and abortion rights and mental health movements (highlighted by athletes Naomi Osaka and Simone Biles), among others.

In a world demanding conversations around issues of injustice, wellbeing, and a level playing field, there is a longstanding lack of belonging and mobility across the corporate landscape that has forced employees to reimagine how they should prioritize their careers. It is no longer enough to have a paycheck that covers the bills: careers should also directly support personal growth, work/life balance, and access to opportunities.

If they don’t feel valued, supported, and encouraged to thrive, no amount of money is going to keep employees still for very long. 

And this isn’t just true for millennials. It turns out “carrots and sticks” (i.e., incentives and consequences, raises/bonuses and write-ups, etc.) have never been all that effective for motivating employee engagement. What is effective? According to leading social scientists, “autonomy, mastery, and purpose.”

Consider that: the “Great Reshuffle” isn’t an out-of-the-blue consequence of the pandemic, but a movement that has been in the making for years.

When the world went on pause, and a large group of people were given the time and headspace to reassess their priorities and personal desires, many found they were more creative and more motivated, just perhaps not in the ways that were being demanded of them prior to the shutdown.

Why? As people were laid off from their jobs or found their organization minimizing or pivoting directives, they followed what came to them instinctually: their strengths and their passions.

Great news: this era of “values awakening” can actually be a great thing for competitive innovation and agility, *if* organizations stop looking at attrition as a solely monetary “problem to solve.”

Falling back on traditional means of motivation and retention is not an option for appealing to this workforce. Human empathy is the only path forward. And genuine empathy means a reckoning with corporate norms that have contributed to an individual’s lack of opportunities and sense of belonging — the very two factors that will convince that person to quit, even after getting a raise.

So, What Can You Do to Save Retention Risks?

Learn From Every “Leave”

There are plenty of reasons why an employee might request a raise: they may have rightfully earned the higher compensation, they may have noticed a discrepancy in their salary compared to the average band for their role, *or* they may be motivated to leave the organization for a variety of reasons, and the raise is their last attempt at making an appeal to stay.

If you are a manager and know your employees well enough (and can be honest about how fairly your organization addresses payroll), it can be pretty easy to decipher which of these is true. And if not, a frank conversation about career goals may be illuminating. But from what we know about the ineffectiveness of monetary motivation, if the last scenario is the case, a raise isn’t going to keep an employee put, *unless* you accompany it with the right questions. 

EX: Are you comfortable with your workload? Is there anything you are missing from your day-to-day that would help you feel more fulfilled at work? Is there any support you are missing that I could help with?

Odds are, money is not the only problem. Whether or not you give them the raise is one thing, but how you tailor the conversation (and follow up on it) can provide a lot of intel about the deeper ailments that might be plaguing your overall talent pool.

Find the Full Scope of Potential

Of course, to avoid having those “end of the rope” conversations, you have to begin initiating the conversations that empower your employees to find fulfillment from their work before they begin questioning their place at the organization.

Further, you have to make it clear that there is opportunity for growth in areas that might not necessarily align with their current role or how they see the trajectory of their department’s vertical.

They might be perfectly happy with their role as is and can visualize their next steps clearly… or they might not. They might be dreaming of a pivot and underestimate the scope of how their work could bloom or their environment could improve. You won’t know until you ask.

Bottom line: feeling that they are valued as an individual with unique potential and insights helps create the sense that their growth and curiosity is supported holistically by the organization, not bound to a single set of deliverables or bottom line.

This means delving into those more nebulous, yet core areas of motivation – autonomy, mastery, and purpose – *without* setting boundaries that might make employees feel trapped. If they assume they have no room for growth or projects aligned with their skill set and passions, this is when they may start window shopping for the “better fit.”

EX: What is something you are really passionate about (unrelated to your work)? Are there ways we could help you bring that passion into your work? What do you consider to be your strengths, and do you believe your role allows you to maximize on them? 

This sort of dialogue addresses the root causes of burnout and attrition: feeling under-appreciated or overlooked for one’s potential. 

It reflects a sincere desire to understand and meet your employees’ sense of purpose and, to your benefit, over time you will foster a more unique, optimized team, driven not by the task at hand, but by each individual’s innate desire to better themselves and push the boundaries of their roles.

Put The Power in Their Hands

All that said, the above conversation isn’t a one-way street. Employees need to know how to identify and best articulate their strengths, passions, and career goals for these types of conversations to be most effective.

It is also important for them to understand how to market their personal brands in a way that equally benefits the organization and their individual career advancement.

Though a vital element of effective working relationships and collaborative innovation, these types of communication skills and personal marketing strategies are lacking across the corporate ecosystem. 

Employees frequently leave organizations unnecessarily, because they are unable to articulate their needs and potential in a way that could maximize on the relationships and opportunities already available to them.

On the other side of the coin, employers often overlook the “autonomy and purpose” element to learning and development, and focus instead on mastery of hard skills.

Rewarding “a job well done” with a pay raise will only keep employees engaged at your organization so long as they feel empowered to:

  1. Take ownership over their careers. i.e., grow along a unique trajectory (horizontally, vertically, etc.) and raise their visibility

  2. Follow what feels meaningful to them. i.e., lean into their strengths and passions

But let’s be frank…

L&D and HR departments do not have the time or bandwidth to sit down with each individual employee and scope out their sense of fulfillment.

What’s more: when these initiatives do take place internally, they often either favor “high potentials” as defined by biased corporate standards — not by drive and willingness to grow (key indicators of success) — or “retention risks:” those for whom it may already be too late.

By beginning at the employee level, our Level Up curriculum teaches individuals to strategically and meaningfully advocate for the opportunities that will fulfill them, and to create strong professional relationships that help bolster workplace belonging and community reliability — key elements to sustaining retention.

Interested in learning more about Level Up for your organization? Get in touch with our team.