The Centrality of Salary when making Exit Decisions.
It is a commonly held view that money is not the primary reason that people leave their jobs. Yet while perhaps the reasons for changing jobs are often complicated, money does seem to at least play a part of the decision in some way. For example, most people would be unlikely to move job for less pay. I wondered how many Exits could be prevented by simply paying more. The data is revealing. In a previous blog post I reviewed over two thousand sets of Exit data from our systems that helps companies understand the trends which influence people to leave. That set of data was a bit lite on direct questions regarding salary as a variable. We added a few questions to our system, and we now have over 400 people, over multiple companies, with additional data on aspects of salary. We asked, for example, two fairly general questions related to earnings:
1. My decision to leave is mainly due to my current salary
2. I am not paid fairly for the work I do
Both questions used a scale from 1 (Totally Disagree) to 100 (Totally Agree).
In both questions therefore, higher numbers would indicate that salary was a central issue to the decision to leave. Of course we know that any such decisions are complex and based on multiple variables. For example we found (in the previous blog) that about for about 25% of people will leave mainly due to their direct manager. Increasingly, people also leave roles where they believe they have become stuck, with nothing left to learn. But what about the money ?
A full 24% of people Strongly Agreed with the questions “My decision to leave is mainly due to my current salary”. That is a substantial amount of people, but it does leave about 75% of people leaving for other reasons, including 35% of people who Totally Disagreed with the item.
For the second question, “I am not paid fairly for the work I do”, almost 40% of the sample Strongly Disagreed. Only 11% of people felt very strongly that they were not paid fairly. There was however a gender difference. Men who felt that they were not paid fairly for their work where significantly more likely to leave for salary reasons than women. For some reason, women seemed more prepared to tolerate a lower salary rather than leave. There was a similar trend with race. Black and Coloured staff where significantly more likely to cite salary as the main reason they were leaving that Indian or White staff. Complex socio-political reasons must play a role here.
Our system also captures the view of whether the person leaving was a Regrettable Loss to the company. So, do the numbers change when the person leaving is considered a Regrettable Loss. They do, but in a surprising way. Those who are not considered to be regrettable losses are more likely to see salary as the issue. Better workers, those considered to be regrettable losses are less likely to leave for salary reasons. One reason could be that the regrettable losses are paid better anyway, so salary is not as much of an issue as say stretch or growth. Those who are not regrettable losses presumably get paid worse and thus would look for opportunities elsewhere to improve their earnings.
So, would it be possible to improve retention by paying people more. It certainly seems that is case for about 20% of Exiting staff. They could like the company, like their roles, like their managers, but simply need to earn more. Many companies will not be prepared to this for reasons including affordability, principle and fairness to others. It is a complex issue. But clearly money plays an important role and cannot be disregarded as one of the primary reasons why people leave their jobs.