Why are retention budgets significantly less than hiring budgets?
In: Economics
Because unless someone has very unique skills that simply aren’t going to be reasonably replaceable, it’s likely going to be easier and cheaper to just hire someone else.
1. There is no secret cabal behind the scenes conspiring to keep retention budgets lower than hiring budgets.
2. If most organizations kept up salaries of existing hires with new hires, they wouldn’t have enough to pay everyone.
3. Most simply: Most employees don’t have alternatives enough of the time to demand the premium. Like, you can say to your boss I want a 20% raise or else I’m leaving, but in order to carry through on that you have to have an offer somewhere else with at least a 20% raise (or else you get a 100% pay cut). Most people don’t have that most of the time.
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