4 Reasons Your Top Talent Is Thinking About Leaving

Chou, who is senior practice leader, compensation, at WorldatWork, offered his tips at WorldatWork’s Total Rewards 2013 Conference and Exhibition in Philadelphia.

Why Key Talent Leaves

Employers are always concerned about retaining top talent, says Chou, and most are getting a little more concerned as the economy brightens. However, the truth is that the job market is always hot for key talent.

Here’s what a recent WorldatWork survey shows are the top reasons that key talent looks elsewhere:

1. Better Pay

The number one reason key people leave one employer for another is for better pay, says Chou. There is a widely held perception that people leave because of their managers (“Employees come to the organization for better pay, but they leave because of bad management.”), but that theory is not supported by the research, Chou says.

The research shows that top performers are more likely to leave over pay than over having a bad manager or any other reason. (That doesn’t mean you can ignore bad managers.)

2. Lack of Promotional Opportunities

Key workers are always thinking about their careers and what’s next for them. If they don’t see opportunities ahead in your organization, they’ll certainly be looking else- where.

One of the common problems Chou sees is “stacking.” That refers to the situation where older workers with the more senior positions, who, in former times, would have retired to make way for the next generation, are still there at work. That leaves key talent stagnated at lower level jobs longer than they want to be, and that’s not a good place for employers to be from a retention and engagement standpoint.

3. Perceived Pay Inequity

The third most common reason for key players to leave is perceived pay inequity versus colleagues. (External pay equity is covered under reason #1.)

There is a lot of research to show that high-performing employees appear to be particularly sensitive to whether their higher performance is rewarded with above-average pay increases, while low performers prefer low-contingency pay systems, says Chou.

Fortunately, some experts believe that it’s not so much the dollar amount of the difference as much as the fact that there is a significant difference.

The average difference now is about 50 percent, but Chou recommends 200 percent. (More on that in tomorrow’s Advisor.)

Research also shows that people with a high need for achievement and higher feelings of self-efficacy prefer pay systems that more closely link pay to performance, says Chou.

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4. Dissatisfaction with Job or Responsibilities

High performers want to be learning and growing on the job. If they feel stagnated or if the job is just boring, they will be thinking about moving elsewhere.

Top Talent Premium Should Be 200%, not 50%

The average premium percentage that high performers receive over what middle performers receive has stayed roughly constant during the recession, notes Chou, as seen in the table below.

Average Merit Increase Awards

The data are mean (average) values and include zero-percent responses.

However, Chou recommends that employers provide a greater premium for high performers, up to 200 percent.

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