Is Win-Win Still Winning? Part Two
January 30, 2017
Employee value over the long term - who wins?
The first act of turning an applicant into an associate is to hire one, which is to say, come to mutually agreeable terms. This creates the contract that exists between all employers and all their employees, whether it is committed to paper or simply understood between the parties. It’s the quid pro quo of working – the who-does-what-to-whom-when-and-how-often stuff. The employee agrees to put in time in exchange for personal fulfillment, peer recognition, deep professional satisfaction… and maybe the tiniest bit of money. In the entry-level positions, pay is pretty much a take-it-or-leave-it proposition; in the professional ranks, it can be subject to wage surveys, local living costs, mathematical computations, the laws of supply and demand, and massive amounts of pure dumb luck.
Let’s start with the happy assumption that forming an employer-employee relationship signals a successfully negotiated win-win scenario. However, once the new hire paperwork is done the new employee typically becomes a human resource commodity. Unless the company is failing or the employee is an outright incompetent, the normal procedure is to review salaries annually and grant a modest increase to all. The annual pep talk that goes with the employer’s modesty has been recorded on a closed loop for years now: “here’s your three percent, which is the best we can do in these competitive times. Employee insurance is costing us a fortune, but know that we do appreciate all you bring to the table.” The tape ends and the status quo intervenes until the next year’s rerun.
That three percent, by the way, has been the average American raise since 2014. That was the most current data available, but from my own personal experience I would contend that 3% has held reasonably steady for far longer than a decade. According to CNN Money, the highest rated performers get 4.6% increases; those deemed “average” realize 2.6% and those rated “below average” see less than 1%. For the purpose of my observations, I will use 3% -- confidently.
In the meantime, reliable, trainable employees increase significantly in value. In the first year, they learn the products, the people, the politics, the ropes, the routine, and the route to the restroom. That may not sound like much, but nothing saves an ongoing enterprise money like a stable workforce. The savings from heightened productivity and business continuity drop to the bottom line. Contrarily, employee turnover is a distraction and a nuisance that can cost your business its reputation as well as its opportunities. Keeping good employees well trained, well compensated and happily on the job is the single best investment an employer can make.
But is that what happens in real life? Not generally -- employers rarely step up with base adjustments or incentives to keep the employee happy, loyal, and most importantly, in place. Not just in place, but in a better place. The HR team will tell you that the company promotes from within whenever possible, but there is another typical “win-win go-around” in that benevolent practice.
Consider this example: a model employee who was hired at a starting rate of $50,000 and has been on the job for three full years. With two annual reviews that yielded above average ratings, that employee’s salary is approaching $55,000 annually. Suddenly, there is an opening for a supervisor’s position that, if filled from outside the firm, would start somewhere in the range of $75,000.
I can’t tell you how many times I have been part of executive conversations – in excellent companies performing well within budgetary expectations – that stop dead when someone suggests that the inside candidate should be offered the job and given a 36% salary increase. Most supervisory types are loath to suggest that the associate who added value to the company last week at $55,000 could possibly do anything to justify coming in next week at $75,000. Moreover, it seems to suggest that the management team would be considered incompetent or inattentive to the shareholders needs if they were even to float the idea. The typical solution is to offer a modest increase coupled with a dramatic increase in responsibility, essentially offering a title without the associated compensation. It’s a definite win-lose: the employer sidesteps the risk of the unknown and acquires a no-training-needed supervisor at bargain basement prices. The grateful employee has moved ahead but only slightly, coming up far short of what s/he would be earning if hired from the outside.
Do I stay, or do I go?
Now let’s throw around some job-change numbers. According to information provided by the Bureau of Labor Statistics (BLS), the average American worker changes jobs between eleven and twelve times over the span of his or her career. Surprisingly, there isn’t much gender separation here – women change 11.5 times where men change 11.8 times. According to the folks at the Gallup organization, the average American worker starts his or her career at age 18 and retires at age 62, spending 44 years in the labor force. If you change jobs 11.75 times in 44 years, then mathematically you spend an average of 3.7 years on each job. In September of this year, the BLS put the number as of January 2016 at 4.2 years per job, down from 4.6 in 2014. (Interestingly, Forbes had a higher number based on older data, reinforcing the downward trend, but did note that the tenure expectancy for the millennial worker is about half of that number. Remember that the next time one of those bright, young smiling faces is seated across from you in a job interview.)
The downward trend signals a stronger economy that offers greater prospects for advancement with job movement. If a job change opportunity arises early in your fourth year of employment, and you received good job ratings in your three annual reviews, you are likely to be earning 12.5% more than when you started. If you did a stellar job, you’re making as much as 14.5% more than your starting salary.
So what personal experience advice do I offer to younger up-and-comers who seek career guidance? Easy: although I deeply believe in the value of job continuity, every big salary leap I’ve made over my lifetime has involved taking on the devil I didn’t know. If you’re young, adaptable, anxious to get ahead, and another company is offering you 15% above what you’re making, take the new job. If you’ve been in your current position three years or more, take the new job. If your prospects for promotion – true, fully paid promotion – are slim to non-existent, take the new job. If for some reason you’re not in harmony with your immediate supervisor, the most influential person in your career trajectory, take the new job. Do you sense a recurring theme here?
If you’re as good a worker as you think you are, when your resignation is received, there is a ritual you must endure: the begging, pleading and wondering aloud what, oh what, we, the management team, can do to get you to change your mind. Of course, management’s first act of contrition is to match or better the offer you received. If this does happen, ask yourself why money is freely available to save employees rather than routinely being used to retain them? The obvious answer is that workers typically receive the least that the employer feels is required to keep them in place. If money was the only reason for your departure and you’re satisfied with the counter-offer then take it, but do so knowing that you’ve used up your one wish and that you will now return to the regularly scheduled program already in progress.
I routinely counsel employers that they should spare themselves the humiliation of ritual begging. Turning in a resignation is much the same as asking for a divorce: by the time the request is made, it’s far too late to consider how you could possibly develop into a better person (or company). It’s best to make the transition reasonably workable for both parties, acknowledge the departing employee’s contributions to the organization, and wish them well as you wave them good-bye. If you still want to be a better person or company, then concentrate on improving the future rather than atoning for past mistakes.
Does advocating for job change support the win-win scenario? For employers and employees, both sides should recognize the inherent power imbalance in the relationship, embrace the constancy of change, and welcome the benefits that accompany reasonable transition. Companies benefit from the periodic infusion of new blood and new ideas. Workers hone new job skills, develop more robust experience, become more valuable to the market over time… and maybe earn the tiniest bit of money betting on their own future.
Set aside the status quo – growing and moving on is a win-win scenario for employers and employees, just as it has always been for parents and children. It’s tough while it’s happening and it takes some getting used to, but it usually turns out for the best.
Michael Schubach CHTP, CHAE
Strategic Business Director and Program Management Officer
As published on GlobalHotelNetwork.com
- North America