The web is abuzz with the news of Google giving every employee a 10% raise and a $1,000 cash bonus for the holidays. Eric Schmidt says they are doing this to retain Google’s talented work force. But will it work?
Most employee retention experts would say no. And I would say the same. Study after study has shown that salary is not high on the list of reasons people leave a job. In my opinion, raising salary will have the effect of retaining the B and C players but not the A players. So hopefully Eric Schmidt’s strategy doesn’t stop at simply a 10% raise and $1000 spending money.
And I’m guessing it doesn’t. Because on the surface, Google’s decision to give across the board salary raises smacks of desperation. They are acknowledging they are no longer a front runner. Either they are really dumb, or really smart. And here is what I guess could really be happening.
Perhaps Google is actually having difficulty hiring top talent, rather than retaining. Perhaps their current salary levels are too low competitively, and to get good people they need to hire them at a higher salary than existing employees. New people coming in the door aren’t going to be as excited about stock options with Google stock floating above $600 per share. So Google needs to make up for it in base salary. And that puts them in a quandary about current internal employee salaries.
The answer? Give everyone a raise. For the employees that have been at the company awhile and they are fully vested in early shares, this may work. However, I think if they went to Google because they were excited about joining a rising star of technology, a 10% raise has no chance of them keeping them from joining Facebook or some other private, yet-to-IPO company.
If Google was serious about retaining existing employees, and if that is the pedestrian strategy, then there are lots of other choices than salary. First and foremost, make sure individuals are given job responsibilities where they feel like they can contribute. That their job makes a significant impact.
At a primitive level, inside or outside of a job, everyone just wants to be loved. We want recognition. It works exactly the same for employees. If you feel like someone cares about what you do, you are acknowledged for your accomplishments, and not made the scapegoat for problems, you will stay in your job. If you like your boss, your job means something, you get paid fairly – you will stay.
It’s definitely not just about the salary. For many that were thinking of leaving, it just gives them better salary negotiation power for their next gig.
What are your thoughts?
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