THE BASIS POINT

A third of people quit jobs when promoted. Is it better to just give raises?

 
 

One of the largest payroll providers ADP analyzed 1.2 million U.S. workers at companies employing at least 1000 people from 2019 to 2022 and found that 29% quit within the first month of getting a promotion. So would it be better to give people raises instead? One answer comes from this insight from the ADP research team:

– If the 29% of people who quit within a month of their first promotion hadn’t been promoted, ADP estimates only 18% would have quit.

ADP put it like this:

“Promotion, in other words, led to a nearly two-thirds increase in the risk a person would leave.”

The fine print of this ADP research also notes less experienced workers are way more likely to quit after a promotion:

– People who landed their first promotion while working jobs that requires a high school diploma or less were nearly 6 times more likely to leave in the first month after their promotion than they would have been had they
not been promoted.

– Also for those folks, that promotion continued to more than double their chance of leaving the company for the remainder of a nine-month period.

– Conversely, people working jobs requiring graduate school or advanced technical degrees were 52% more likely to leave in the first month after being promoted, but by the fifth month, their risk of leaving dropped below what it
would have been without getting promoted.

So now back to our question:

Is it better to just give people raises than promotions?

I vote Yes, because people really want money more than anything else.

Of course I tend to have sales bias, where salespeople care much less about titles than the dollars.

I think this argument can be made for most folks.

And if more money retained them longer compared to a better title that makes them seek another job faster, I think basic management and budget logic should prevail.

Here’s a link to the ADP Research team’s findings. Interesting stuff for managers.

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Reference:

Today At Work

 

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