The key to earning more money?
Change jobs every two years: People who work for same employer for longer will earn 50 per cent less over their lifetime
By Matthew Blake, Daily Mail Australia Published: 18:36 AEST, 23 June 2014 | Updated: 21:18 AEST, 23 June 2014
• Average raise in 2014 will be 3%, but with inflation, that equates to 1%
• Average raise employee gets for leaving company is between 10% and 20%
• It is because recession has made firms freeze pay and use promotion quotas
Employees who stay in the same job for more than two years will earn 50 per cent less over their lifetime than people who change companies more frequently, research has found.
The average raise a worker can expect in 2014 is 3 per cent.
But with inflation at 2.1 per cent that raise equates in real terms to just 1 per cent, according to Forbes magazine.
Keep moving: This graph shows how an employee who changes jobs (in purple) can jump between salary brackets, enjoying a faster pay increment than workers who stay in the same job over a period of years.
By contrast the average raise an employee receives for leaving their company is between a 10 per cent to 20 per cent increase in salary. In some cases, that figure can be as high as 50 per cent.
The reason company-loyal employees lose out in the long-run is that many businesses have been forced to freeze payroll and decrease salaries as the nation navigated itself out of the recession in 2008.
Bethany Devine, a Senior Hiring Manager in California’s Silicon Valley who has worked with many Fortune 500 companies told Forbes: ‘The problem with staying at a company forever is you start with a base salary and usually annual raises are based on a percentage of your current salary.
‘There is often a limit to how high your manager can bump you up since it’s based on a percentage of your current salary. However, if you move to another company, you start fresh and can usually command a higher base salary to hire you.
‘Companies competing for talent are often not afraid to pay more when hiring if it means they can hire the best talent.’ She adds that promotions work in a similar way.
Once, she says, an employee becomes ‘entrenched’ in a company, they may find it harder to achieve promotion due to the fact they are waiting in line behind others who should have been promoted a year early but were not because the firm had already reached its annual promotion quota.
‘However, if you apply to another company, your skills may match the higher title and that company will hire you with the new title,’ she says. ‘I have seen many coworkers who were waiting on a certain title and finally received it the day they left and were hired at a new company.’
She added that she had often encountered employees who had worked in companies for more than two years that she felt were ‘underpaid’.
Brendan Burke, Director at Headwaters HW, agreed, saying that ‘companies turn over great employees because they’re not organizationally strong enough to support rapid development within their ranks.’
But Andrew Bauer, CEO of Royce Leather told the magazine that employees looking to jump ship should consider all the consequences as moving jobs can be stressful.
He urged workers to always consider their ‘quality of life, mental health, physical health and better moral standards.’
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Interesting article, especially for employers. It highlights the need to regularly assess external salary data and market rates to ensure you remain competitive and retain your top talent.
If your Company is experiencing a high absenteeism, high turnover or poor productivity it might be time to get a second opinion and Human Resource Services can help – call us now for an obligation free chat;
