As the demand for engineers escalates, people are churning - milling about between companies, as it were. I have mixed emotions about this churn, from both the individual's and the corporate standpoint. For a corporation, the churn of people increases the cost of business, both in the real cost of hiring new employees and in the hidden costs of training and integrating these employees. Of course, it also leads to escalation of salary expense. Unfortunately, there is an issue here that is seldom discussed. There is always a discrepancy between what new employees and old hands are paid. Years of experience within a company appear devalued by the high starting salaries of new employees. People always say that this should be fixed, and that existing employees should all get a big raise because salaries for new hires have increased. But the idea is a nonstarter. The market doesn't work that way. Managers scheme on how to retain their key employees. What they would like is something akin to frequent flyer miles to build loyalty for employees with longevity in the company. They come up with socalled golden handcuffs in the form of vesting bonuses, options, or stock, with the idea that this will lock in their critical people. Not only do the golden handcuffs fail to work as intended, they create unrest and churn in themselves. Nothing stays secret within a corporation, and the existence of any special deals quickly becomes known. This creates two classes of people-disgruntled employees who have been left out, and gruntled employees who have had their market worth affirmed. The latter class is newly attuned to the possibilities of leveraging their value on the outside. So job churn seems bad for the corporation, at least past a certain point. Some level of job churn is, of course, necessary for corporate vitality - say, about 10% annual attrition. On the other hand, churn seems good for the individual. Opportunities abound, and the general level of compensation increases. The question for the individual, though, is this: why do we have to leave our jobs, homes, and friends to prosper? Why not, in a perfect world, stay where we are, yet see compensation increased to market levels?
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Open Access
Jul 1, 2003
Paul Smaglik 
