Which is better business — paying signing bonuses or treating people right?
High turnover costs big money. First of all, it costs money to go out and replace all of the people you’ve lost. If the companies in Silicon Valley that are losing people would stop paying $50,000 signing bonuses, and instead do what’s necessary to keep the people they’ve got, they would be much better off economically. Along with incurring replacement costs, when you lose people, you lose knowledge, you lose experience, and you lose customer relationships. Every time a customer interacts with your company, he or she sees a different person. I like to go to my branch bank because I know that I’ll always make a new friend there: The turnover is so high, I’m always meeting new people! There is nothing soft and sentimental about this part of the argument. This is simple economics. David Russo did a calculation in my class one day: A student asked him why SAS does so much family-friendly stuff. He said, “We have something like 5,000 employees. Our turnover rate last year was 3%. What’s the
