Here’s a secret that people who change jobs often know too well: you get paid more if you change employers every 2 years or so. This was validated in a recent article on Forbes where the writer shared that if you stay in a company for more than 2 years there’s a big chance you will get paid 50% less compared to people who change jobs. The reason is straightforward:
Employers give low annual increases (3%-5%) but they won’t hesitate to pay higher for new talent.
This is #RealTalk and plain simple truth. The challenge now is how do you address this if you’re an employer? In my talk earlier this morning at the Philippine Digital Convention breakout group on progressive workplaces, this was my proposed answer:
We need to move away from fixed salaries to fixed + regular variable pay. Companies need to pay people bonuses regularly based on agreed KPIs and metrics and not do it annually or every two years. Increase the frequency (might be lower in total) but just so you don’t get put out of business, do the numbers so it only gets given if the business grows.
There are companies who already do that in the Philippines and most of them are either sales-driven organizations or start-ups who need to scale fast. I know of at least three companies here in the Philippines who have monthly bonuses stacked on top of your fixed pay depending if you meet your monthly KPI. I also know several start-ups who give quarterly bonuses based on individual KPIs and a retention bonus after 2 years based on company and employee performance.
It’s critical this issue gets addressed by companies because compensation is the top factor employees look at for Job Satisfaction based on the PH study by LinkedIn (see chart above).
At the end of the day it’s not product that needs innovation also. Human Resources, Legal, Finance, and all other departments need to embrace different ways of working to be able to address the new realities of business. If you’re a business owner we strongly recommend you re-evaluate your compensation model and adopt a performance-driven set-up like the ones we mentioned earlier. It’s a win-win if you work out the numbers properly.
This post is part of our 4-post series on Hiring in the Digital Age. See the posts below:
- Thoughts on Why Open Space Offices Don’t Work
- Fastest Way to Accelerate Digital Marketing Skills
- What Filipinos Want in a Job
- People Who Stay in their Job for 2 Years Get Paid 50% Less