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. 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.’
Article from the Daily Mail