The best way to get rid of a problem employee--besides a pink slip--may be a fancy new title, according to a Cornell University study. In fact, promotions alone don't encourage star employees to stay, either. Regular raises are much more effective.
Studying about 5,000 employees at a large petroleum firm, researchers found that almost half of low performers remained at the company after four years when given few promotions. But less than 10 percent stayed when "rewarded" with new titles. The new titles suddenly made these workers more attractive to other employers, leading them to Jump ship.
As for star employees, only 28 percent remained at the company when rewarded primarily with promotions, compared to over 80 percent of average workers. But when compensated with sizeable salary hikes, more than 85 percent of these star performers stayed.
While employee turnover is affected by such factors as company culture and the current job market, the study's results may provide key lessons for employers who want to keep outstanding employees. "When you lose a top performer, you are losing a possible future leader of your company," says Cornell researcher Charlie O. Trevor, Ph.D. "And if the best performers leave because they are not being paid enough, there's little motivation for good performers who have the ability to become excellent performers."