Show Me the Money

It takes more than just a fancy new title to keep a productive employee.

By Dinha Kaplan, published on July 1, 1997 - last reviewed on August 30, 2004

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."