In today's job market, more people are moving on from their employers than ever before. In fact, according to the U.S. Bureau of Labor Statistics, the quit rate for employees is 2.5 percent — down somewhat from the April high of 2.8 percent, which was the highest it’s been since the BLS began collecting that data. And although there are a number of reasons why anyone leaves an employer, employee salary almost always plays some part in the decision-making process. 

For workers, there's a clear advantage to leaving, since they gain, on average, a 10 to 20 percent raise in base salary with each new role — but 73 percent of the time they need to leave their current employer to capture that increased employee salary. Such high employee turnover is acutely felt on the employer side as well, since the cost of voluntary turnover can become exorbitant depending on the seniority of the role that needs to be filled:


30-50 percent of the worker's annual salary



150 percent of the worker's annual salary



up to 400 percent of the worker's annual salary


So what should your employee compensation program look like in order to keep employee retention high? Let's dig in.


the quit rate for employees is 2.5 percent — almost the highest it’s ever been.

make sure base salary is competitive

Thanks to a candidate-friendly job market and the advent of data transparency tools like salary calculators, workers know the value of the work they provide more than ever before. So if your employees' compensation levels are not competitive for the industry and marketplace you're in, don't expect them to stick around for long.

Also, ensure that you offer promotions that are meaningful — in both responsibilities and salary. And know that with higher compensation comes higher expectations: Paying employees top-notch salaries means that your standards can be equally high. Rest assured, as well, that workers who are paid well will also expect more from themselves.

tailor your salary to the employee's market

Any good salary calculator will take into regard the specific marketplace where the employee lives (and, if in-house, operates). We all know that $50,000 won't get your employees nearly as far in New York City as it will in Cleveland or Atlanta, so adjust your salary budgets to reflect specific cost-of-living data for the cities in which you operate.

And if you transfer someone from one market to another, be sure salary is adjusted accordingly. Employees who work on the front lines for you in more expensive cities shouldn't have to shoulder the additional financial burden for you.

go beyond base salary

variable pay benefits

To really retain your top talent, you're going to need to think beyond base salary, and variable pay benefits is a great place to start. Think of salary as employee compensation for regularly performing the tasks required of them, day in and day out. On the other side of the coin are variable pay benefits — financial incentives that motivate your workers to exceed established goals and capture additional achievements. 

Many organizations have found variable pay benefits to be a proven, powerful tool for driving engagement and retention. These can include:

  • end-of-year or holiday bonuses
  • sales commissions
  • referral bonuses
  • ash spiffs
  • profit sharing

many organizations have found variable pay benefits to be a proven, powerful tool for driving engagement and retention.

No matter the benefits you choose, the most important thing to remember is to keep the incentives simple. Each of your employees should understand them and know exactly how to achieve them, so clearly communicate every goal, the amount of productivity required, and the end results they need to deliver.

"quality of work life" rewards

In addition to base pay and variable rewards, you can strengthen your compensation arsenal by providing "quality of work life" rewards. Like variable pay benefits, these are incentives that reward workers for going above and beyond, but instead of cash are focused more on improving work life and skill development. These can include:

  • educational assistance, such as tuition reimbursement or paid professional development and certification programs
  • an annual retreat for top performers, with workshops and other events that inspire engaging, creative thinking
  • increased opportunities for telecommuting or schedule flexibility
  • equipment upgrades, such as laptops for performing remote work or tablets to use during sales presentations 

The most important consideration here is to develop a rewards program that is applied fairly and consistently across the entire organization, so everyone can reap the benefits no matter their contribution level.


develop a rewards program that is applied fairly and consistently across the entire organization, so everyone can reap the benefits.

know that salary alone may not be enough

Even when you're checking all the boxes for salary and additional compensation, it may not be enough to halt employee turnover — especially as employees continue to prize remote or flexible work as highly as salary. In fact, recent data from HR software maker iCIMS found that half of companies had removed or loosened location requirements for new hires, meaning companies will increasingly have to compete for talent with companies that let workers work from wherever they feel most comfortable.

If remote or hybrid work is an option for your organization, it may be time to consider adding that your list of benefits.

partner with a staffing firm

Developing a strong and competitive employee compensation program is no easy task. And that's where working with a staffing firm with deep expertise in compensation and its impact on employee retention can place you on the fast track to strengthening your organization. If you need a staffing partner that knows the ins and outs of compensation and benefits (have you checked out our salary calculator and salary guide?), or you're just looking for extra assistance in finding the best talent for your culture, contact us to start working together today.