Adam Grant advocates for employers to offer high salaries as a strategic investment. By paying employees well, organizations can improve retention rates and reduce turnover costs significantly. He highlights that competitive salaries foster a loyal workforce, ensuring employees are engaged and motivated, which leads to productivity and profitability increases. Notably, replacing employees can cost companies double their salary, making generous compensations a financially sound decision. Grant emphasizes that higher pay can yield a more stable and committed workforce, ultimately benefiting the company's bottom line.
"Giving people a raise, and in particular, paying them well-some would even say paying them extremely generously-is an investment in motivation and retention," Grant told Fortune.
"When organizations pay on the top end of the market range, they end up with unusual loyalty, because people know that they can't easily replicate the salary that they're getting elsewhere," Grant added.
According to Gallup, higher employee engagement means 78% less absenteeism, 18% more productivity, and 23% more profitability.
Gallup estimates that replacing an employee can cost a company up to two times the worker's annual salary - much more than the median 3.8% annual raise in 2024.
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