KEY POINTS:
The latest analysis of New Zealand remuneration reveals no correlation between employee pay and voluntary staff turnover.
The review of data from 35 major companies by Higbee Schäffler shows employees are not quitting over pay. The average staff turnover in the 10 highest paying companies was 17 per cent, and in the 10 lowest paying companies, 18 per cent. The 10 companies with the highest turnover (average 27 per cent) paid, overall, almost exactly the market average. So did the 10 companies with the lowest (average 11 per cent) employee turnover. The analysis excluded sectors with traditionally high turnover, such as hospitality.
Higbee Schäffler consultant Caroline Fenton says the lack of relationship between pay and staff retention flies in the face of what many believe. "Paying high in the market may attract candidates at the recruitment stage, but it doesn't reduce turnover," she says.
This should come as a relief to companies struggling to keep up with rising pay packets. "Paying every employee above the median is a questionable strategy and unlikely to bring the best return to shareholders or taxpayers. Companies are better off targeting their best people, with high pay going to the most productive employees," says Fenton.
