Employee Retention and Pay

Retention is a very good reason to do so; replacing someone good is always hard (and expensive) in terms of hiring and ramp-up times. If you don't adjust your employees' salaries to reduce the incentive to job-hop in order to get a raise, you're basically asking your best employees to leave.

You aren't "investing" in employees by paying them a salary. Employees will get a 10-15% payrise by switching after 2 years. Give them that payrise and communicate why. Even if they leave anyway, you only pay them while they stay so you don't lose much.

All of the things you listed are typically justified as being incentives for employees to stick around. If the value of an employee sticking around is not that high, why are they paid so much to do it? It sounds like the root of the problem is that the company is spending years paying for something that it does not want (long-term loyalty) and then having to enact painful corrections later on down the line.

Don't want your employees to leave? Pay them more.

Companies who want to keep you need to offer you enough that stay. You can skip raises to keep people for a few years, but they will remember that and expect you to make it up latter. (the ability to keep your paycheck through a downturn - and thus house and local friends - is valuable) Eventually employees catch on that their pay is significantly less than they can get elsewhere and they will leave. It is better to proactively give raises to everyone so that they don't go looking: replacin

Most companies prefer some attrition to keeping everybody up to date with the crazy run that the software eng market has been in the past 10+ years. Reality is, if your company is good place to work at otherwise, most people won't start looking for a new job only because it could pay 20-30% more. And, at the same time, in many companies payroll is the biggest cost, so if you can keep it lower by that 20-30%, it will have huge effect on the bottom line.

What's funny is they'll end up raising the pay anyway. It's not like when you leave they can get someone for the same pay. They're going to have to pay as much to an incoming candidate as the next company will have to pay you. They're literally just banking on you either being too lazy or afraid to leave. So then the only loyal engineers they have are ones who aren't competent enough to leave.

It’s not bad at all. Companies forced this by not rewarding people who stay.

You forgot the biggest benefits to the company - increased retention rates and salary suppression.

> Maybe it would be in their interest to pay more, so you don't leave.I think that would have limited effectiveness. In my experience, people usually don't leave because of pay reasons, and more pay wouldn't get most of them to stay.They usually leave because they want to learn something new, or work on something different, or there are things about their working conditions or company that makes them very unhappy.Offering more money would keep some of them around, sure