Real life. Real strategy. Turned all the way up.
Note from Michaela
October has plenty of costumes, and it's not even Halloween yet. One expense I see dressed up as savings is a pay decision that looks inexpensive until someone leaves and replacement costs start showing up in different places. This is an extra addition and a follow-up to my October 10th newsletter advocating for critical people before the budget closes. There were so many positive comments and questions. Let's look at the other side of that decision.
TL;DR
Before turning down a targeted pay adjustment, compare its full-year cost with a plausible vacancy, search, and ramp. A raise does not guarantee retention, but you should make the decision with the whole cost in mind, because the numbers don’t lie.
Is an out-of-cycle 6% increase better or worse than the alternative?
THE COST AFTER “NO”
Picture: This is a decision scenario and not a story about a specific company. A manager requests an adjustment for a strong performer. The budget's closed, so the answer is no. Months later, that person resigns. Now the company may fund a search, cover the open role, onboard a replacement, and wait for that person to fully reach productivity. Some of these costs land in separate accounts. Others show up as delayed work or time taken from the leadership team. The proposed adjustment was easy to see. The alternative deserves the same scrutiny. Before making the call, here are the questions everyone should ask:
What's the fully loaded annual cost of the adjustment?
Might a role sit vacant, and who would carry that work?
What are the likely search, onboarding, and ramp-up costs?
Which client revenue, production, or integration milestone might slip?
If pay cannot move now, what can leadership honestly change, and when will it revisit the decision?
A person may leave even after receiving a raise. A company may have a sound reason to say no. Those truths do not make the vacancy cost irrelevant. This month's move: Choose one role your Q1 plan depends on. Put the proposed adjustment beside a plausible replacement scenario using your own numbers, then decide. So often, the statistics tell us turnover can cost 50% to 200% of the first-year salary. With that in mind, and after answering all of these questions, is a 6% increase better or worse than the alternative?
On My Radar
📖 Reading: Book/article/newsletter — one sentence about why it's worth reading.
🎧 Listening: Podcast/episode — one sentence.
📺 Watching: Show/video/documentary — one sentence.
