If building employee loyalty is a challenge for managers and they see their workers leaving for better

opportunities, what can they do to change the situation? Some companies focus on team-building

activities, company picnics, rock-climbing walls, or zip lines, but do these actually make workers decide to

stay with their company for less salary? The answer is usually no. The reality is that salary plays an

important role in an employee’s decision to move to a new job. Therefore, retention bonuses are a

popular and perhaps more successful technique for instilling loyalty. The company provides a payment

to an employee contingent on his or her committing to remain at the company for a specific period.

According to a Glassdoor study,8 when changing jobs, employees earn an average increase of more than

5 percent in salary alone, not including benefits. Thus, the offer of a salary increase and/or a retention or

performance bonus can help turn many would-be former employees into newly loyal ones. The same

study found that a 10 percent increase in pay upped the odds that an employee would stay at the

company. According to Dr. Andrew Chamberlain, chief economist of Glassdoor, “While it is important to

provide upward career paths for workers, a simple job title promotion may not be enough. Maintaining

competitive pay is an important part of reducing turnover.”9

Of course, a retention bonus may not be enough to keep someone at a job he or she hates, but it might

help someone who likes the job to decide to stay. The Society for Human Resource Management believes

retention plans should be part of an overall pay strategy, not merely giveaways for tenure.10 Imagine

that your colleague is considering leaving your firm for another company: Your manager has offered him

a retention bonus to stay and your colleague is seeking your advice about what to do. What would you

advise?

Critical Thinking

• What questions would you ask your colleague to better determine the advice you should give him or

her?

• Consider your summer jobs, part-time employment, work-study hours on campus, and internships.

What meant more to you—the salary you made or the extent to which you were treated as a real

contributor and not just a line on a payroll ledger? Or a combination of both?

• What lessons do you now draw about reciprocal loyalty between companies and their workers?