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Some Tech Companies Not Retaining Staff Because Of $5 An Hour

$5 Bill

Last night I was chatting with Steven Sorsveen (my business partner) about how nearly every day a client says they lost a key employee to a competitor.

In this case it was a web development shop losing a mobile developer who was truly underpaid.

I told Steven I think it is silly that $10K more a year would have likely kept the person. They liked the company, culture and work.

Steven said, “Even more silly, that is $5 an hour”.

Think about that for a moment... $5 an hour.

The $10K would only have put the developer almost even with market rates. So no, they were not being greedy.

Why could that $5 an hour not have been added in to the projects when they were pitched?

I guess if you have 4 mobile developers working on a project that’s an extra $20 an hour and over a 160 hour project $3,200.

But $3,200 is cheap compared to the time and energy (those are dollars too) to recruit someone new. There is also the ramp up time of the new hire and likely lost revenue in the process.

All over $5 an hour.

Really does seem silly...

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So true! If you logic out the cash, it's bad business... Do you think the managers are just making emotional decisions, or is money so tight the 3K seems more risky than the gamble to lose a consultant?

Eric Putkonen @

What's worse, the company then backfills that job asking to pay the same (or less) for all the various skills the person leaving acquired by working there (the mix of skills likely could not be replicated without working there). As if you could hire a duplicate of the person (so they can hit the ground running) for the same or less money.

It is insanity. We keep cutting pieces off this rope, but it is still too short.

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