Copyright © 2024 Entrepreneur Media, LLC All rights reserved. Entrepreneur® and its related marks are registered trademarks of Entrepreneur Media LLC
By Sherin Shibu Edited by Melissa Malamut
Share
What if employers paid their workers the highest salaries they possibly could?
According to psychologist and best-selling author Adam Grant, it’s in an employer’s best interest to pay their employees as much as possible — in the form of a high starting salary and raises.
Higher paychecks give workers an increased incentive to stay at the company, leading to better retention rates, lower turnover costs, and a more stable workforce in the long term, he says. Grant frames higher salaries as an “investment” for companies.
“Giving people a raise, and in particular, paying them well—some would even say paying them extremely generously—is an investment in motivation and retention,” Grant told Fortune.
Related: Looking for a Remote Job? A New Survey Says It Could Be Harder to Find Than You Think.
Gallup estimates that replacing an employee can cost a company up to two times the worker’s annual salary — much more than the median 3.8% annual raise in 2024, according to data from nonprofit think tank The Conference Board. Still, job hopping may not yield a significantly higher salary, anyway. According to federal wage data released this week, people who stayed in their jobs saw their salaries rise by 4.6% in January and February while switchers experienced a slightly higher increase of 4.8%.
Adam Grant. Photo by Brian Stukes/Getty Images
“When organizations pay on the top end of the market range, they end up with unusual loyalty, because people know that they can’t easily replicate the salary that they’re getting elsewhere,” Grant added.
Employees with higher salaries are also more motivated and engaged, per compensation site Figures HR. According to Gallup, higher employee engagement means 78% less absenteeism, 18% more productivity, and 23% more profitability.
Meanwhile, a new Harris Poll survey for Bloomberg News released last week found that three in four workers think employers have the upper hand in the job market. The hiring rate for all workers was 3.4% in January, a low point in the past decade, while job postings were down 8.6% in December compared to the same time last year.
Related: ‘No One Is Paying What They Used to’: Job Hopping Isn’t As Lucrative As It Used to Be, According to New Data
Entrepreneur Staff
News Reporter
Want to be an Entrepreneur Leadership Network contributor? Apply now to join.
Artificial General Intelligence (AGI) is no longer a distant concept; it's poised to redefine how businesses operate by 2027. The next two years will determine who leads the AGI revolution — and who gets left behind.
We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.
Entrepreneurs and elite soldiers share a common trait: the ability to thrive under pressure. Discover five critical lessons from special operations training that can give you a strategic edge in business, from resilience to decision-making under stress.
Dimon has been CEO of JPMorgan since 2006.
18-year-old Boogie Fland signed his first NIL deal at 15, becoming New York's first high school athlete to secure a sponsorship. As he prepares for the NBA draft, he reflects on the insights he learned from his business manager, Julian Aiken, with Entrepreneur.
Tesla shares have dropped over 50% in three months.
Successfully copied link
We'll be in your inbox every morning Monday-Saturday with all the day’s top business news, inspiring stories, best advice and exclusive reporting from Entrepreneur.
Copyright © 2025 Entrepreneur Media, LLC All rights reserved. Entrepreneur® and its related marks are registered trademarks of Entrepreneur Media LLC
