Several research studies have shown that ‘lack of career progression’ is the most common reason for people quitting their jobs to seek opportunities elsewhere. There is no doubt that career progression will almost certainly lead to a higher salary but many managers and HR professionals make the mistake of thinking they can address the ‘lack of career progression’ problem by offering the employee more money.

Having worked with many SMEs and global organisations, I know that throwing money at this problem will never solve anything. In fact, it often makes the situation worse. If the response is a pay increase, it could lead to pay disparity amongst the team and simply delay the inevitable. Also, with the new equal pay legislation, companies must start thinking about tighter controls and governance instead of reactionary pay increases which may impact the gender pay gap.

Another common reactionary response to an employee looking to resign due to a lack of career progression is a cash retention plan. This is more common for senior or highly technical roles. However, unless you have a very generous cash retention plan, this is another ineffective retention tool. With competition for talent heating up, many organisations are prepared to buy out cash retention plans. Even if the cash retention plan works, a strong possibility exists that the employee will leave as soon as the retention plan ends, as their annual earnings will have decreased significantly.

Does this mean we should never award out-of-cycle pay increases or a cash retention plan if there is a risk that an employee is about to resign? Not at all. They may be appropriate in some cases. However, they should be the last resort. What we need is for managers to be proactive and have the freedom to make decisions that consider the long-term strategy of the business rather than having to always respond to situations out of necessity.

This requires a shift in attitude for managers and the culture of the organisation. A shift from always focusing on the short-term budget and annual results to, instead, considering the long-term development of employees and the business. A shift from making decisions based on ‘gut feeling’ to making informed decisions based on research and benchmark data. Even if we are aware of best practice and the right solution, we must back it up with internal and external data. HR must accept responsibility for driving this change if they want to shift their focus from policy administration to creating strategic long-term value for the organisation.