…..Loyalty also brings benefits in business. In Silicon Valley, where companies frequently poach employees from each other, the pay of 50,000 software employees was studied by Kathryn Shaw, an economics professor at Stanford Business School, and her colleagues. For most experienced workers, typically those who had at least five years of experience in the field, the bulk of wage growth comes from staying with an employer, not hopping between companies. People who had a minimum of experience of five years with a single employer typically got 8% increases in compensation a year compared with about 5% for people with a history of job hopping. Dr. Shaw, who conducted the study in 2006 on behalf of the National Bureau of Economic Research, says she found a similar pattern among workers with relatively fewer skills, such as people who install car windshields.
“There’s a perception in Silicon Valley that there’s a gain to be had by hopping from employer to employer,” says Dr. Shaw. “But short-term hopping is not advantageous to the employer or employee.”
While it is rare for employees to spend their whole career at one company, most are better off if they stay put for five to 10 years, she says. One exception is young workers, who should initially be searching for a firm that offers the right match for their talents and interests, she says.
Employees who stay with a single employer longer also are more productive and creative than those who haven’t been at the company as long, Dr. Shaw says.
“The more that you’re familiar with the organization… the more you can look at it and say there’s another way to do it,” says Mark Keefe , a human resources manager at Atlantic Health System, a 10,000-employee nonprofit hospital concern in New Jersey. The company tries to retain employees by giving merit-based pay increases that top most of its competitors, and other perks. Last year, Atlantic retained 98.5% of its employees.