Why it pays to QUIT

"Why it pays to QUIT

Loyalty, shmoyalty. In today's frenzied job market, staying put gets you nowhere. Walking out gets you ahead

By Kim Clark; Joellen Perry

Truck drivers are abandoning their rigs at truck stops and driving off with recruiters who offer them a few more pennies per mile. Waitresses scooping up tips of dollars and dimes are also pocketing business cards left by competing restaurant managers. When pharmacists answer the telephone, they hear the healthy voices of headhunters offering big signing bonuses to jump to the new chain store across town. Maybe your mother told you that quitters never prosper. Well, Mom never saw a job market like this. No one has. Trying to rein in salaries, employers continue to limit annual raises for longtime employees to a paltry 4 percent, on average. But in their hunger for extra staff, they are offering job hoppers 10 to 20 percent raises over their current salaries.

By the millions, American workers are taking the hint and the cash. Based on a survey of resignation rates by the Saratoga Institute, a work-force research firm, U.S. News estimates that approximately 17 million workers will quit to take other jobs this year, up 6 million from five years ago. The quit rates in some industries, such as the notoriously low-paying retail sector, are mind-boggling. On average, companies nationwide will have to replace one seventh of their workforce this year, but the National Retail Federation says that because part-time clerks tend to stick for only a few months, a typical store replaces the equivalent of nearly its entire work force annually. Money talks. True, people change jobs for all sorts of reasons. But anyone who thinks puny raises aren't at the root of almost every decision to quit gets a snort from Stephen Pollan, co-author of career advice books like Live Rich and an upcoming negotiation primer.

"Boy, are they wrong," he says. In his opinion, money is behind many of the common non-financial explanations for changing jobs. It can ease the pain of personal problems such as child- or eldercare crises, Pollan notes. A hefty raise can also compensate for an obnoxious boss or other workplace hassles.

Dan Meyers, 51, couldn't agree more. The manager of five mobile-home parks in Connecticut, Meyers was fed up with being on call seven days a week, breakdown-prone equipment, and his frozen salary. Early this year, he gave up asking for improvements and found another job. Now manager of a nursing home near Chicago, he is still on call evenings and weekends and has plenty of stress. But he doesn't mind so much because he's earning $15,000 more a year. "People say it isn't the money," Meyers says. "But it is. It is always the money."

There may be plenty of good reasons to stick with your current job - great benefits, a pension plan, or you might just plain enjoy it. And the quit-to-win strategy does have a downside. Job-hoppers have no chance of retiring with a company pension, for example, and they face the danger that in a downturn, the most recent and higher-paid hires will be the first fired. But loyalty also now carries a cost. If longtime employees ever decide to look for other jobs, some recruiters suspect they lack drive or competence. Chris Olson, a headhunter in Fresno, Calif., says she recently tried to sell an employer on a prospective applicant who had been at his current job for 15 years. "The employer asked: 'What's wrong with him?' I said: 'He's loyal.'

"How did we stumble into this through-the-looking-glass job market, in which loyal workers are left behind? One reason is that companies believe it is more profitable this way. It's hard to argue with them - so far, anyway. Since the beginning of this economic expansion in 1991, companies have budgeted 4 percent annual merit raises for their salaried workers and slightly less for hourly workers. Corporate profits, meanwhile, have risen by 9.4 percent a year. Executives and investors have done even better. Take-home pay of CEOs of large corporations rose by 13 percent a year in the same period. The S&P 500 index has skyrocketed by 15.5 percent a year.

Bye-bye, staffers. The calculus is simple to managers like Theresa Hoover, who heads human resources for Gallery Graphics, a Joplin, Mo., firm of some 100 workers that makes frames and gifts. Large raises have gone only to a few indispensable workers who threatened to leave. That's meant a lot of costly turnover, but Hoover shrugs it off. "We just have to lose people," she says. "It is cheaper than giving general raises. "That's why professional career coaches like Leslie Prager, founder of the Prager-Bernstein Group and coordinator of the Career Center at New York's New School University, warns clients not to expect big raises from their current employer. If your boss tries to keep you from jumping by making a counteroffer, you're probably wise to ignore it. "They shouldn't, but employers hold it against you," she says. Her straightforward advice: "To get a significant raise, you have to change jobs.

"Demographics also work against many baby boomers that stay loyal. Most companies say they distribute raise funds by merit. But they also tend to distribute the money by age: The older the worker, the smaller the percentage raise, observes Sylvester Schieber, vice president of research and information for Watson Wyatt Worldwide, a human resources consultant. He says this makes economic sense not just because it limits the dollars the companies hand out-it doesn't take many dollars to give a big percentage raise to a young, low-wage worker. It's also a good strategy for companies because younger workers are probably showing the biggest increases in productivity, Schieber says. Middle-aged workers, who are already comparatively well paid and productive, find themselves bumping up against the corporate ceiling. "There are so many baby boomers in journeyman positions that there is a bottleneck at the top," Schieber explains.

No bump. That's what happened to Dennis Morris, who spent seven years working in the lab for Watson Pharmaceuticals in Salt Lake City. Early this year, Morris, 42, realized he had topped out. "They couldn't bump me up to the next level, senior scientist" because he only had a bachelor's degree, not a doctorate. And there was plenty of competition for management jobs. Facing the prospect of doing the same job for 3 percent raises for the rest of his life, Morris concluded: "The only way to move up was to move companies." He called a local headhunter, checked Web sites for job listings, and read the want ads. After a couple of months, he found a job testing vitamins in the lab at a nearby vitamin company for a 20 percent raise.

Even if they aren't being pushed to look for new jobs by their current employers, new technology is pulling a lot of workers into the job market. Becky Dinkins, 49, a part-time school aide, "hadn't even thought of looking for a job online." Cruising the Internet this summer, she happened to click on a banner ad for the Career Path Web site. She noodled around and suddenly was staring at a want ad that seemed to have her name on it-and paid twice as much as her current job-for 10 hours less a week. She clicked over to the employer's Web site, printed out an application, and a week later, was talking to the man who became her new boss. She loves her new job installing videoconferencing equipment in schools so NASA scientists can talk with students, she has more time to spend with her 13-year-old son, and she's using the extra money to buy a house-all because of an accidental job search.

Drugstore cowboys. Don't think for a moment that the job shortage is limited to the red-hot technology field. As a result of the booming economy, dozens of headhunters make cold calls or lurk outside workplaces to nab bodies in occupations that just a few years ago were overcrowded. Ray Rogers spends much of his day taking calls from desperate pharmacies at the San Antonio headquarters of Innovative Staff Search. He scours the country for pharmacists at a drugstore paying, say, $25 an hour and offers them, typically, a 50-cent-an-hour raise and up to a $5,000 signing bonus if they'll shift to a competing store across town. They'll get more if they have to move or if the job is a promotion, he says. "It's crazy. Five years ago, we had to fight to get openings. Today there aren't enough pharmacists to go around," he says.

Other headhunters repeat similar stories for anyone with computer expertise, as well as a host of less nerdy skills: chefs, assistant store managers, nurses, truck drivers, journalists, even barkeeps. Chuck Dressler had worked at a Red Lobster restaurant in Atlanta for less than two years as a bartender and fill-in manager when headhunters started calling. "I always thought that was just for computer people or high-level" executives, he says with wonder. Soon he got a call he couldn't refuse: a $10,000 raise and promotion to assistant manager at Mick's, an Atlanta-based chain. Now Dressler is one of the hunters, handing his business card to waiters and waitresses at other restaurants.

Keep on truckin'. Finding another job is so easy that workers of all stripes are jumping for relatively small advantages. Donnie Whitley of Milano, Texas, had trouble finding his first truck-driving job in 1987. In the past couple of years, though, whenever he pulls into a truck stop one recruiter or another tries to lure him. Earlier this month, he jumped to his 11th employer in his 12-year driving career, joining Hawk Transport of Dallas because it promised steady work, a friendly atmosphere, and a 3 percent raise. "From my point of view, it's a big raise," he says.

All this pushing by employers and pulling by the Internet can't help but change worker attitudes. Through much of the hiring binge of the 1990s, economists, including Federal Reserve Chairman Alan Greenspan, have puzzled over why so many workers have clung to low-paying jobs. After all, surveys by the Hay Group show workers' satisfaction with their compensation has eroded steadily from its 58 percent approval rating in the late 1970s. As workers have watched profits and executive pay skyrocket past them in the 1990s, their happiness with their compensation level has slipped to about 40 percent. Fed up, wired, and ready to grab their share of the boom, workers are abandoning their economically puzzling job insecurities and loyalties. Millions of American workers who'd never before thought about changing jobs are logging on to want ad Web sites. What's more, they're doing it on company time. Hits on the new Wanted Technologies meta-Web site (which searches 30 other job sites) peak at 1 p.m. And those who seek are taking the jobs they're finding. Five years ago, 1 in 10 workers was a quitter. Today the number is 1 in 7.

Darren Smith, 32, remembers how he lost his nerve in his first attempt to switch jobs. Instead, he gladly accepted a counteroffer from his first employer, a small software firm. Within a year he was sorry, though, as he realized he would have to keep getting other offers to get more raises and promotions. In the five years since then, he has changed jobs twice for big raises. He likes his job as a network services engineer at the Web division of a publisher in Tampa, but he still checks Web site job listings and help-wanted ads religiously because he believes "there's always somebody willing to pay you more down the street."

When Dixy De La Rosa, 28, was finishing up her architecture degree at Kent State University in Ohio last year, she was frightened by reports from recent grads that they'd had trouble finding jobs. She found one easily, and early this year, when she heard that her boss at a New Jersey architecture firm hadn't given annual raises to other employees, she picked up the Sunday paper and started looking again. "He thought we had to put up with whatever he offered," she says. Another New Jersey architecture and engineering firm offered her a job paying $4,000 more a year and a leased BMW if she stayed a year.

Lunch crunch. Yet, job jumping can carry a psychic cost. Proving yourself again is emotionally exhausting. So are learning new bureaucracies, coping with a new insurance and benefits package, making new friends, even figuring out the best lunch spot. That's what 31-year-old Penny Brothers learned this summer. After four years of feeling underpaid as an account manager at an Orange County, Calif., insurance brokerage, she landed a job as an account manager at a health claims administration company for $6,000 more. But her new office was poorly organized, so she had to put in long hours filling in for others. Worn out and frustrated, she quit for a sales job that paid less (though still more than the previous job) but promises more in commission and fewer hassles. "The more you [quit]," says Brothers, "the easier it gets.

"Some employers are finding the growing popularity of job-hopping so distressing - and potentially unprofitable - that they are beginning to reward loyalty again. Costs associated with turnover are skyrocketing for some employers. Surveys by the Saratoga Institute show the average time to fill openings has increased by 10 days to 51 days in the past 3 years. And some employers say they can't afford to lose too much institutional memory.

A penny saved by not giving a raise isn't always a penny earned. Mike McBroom, vice president for human resources for the Hendrick Health System in Abilene, Texas, says his hospital brags that it is keeping raises to the industry standard 4 percent. But, he acknowledges, "When you tack on recruiting costs and hiring bonuses, our budget is probably up 10 percent." McBroom says the hospital is now considering retention bonuses as a counterweight to hiring bonuses.

Don't go. Larry Hall, Chuck Dressler's boss at Mick's Restaurant in Atlanta, has thought hard about the value of loyalty. Last year, he was recruited away from a company that offered meager raises, and he doesn't want to repeat his previous employer's mistakes. He's also seen studies showing that restaurants with stable work forces make more money. So Hall is handing out annual raises of about 8 percent this year. But he can't afford such big raises forever. At some point, his workers "will be topped out and they'll leave," he says. Someday, too, the great hiring frenzy will screech to a halt. The growing recruitment and retention costs will put pressure on prices. The Federal Reserve, already hypersensitive to any signs of inflation, will raise interest rates in response. Then will come the true test of the technological and attitudinal changes in the labor market. The free agents of the work force may indeed be the first to suffer when Internet sites and headhunters stop bidding for their services. But two dozen years of corporate layoffs and the Internet communications revolution have combined to release the genie of employee loyalty from its cubicle. It would take more than a run-of-the-mill recession to make workers as different as architect De La Rosa, computer maven Smith, and account manager Brothers forget the thrill of walking into their boss's office with a better offer in their pocket and saying, "I quit.""

<Note from JobFairy.com: Take that job with the other company and don't look back. Your present company will never be able to pay you the current market rate for your job on an ongoing basis.>