Business

Adam Grant: Employers Benefit From Giving Workers Higher Pay

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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.

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.

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Business

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3 Unseen Advantages of Mentoring Other Entrepreneurs

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Opinions expressed by Entrepreneur contributors are their own.

I didn’t start my business on my own. Sure, I’m the only founder, and I conceived the ideas that my company, Jotform, is built around.

But it’s also true that I would not be where I am today without the mentors I looked to for advice and guidance. Some of the rules I credit with Jotform’s success — for example, that I hire only when I’ve got a year’s salary already in the bank — were lifted directly from other founders who showed me the way.

I’ve always believed mentors are indispensable for anyone looking to start a business. But I’ve also come to realize that mentoring others is equally important and can help your business in surprising ways. Here’s how.

You discover new ways of thinking

One of the worst things you can do as a founder is surround yourself with people who think the same way you do. That’s one of the reasons I mentor other founders — I’m constantly surprised by how much I learn just by talking to them.

I’ve been building my own products for two decades, but that doesn’t mean I know everything. I’m constantly learning — I dedicate time each day to reading blogs and listening to podcasts to ensure I’m keeping up with what’s going on in my industry. Still, talking to my mentees about how they’re using tools like AI gives me a fresh perspective I can’t get from consuming media alone. By helping them think through how to integrate new technology into their products, I’m thinking through how I can apply those lessons, too.

Being a mentor also requires me to constantly reevaluate my own beliefs. In general, my knowledge has accumulated over years of hard-earned experience. Even so, the process of explaining why I think how I do is incredibly beneficial, either to reinforce those beliefs or challenge me to update them.

You can grow your own star performers

Everyone wants to hire a superstar. But I’ve always preferred to create them by promoting them from within. Mentoring employees within your organization provides a crucial opportunity to get to know their future aspirations, grow their confidence and help them feel more engaged with the company’s mission.

At Jotform, we call our new-hire mentorship program The New Grad Training Program. Basically, we hire people fresh out of school who show lots of promise but lack hands-on experience. They start out by doing support tasks, which range from quality assurance testing to user feedback analysis to answering customer support questions. One day per week, these new hires work with a mentor who can show them the ropes of a given department — maybe they’ll attend meetings with a data analyst or shadow a JavaScript developer. Every six months, participants can interview for the position they want. This program is a great way to develop raw talent and turn our new hires into top performers.

It’s tempting to wonder what happens if you spend time mentoring an employee, only to have them leave for a shinier opportunity elsewhere. But this is short-term thinking: Studies show that internal hires are not only high performers, they’re also more likely to stay with the organization for the long haul, while high-performing external hires are more likely to leave. My own experience confirms this: At Jotform, our annual churn rate is only 5%.

And anyway, as Henry Ford put it, “The only thing worse than training your employees and having them leave is not training them and having them stay.”

You can pay it forward

Many of the world’s most accomplished people are quick to note that they wouldn’t be where they are without the support of their mentors. Richard Branson, for example, already had experience as an entrepreneur under his belt when he founded Virgin Atlantic. That didn’t stop him from enlisting the help of Sir Freddie Laker, the founder of the low-cost airline model, for support. “I have always been a huge believer in the inestimable value good mentoring can contribute to any nascent business,” Branson has said.

Even for someone as well-regarded as Branson, success doesn’t happen in a vacuum. I know mine didn’t. That’s part of why mentoring is important to me — I want others to not only learn, but also feel like they’re not on their journey alone. There are few forces as powerful as having someone believe in you, which also leads to a deeper sense of belonging. According to Gartner, “Belonging is a key component of inclusion. When employees are truly included, they perceive that the organization cares for them as individuals — their authentic selves.”

Everyone needs a mentor. However, I firmly believe that mentoring others is equally important. Mentoring gives you the chance to learn new things and challenge your beliefs; it also builds relationships with employees who will often grow into top performers. But most importantly, it lets us reach out through the darkness and offer light to someone who needs it, allowing them to chart their own success.

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