STOP THE TALENT DRAIN –
Why Your Best Employees Might Be Underpaid (and Ready to Leave)
By: Jeffrey Shapiro – VP of Talent Strategy & Delivery, Lloyd
Consider these employee retention strategies to change the dynamics of your workforce.
If you’re leading a growing business, chances are you’ve got a handful of employees who’ve been with you since the early days—smart, loyal, high-performing team members who know your operation inside and out.
But here’s the tough truth: those same people may also be your most underpaid employees. And unless you take action, they may not stick around much longer.
The Loyalty Penalty Is Real
In HR circles, it’s called the loyalty penalty—and it’s costing companies their best talent. Market research consistently shows that professionals who leave their companies for a similar role elsewhere often receive 10–20% increases in total compensation—simply for making a move.
A 2023 Bank of America analysis revealed an average 13% raise for job switchers.
According to The Conference Board, during the pandemic, 29% of job movers saw compensation increases of 30% or more.
Prior to 2025, data from Robert Half, SHRM, and WorldatWork echoed the same theme: big pay bumps for lateral moves.
Meanwhile, the typical annual merit increase? Usually 3–5%. That’s barely enough to keep pace with inflation—let alone market shifts or the rising value of experienced, in-role employees.
A Shift in the Job Market
In 2025, things have begun to level out. As reported by SHRM, job switchers now see average increases of 4.8%, while stayers get 4.6%, according to federal data.
But that doesn’t mean the risk is gone. Top talent still knows its market value—and so do recruiters aiming to poach them. This is why talent retention has become one of the most urgent challenges for business leaders today.
Why Employee Retention Strategies Must Include Pay Reviews
If you’re not actively reviewing compensation for your tenured, high-performing employees, you’re creating risk. Smart employee retention strategies go beyond perks and recognition—they include regular salary reviews and compensation benchmarking to ensure pay is competitive.
Here’s why equity adjustments should be part of your ongoing approach to retaining top talent:
-
Merit Increases Aren’t Enough
Annual 3–5% raises don’t reflect the true market value of top performers. Over time, they fall behind. -
Lateral Job Moves Pay More
Historically, employees making lateral moves externally earn 10–20% more—and they know it. -
Equity Adjustments Send a Strong Signal
These proactive pay increases aren’t tied to promotions or title changes—they’re about aligning pay with market value and employee impact. Talent retention often hinges on this fairness.
The HR Playbook: Using Equity Adjustments to Retain Talent
| Strategy | Why It Works |
|---|---|
| Regular Market Benchmarking | Keeps your salaries aligned with the external job market and inflation trends through compensation benchmarking. |
| Equity Adjustment Policy | Recognizes and corrects under-market pay for strong, long-tenured performers, supporting long-term employee retention strategies. |
| Support Internal Mobility | Encourage lateral moves with modest increases (5–10%) to keep employees engaged and improve talent retention. |
| Differentiate Clearly | Merit increases = performance. Equity adjustments = market realignment. |
Final Thought: Compensation Is Still the Loudest Message
Yes, culture matters. Yes, mission matters. But we all work for a living—and when pay lags behind the market, even your most loyal employees will take that recruiter’s call.
Equity adjustments, combined with compensation benchmarking, are among the most effective employee retention strategies for showing your company values loyalty, impact, and market realities. Don’t let your best people get priced out of their own role—make talent retention a strategic priority.
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If you found these ideas interesting, let’s build a smarter talent strategy together…
I’m Jeff Shapiro, the VP of Talent Strategy & Delivery for Lloyd, I’ve spent the last 13+ years as part of HR leadership teams across a wide range of workplace settings—from hypergrowth startups and unicorns to global enterprises and agency consulting.
I help organizations locate, engage, and retain top talent, while building fiscally responsible, customized staffing strategies that close operational gaps and support sustainable growth. Let’s talk about how to turn retention challenges into strategic opportunities. Reach out to schedule a consultation or learn more about how Lloyd helps clients stay ahead in a competitive talent market.
By email: jshapiro@lloydstaffing.com
By phone: (631) 370-7372
LinkedIn
JEFF SHAPIRO
Jeffrey Shapiro, Vice President of Talent Strategy & Delivery
Jeffrey Shapiro is an accomplished HR and Talent Acquisition leader with experience spanning hyper-growth startups, global corporations, agency recruiting, and consulting. He helps organizations design and scale talent strategies that attract, engage, and retain top talent. Known for a people-first, performance-minded approach, Jeff brings expertise in workforce planning, employer branding, and recruiting operations to innovative, high-performing organizations.
More from Jeff Shapiro…
• Are You Holding a Pre-Mortem Before Every Go Live?
• Why Agency Recruiters Are Worth Every Penny
• The Role of Recruiters in the Hiring Process: How They Can Elevate Your Job Search
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