Why Pay Raises Won’t Solve Turnover—and What Will
It’s the go-to solution: an employee resigns, and the immediate reaction is to throw more money at the problem. Yet, despite pay raises, bonuses, and retention perks, turnover remains a persistent challenge in healthcare.
This approach feels especially tempting when conversations everywhere revolve around lack of compensation and the state of the economy. However, even in financially challenging times, pay alone can’t fix the deeper issues that drive employees to leave.
Why? Because turnover isn’t just about money—it’s about connection, culture, and leadership.
After working with over 20 healthcare organizations on organizational culture, retention strategies, and team resilience, I’ve seen this pattern repeat time and time again. Leaders focus on increasing salaries, only to find their staff still leaving. The truth is, pay raises can’t fix disengagement, burnout, or the lack of a cohesive team.
So, what’s the real answer? Let’s dig deeper.
The Real Cost of Turnover in Healthcare
Turnover is expensive. Research shows replacing an employee costs 1.5 to 2 times their annual salary when you factor in recruitment, onboarding, and lost productivity.
Let’s break that down:
Nurses: Replacing a nurse earning $80,000 annually could cost up to $160,000.
Physicians: Replacing a doctor can cost $500,000 to over $1 million, factoring in recruitment, onboarding, and lost patient revenue.
Healthcare leaders: Losing a leadership role can cost anywhere from $200,000 to $500,000, considering the ripple effect on team stability and performance.
Support staff: Even replacing an environmental aide earning $30,000 annually can cost $60,000 to $75,000.
Now, multiply these figures by 10 resignations across roles, and you’re looking at millions in turnover costs—dollars that could be reinvested into building a resilient, stable workforce.
But here’s the thing: the financial cost of turnover is only the surface. The hidden costs cut deeper:
Burned-out staff covering for vacant roles.
Decreased patient satisfaction due to inconsistent care.
Loss of trust within teams as employees question the stability of their workplace.
Leadership Transformation: Tim’s Story
When I met Tim, a COO at a midsize hospital, his frustration was palpable. Despite offering competitive salaries, his organization was losing staff faster than he could replace them. Morale was at an all-time low, patient outcomes were slipping, and his team felt like a revolving door.
“Throwing more money at the problem hasn’t worked,” he admitted. Like many leaders, Tim felt stuck. But I challenged him to think differently.
Instead of focusing on compensation, we worked together to uncover the real root causes of turnover in his organization:
Disconnection between leaders and staff.
A lack of recognition and trust.
Teams feeling unsupported and unheard.
Within 90 days, Tim’s organization transformed. Communication was prioritized, trust was rebuilt, and his team began to thrive.
The results?
A 30% reduction in turnover in just three months.
Significant improvements in engagement scores.
A stable, motivated team that wanted to stay.
Tim’s story proves that leadership transformation works—and the ripple effects can change everything.
Why Pay Raises Aren’t Enough
Pay raises may keep someone from leaving this month, but they don’t create loyalty. Here’s why:
Money Isn’t Motivating Long-Term
Studies show that while competitive pay is important, it’s not what drives engagement or retention. Employees leave because they feel undervalued, unsupported, or disconnected—not because of their paycheck.
A Gallup report found that employees often leave due to poor management, lack of career growth, and feeling unrecognized—issues no paycheck can solve. Similarly, a SHRM study revealed that trust in leadership, growth opportunities, and respect have a far greater impact on retention than compensation alone.
It’s a Band-Aid on a Bigger Problem
If leadership systems are broken, no amount of money can fix trust, communication, or engagement. A disengaged employee may appreciate a raise in the short term, but it won’t rebuild trust or resolve frustration with poor leadership.
You Can’t Buy Culture
Culture is built through leadership, not compensation. A team that feels empowered and connected will stay, even if they’re not earning top dollar. Neuroscience shows that feeling valued activates the brain’s reward centers, driving loyalty and motivation.
The takeaway? Organizations operating on tight budgets don’t need endless resources to create a thriving team—they need leaders who prioritize trust, communication, and purpose.
How to Solve Turnover: Leadership Transformation
If you want to solve turnover for good, here’s what works:
Build Trust
Employees stay where they feel safe and valued. Make trust-building a leadership priority.
Foster Connection
Leaders who genuinely connect with their teams create environments where people want to stay. However, many leaders aren’t taught how to build meaningful connections. This isn’t their fault—it’s a systemic issue tied to outdated leadership programs.
The good news? When organizations invest in leadership solutions that prioritize connection, the results are transformational.
Invest in Leadership Development
Equip your leaders with the tools to inspire, engage, and retain their teams. Leadership programs have traditionally fallen short, offering generic approaches that don’t meet today’s challenges.
In contrast, leaders we’ve trained outperform others by 60%, and 95% report sustained high performance even a year later. These leaders know how to build trust, foster collaboration, and create environments where turnover becomes the exception, not the rule.
A Vision for the Future
Imagine this: instead of scrambling to fill vacancies, you’re investing in growing your team and delivering exceptional care. Picture a workplace where employees feel valued, heard, and inspired to give their best every day.
We’ve seen this transformation firsthand. When leaders prioritize trust, connection, and culture, their teams thrive—and so does the organization.
Ready to Transform Your Team?
Let’s be honest—if you’re in crisis mode, can you afford to keep bleeding money while you try to figure it out?
We’ve helped leaders like you stop the turnover cycle, stabilize their teams, and see results in as little as 90 days. If you’re ready to take control, let’s find time to talk about how we can help.
Or, if you’d like to get started now, I’ve created a free guide:
“5 Key Strategies to Reduce Turnover by 20% in 90 Days.”
Turnover isn’t just a financial issue—it’s a leadership opportunity. Let’s build a team that doesn’t just survive but thrives.