Why Underpayment Endangers Employee Retention – and What You Can Do About It

"Bringing in 750,000 euros in revenue and having 1,800 euros net in the account at the end of the month?" What initially sounds like a miscalculation is reality for many employees. Especially after training or when starting a career, many people experience that their contribution to the company's success is not proportional to their salary. As a candidate, this discrepancy can be frustrating - and for companies, it can be costly in the long run. In this article, you will learn why fair salaries are crucial for your employer brand and how you can retain talented employees in the long term through an open salary policy.

Low appreciation is a costly investment A salary that is significantly below an employee's market value leaves traces: lack of recognition and respect. Often, the topic of salary is considered taboo, but employees compare and eventually talk about their pay. An below-average salary can quickly be interpreted as lack of appreciation, which burdens the team's mood. The result? Lower motivation, decreasing productivity, and an increasing willingness to leave the company. Employer Brand: Reputation matters For many companies, building a strong employer brand is essential. However, a bad reputation spreads quickly and affects potential employees and customers alike. A team member who feels underpaid and unappreciated may share their dissatisfaction on platforms like LinkedIn or Glassdoor. The image of being a "cost-cutting company" can deter applicants and affect the quality of applications in the long run. Higher turnover due to salary disparities Those who do not feel financially well taken care of in their job are ready for the next career step - often faster than companies can react. Especially in the age of LinkedIn and online job boards, employees are constantly exposed to new job offers. Companies that neglect fair salaries and appreciation risk higher turnover and thus increasing costs for recruiting, onboarding, and knowledge transfer. Salary discussions: Transparency as the key A constructive approach to salary discussions helps reduce turnover and increase motivation within the team. Salary transparency can strengthen trust and help employees feel valued in the long term. Those who openly discuss salaries convey honesty and show that performance is recognized and appreciated. However, it is still common in many companies for candidates to state their salary expectations first - and then encounter silence. A transparent and respectful approach in salary discussions shows that a company takes its employees seriously. Conclusion: Treat talents fairly and retain them in the long term A salary is more than just a number - it is a sign of recognition. Fair compensation, salary transparency, and respectful interaction are central elements of sustainable employee retention. Investing in talents today ensures that the best minds stay instead of leaving the company for the next better offer. Companies that value their employees benefit in the long run from motivated teams, a positive image, and a stable turnover rate.