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.

I’ve worked with over 20 healthcare organizations specifically on organizational culture, retention strategies, and team resilience, and 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 Numbers Don’t Lie: The Real Cost of Turnover

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:

A nurse earning $80,000 annually could cost your organization up to $160,000 to replace. But the costs don’t stop there:

• Physicians: Replacing a doctor can cost $500,000 to over $1 million, factoring in recruitment, onboarding, and lost patient revenue.
• Leadership roles: Losing a healthcare leader could cost anywhere from $200,000 to $500,000, considering the ripple effect on team stability and performance.
• Support staff: Even an environmental aide or medical assistant, earning around $30,000 annually, can cost $60,000 to $75,000 to replace, considering training, overtime, and lost efficiency.

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.

And yet, these financial losses are just the tip of the iceberg. The deeper, more damaging costs are harder to quantify:

• 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.

A Story of Leadership Transformation

When I met Tim, a COO at a midsize hospital, his frustration was palpable. Despite offering competitive salaries, he 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 during our first meeting. 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 his turnover problem:

• 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 is proof that leadership transformation works—and that 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 organizations due to poor management, lack of career growth, and feeling unrecognized—issues that no paycheck can solve. Similarly, a study by the Society for Human Resource Management (SHRM) revealed that trust in leadership, opportunities to grow, and respectful treatment have a far greater impact on retention than compensation alone. While fair pay sets the foundation, it’s the workplace culture and leadership that determine whether employees choose to stay or walk away.

It’s a Band-Aid on a Bigger Problem:

If leadership systems are broken, no amount of money can fix the underlying issues of trust, communication, and engagement. A disengaged employee may appreciate a raise in the short term, but it won’t rebuild trust with a manager who doesn’t listen or resolve the frustration of unclear expectations. In fact, relying on pay as the primary retention strategy often masks deeper problems, leaving them to fester. Leaders who fail to address these systemic issues risk creating a revolving door of talent—where employees leave not because they’re underpaid, but because they feel undervalued, unseen, and unsupported.

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. In our work with over 20 healthcare organizations, we’ve discovered a powerful truth: employees stay when their psychological needs for trust, recognition, and belonging are met. Neuroscience shows that feeling valued activates the brain’s reward centers, releasing dopamine—a key factor in motivation and engagement. When leaders create environments where employees feel genuinely seen and supported, it fosters loyalty and reduces the instinct to seek external opportunities.

This is empowering for organizations operating on tight budgets. You don’t need endless resources to create a thriving team; you need leaders who prioritize trust, communication, and purpose. By focusing on these deeper drivers, even cash-strapped companies can retain top talent and create cultures where people choose to stay—not because they have to, but because they want to.

What Actually Works: 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, most leaders aren’t taught how to build these meaningful connections—they’re expected to lead without guidance on fostering trust or creating alignment. This isn’t their fault; it’s a systemic issue stemming from outdated leadership development programs that fail to address the emotional and cultural needs of today’s workforce.

The good news? When organizations invest in solutions that prioritize connection as the foundation of leadership, the results are transformational. Leaders who know how to listen, recognize effort, and communicate with authenticity create cultures where employees feel valued and want to thrive. And the impact isn’t just retention—it’s higher morale, stronger performance, and a team that rallies behind their mission.

Invest in Leadership Development:

Equip your leaders with the skills to inspire, engage, and retain their teams. Leadership development programs have often fallen short, offering one-size-fits-all approaches that leave leaders unequipped to handle the nuanced challenges of modern teams. This lack of applicable, real-world tools creates a frustrating cycle where leaders feel unsupported, and teams feel disengaged.

But it doesn’t have to be this way. Organizations that invest in high-performance leadership solutions see a significant return on investment—both financially and culturally. Leaders we’ve trained outperform traditionally trained leaders or those with no formal training by 60%, and 95% of them report sustained high performance even a year after working with us.

These results are no accident. Leaders equipped with actionable strategies for inspiring, engaging, and retaining their teams feel empowered and confident. They’re no longer guessing how to lead; they’re building trust, fostering collaboration, and creating environments where turnover becomes the exception, not the rule.

The best part? The ripple effects of this investment go far beyond retention. It creates a leadership pipeline that’s prepared for future challenges, fosters innovation, and transforms the organization into a place where people want to work—and stay.

A Vision for the Future

What if turnover wasn’t a constant distraction?

Imagine this: instead of scrambling to fill vacancies, you’re investing those resources into growing your team and delivering exceptional care. Picture a workplace where employees feel valued, heard, and inspired to contribute their best every day.

We’ve seen this transformation firsthand. When leaders prioritize trust, connection, and culture, their teams don’t just survive—they thrive. And the benefits ripple through the entire organization:

• Stronger morale that energizes teams.
• Improved patient outcomes thanks to staff stability.
• A reputation as an employer of choice, attracting top talent with ease.

This isn’t about chasing perfection. It’s about progress—moving from reactive fixes to a proactive strategy that delivers measurable results.

Ready to Transform Your Team?

If you’re tired of seeing your turnover costs spiral while your team struggles, it’s time to take action.

Let’s be honest—if you’re in crisis mode, can you afford to keep bleeding money while you try to figure it out? The stakes are too high to go it alone.

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 outlining the 5 Key Strategies to Reduce Turnover by 20% in 90 Days. It’s packed with actionable tips we’ve used to help organizations build thriving cultures:

?? https://bit.ly/cutturnover

Turnover isn’t just a financial issue—it’s a leadership opportunity. Let’s build a team that doesn’t just survive, but thrives.