>I don't see any reason why a company would prefer to be in the second category.
The 2nd company doesn't have to bear the costs for training.
>If you're in that category you'll be trying to hire employees for the same salary they're already being paid by an (intelligently run) company,
For the first company, it doesn't matter how much they (intelligently) increases the salary because they still have to add in the expense of the training.
>, in addition to having to retrain them for your company.
Not necessarily. A common example would be IT consultants. It is very common for Oracle and SAP have their consultants spend 4 to 8 weeks of training and then boutique firms would poach them with higher salaries. The boutique firms didn't have to pay the $20k to $40k for the 8 weeks of classes and they also don't have to retrain them. The Oracle DBAs' skills are ready to be put to use on day 1.
If one thinks Oracle/SAP can simply increase the salary to what the boutique firm was offering, the math doesn't always work out because the total higher compensation has to include the training they already paid.
If we use following placeholders:
s=salary, t=training, i=increase to market salary rate
Category 1 company total expense = s+t+i
Category 2 company total expense = s+i
Because "t" was a non-zero amount that can't be magically erased, it means that for all values of "i", "s+t+i > s+i"
In other words, for Category 1 company to "match" a higher Company 2 salary, they must always pay more than that salary because the "pay more" includes the training $$$ they paid.
Hopefully, for Company 1, they have other non-monetary advantages that outweighs the absolute mathematical disadvantage the above equation shows.
The 2nd company doesn't have to bear the costs for training.
>If you're in that category you'll be trying to hire employees for the same salary they're already being paid by an (intelligently run) company,
For the first company, it doesn't matter how much they (intelligently) increases the salary because they still have to add in the expense of the training.
>, in addition to having to retrain them for your company.
Not necessarily. A common example would be IT consultants. It is very common for Oracle and SAP have their consultants spend 4 to 8 weeks of training and then boutique firms would poach them with higher salaries. The boutique firms didn't have to pay the $20k to $40k for the 8 weeks of classes and they also don't have to retrain them. The Oracle DBAs' skills are ready to be put to use on day 1.
If one thinks Oracle/SAP can simply increase the salary to what the boutique firm was offering, the math doesn't always work out because the total higher compensation has to include the training they already paid.
If we use following placeholders:
s=salary, t=training, i=increase to market salary rate
Category 1 company total expense = s+t+i
Category 2 company total expense = s+i
Because "t" was a non-zero amount that can't be magically erased, it means that for all values of "i", "s+t+i > s+i"
In other words, for Category 1 company to "match" a higher Company 2 salary, they must always pay more than that salary because the "pay more" includes the training $$$ they paid.
Hopefully, for Company 1, they have other non-monetary advantages that outweighs the absolute mathematical disadvantage the above equation shows.