One of the biggest challenges faced by our HR colleagues is what you are facing. Invariably, we find employees hopping jobs for a rise in pay, and the feeling amongst employees is that one should not stay in an organization for more than 3-4 years. A 30-40% hike for every job hopper, in addition to what they get during the 3-4 years of their stay in an organization, is quite a common feature we see these days. As long as these job hoppers are encouraged, this trend will continue.
Yet another underlying fact is companies entertain recruitment through consultants. Some consultants (I don't blame everyone) who have a passion for making a fast buck keep shuttling candidates from one organization to another and earn money in the process. In some instances, one employee who leaves the organization tends to pull other colleagues to his new company with a view to boost his image in the new organization.
Try to find out the source through which you are losing people heavily, and then you will be able to minimize attrition. A tough exercise, though.
Regards,
M.V. Kannan