Tuesday, August 3, 2010

When the good guys leave...

Of all the miseries that can dog the pursuit of Operations Excellence, surely the worst is high attrition – good guys leaving!

I would rate it even above good customers leaving!

Firstly, it is a sign that employees have lost faith in management. It is an indictment that the top management is either totally unaware of the attrition (maybe they are not tracking the metric at all!) or they are in denial (no, it’s just a co-incidence) and basically, there is no plan to take any corrective action.
Now, of course, whenever new leadership takes position and ratchets up a sleepy culture, there is anxiety and people too accustomed to a ‘comfortable life’ will leave.   This is not the same as the attrition I am talking about here.  Of course, when undesirable people leave, it is great news…!  And if there are way too many of the wrong types in an organization, even all of them leaving is not such a bad thing to happen after all!
Yet, we would like them to leave in small lots, so customer service does not slip even further!

But attrition is not always ‘self-propelled’.  One, often-seen, situation is where a new competitor (any organization that is seeking the same kind of staff) has entered the market and is systematically attacking your company by making attractive offers to your staff that are too good for them to refuse.  How does one react to such a situation?

I have seen a variety of reactions from leaders.

One obvious strategy is to ‘lock-in’ your talent with either ‘hard’ or ‘soft’ chains! 
Hard chains are essentially legal bonds, which require the employee to pay a large sum or give a very long notice, if they desire to leave the company. 
The long notice rarely works.  Which company would force an employee to ‘work’ productively, when s/he has already professed allegiance to another company, possibly a competitor?  Rather, many companies, on suspicion of an employee moving to a competitor, will ask them to leave immediately, lest s/he learn even more strategic / competitive secrets to be passed on to the new employer.

Monetary provisions do work to a certain extent.  Senior management candidates, who do not want to burn their bridges -- lest their sins come back to visit them in an ever shrinking world -- rarely try to jump bonds, unless of course, they have other legal reasons.  On the other hand, if the person is really good, many ‘acquiring’ companies are happy to pay-off the large sum.

Most companies today are experimenting with ‘soft chains’.  These are essentially incentives -- stock options and other deferred benefits – which are available only several years after they have been granted.  Of course, the effectiveness of these measures is largely dependent on the amount invested in these programs, as they increase the cost of hiring for the acquiring company.

Another option is to take the issue to an industry association / chamber of commerce-type entity, if there is one and hope they intervene.  I have seen this attempted several times, but have never seen it work.  The ‘attacking’ company always refutes the allegation and says, possibly correctly, that “We never target any one company.  We only use professional agencies to source our talent and then allow our brand / company reputation to do the magic!  If more from any one company are leaving, they should look at their HR policies, rather than blame any external entity!”

The fact is that whenever a new business is launched, it has no alternative but to source experienced talent from elsewhere.  Who has not done that?

I have trouble believing consultants and academics who say employees leave their managers when they do not find the job fulfilling and that money does not count beyond a certain limit.  The fact is that most companies are not so differentiated in terms of culture as to be able to charge a ‘premium’ for it in the form of lower wages.  This means most employees do not have a strong enough reason not to move to a company that pays more.  After all, they do have an obligation towards their family as well!  So, unless your employees just love their Monday mornings, don’t believe money is not important.

An idea whose time may well have come is to stay in touch with your ‘lost talent’.  Some companies have launched or encouraged the setting up of alumni groups on public access websites like Yahoo!, LinkedIn and Facebook.  These places can enable you to keep in touch with good people you know and woo them back.  In fact, should you have the vacancy still open, it is not a bad idea to get in touch with your talent a few months after they have experienced the new company.  Often, by this time, the reality of the new culture hits them and they are wondering if the move was after all a good decision!

There is another important point that is often overlooked.  When attrition levels rise, management’s attention invariable turn toward HR policies, or worse, the HR Manager!  This may not always be true.

Many times the root cause lies outside the HR policy.  We just saw how a change in market situation – the entry of a competitor can affect your attrition levels.  Another, often invisible reason is the slippage of practices and processes.  Established processes are allowed to go lax due to cost or work pressures and become habits.  Lack of metrics ensure that the slippage does not come to the attention of management at all.  Many examples come to mind:
  • Delayed approvals of leave / expense claims and the like
  • Delayed or even inappropriate hiring
  • Performance Management (setting KPIs, providing feedback) becomes a mere formality
  • Excessive hurdles in replenishing or supplementing staff strength
  • Lack of effective orientation for new employees…
And yet, such is the nature of things that when things are going bad, they do tend to go a lot worse before getting better.  It’s much like a street that is a nightmare for traffic.  Whether this is due to pot holes on the way or just more traffic than it can handle, the act of repairing the road or laying a flyover itself causes things to go much worse during the implementation.

When an organization has lousy processes and staff is stretched thin in trying to keep the operations going, management has little choice but to re-engineer the processes and / or replace the systems.  However, this very act requires the best of talent to come together and invest huge amounts of time in the effort.  This in turn both exhausts the best people available and impacts customer service.

Faced with such a situation, many managements resist fixing the broken parts, arguing that time is not right to make such big changes.  Sometimes, this may be the right move.  But only if either the traffic is expected to recede or management has an alternate plan to divert traffic to an alternate channel / street.  Most often, however, this is just paralysis: morbid fear of things going even more wrong; without a concern for the long term or a strategy to fix things.

Good leadership, however, is rarely daunted by such a situation.  Great leaders are able to introduce a hitherto non-existing resource into the equation -- the excitement and energy brought in by a shared vision!  They are able to communicate effectively the unacceptability of the current situation, the shape and contour of a new vision and generate a wave of excitement and positive energy with that vision, at least in a small group of high performers.  It is this new energy that is used for fixing the processes and re-energizing the rest of the organization.

All said, you’ve got to accept that some employees will leave whatever you do.  The typical HR policy or practice is like a product.  It can meet the requirements of one segment of customers.  It is either ‘mainstream’ – meaning a little of everything, or ‘hard’ as in measuring everything in dollars or ‘soft’, i.e., you focus on providing a high quality work life and pay a little below the market.  There is no point agonizing over individual leavers, however valuable they may be.  What leadership should focus on is trends.
Once a trend appears, perhaps the first thing to determine is whether it is internally or externally influenced.  Keep in mind though that it is always convenient to point the finger outwards.  Perhaps, there is no better way of learning the real causes than a heart-to-heart exit interview.

If you have not done this before, here are some good ideas you should practice:
  • Do not try to win the employee back.  It is too late
  • Do not make it compulsory for the employee
  • Choose the interviewer carefully.  At the least, the interviewer should be able to pierce the chill and get into a warm ‘personal’ conversation. 
  • If the employee is senior enough or important enough, lock the time by going out for lunch or dinner.  It may be well worth it!
  • Consider having one single, over-riding objective for the interview: to understand the real reason for leaving.
  • Take his / her personal email / mobile. 


    1. vgsr@yahoo.comAugust 21, 2010

      Re exit interviews, I dont know about rest of the world. but exit interviews are one big farce/ritual. When i have interviewed people leaving and conveyed their concerns at the MANCOMs, even the HR does not support and everyone is busy trying to whitewash issues. I know of cases where the exit interviews are doctored. and some rubbish gets back to the Top mgmt which essentially says all is well. This is an organisational conspiracy. When i have quit and given some serious inputs, by mail and directly endorse a copy to the CEO, , it was conveyed to me that i was out of line. , convieniently ignoring the content. This experience was over 3 organisations, so i think its fairly representative, atleast of the banking industry.

    2. Great point Rajan. I am responding to your comment in my next post, that is now online. "Exit Interviews and Reference Checks"