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Will you lose 45% of your best employees?

April 15, 2012

Newark Liberty Airport, Terminal B, waiting for a flight to Toronto, 6:30 AM and I’m nursing some weak coffee and a meeting-muffin, still cold.  Chairs, outdated 10 years ago, and a corporate color palette best termed ‘innocuous’.  HLN is on the TV, and amid an aural blur of words, a single item catches my attention.  A study had just been released where over 70% of US employees said they felt somewhat abused or taken advantage of by their employers during the recession, and were starting to think about changing jobs in an improving economy.  OK, I thought, if your entire body can change all its cells every 7 years or so, why not an organization?  Suddenly, along came the KO punch – of that group, over 45% who are planning on leaving are your top performers.  I like my body rejuvenating itself all the time, but I don’t want to dumb it down.

Headhunting is not an easy job, requiring a double sell and double close to make an appropriate placement.  By necessity, recruiters are extremely adept at assessing whether a company is an A, B or a C.  They can also quickly determine if a candidate is an A (superstar), B (solid contributor), or a faceless/nameless C.  The match parameters are obvious.  A’s hire A’s, B’s hire B’s and some A’s hire high- B’s.  Meanwhile, C companies get the candidates off the job boards, employment eligibility verified by a junior recruiter who  then pastes on a logo and emails it to the C company’s HR group.   Extrapolating from the HLN piece, many high-B and A’s are getting psychologically ready to make a move.

Companies hire from the pool made available to them during the recruiting process.  ‘A’ companies pay more, train better and dominate their markets.  They attract the best talent, pay them well, who in turn produce outstanding results, allowing the company to be the white-glove provider and charge more, allowing them to pay more, and so on.  B companies treat their average employee pool well but tend to be filled with a lot of ‘go along to get along’ employees, easy to manage as they won’t rock the boat, rarely pushing back.  C companies always seem to be on the ropes, making serial odd decisions (some really odd) and have high new employee churn.  While newer market entrants gain customers, they lose theirs.  During this past recession, I saw instances where a company closed, injecting their workforce into a local economy, now as job seekers.  Everyone has to earn a living, and so some B’s went to C companies, perhaps not knowing any better, others looking for a safe anchorage in which to ride out the storm. The high-B’s stayed 1 day, 1 week, and in one case, someone with the patience of a Saint stayed 4 months.  You could watch them go through a Helen Kubler Ross like grieving process.

The Bureau of Labor Statistics on April 13th, released the following:

Real average hourly earnings fell 0.1 percent in March, seasonally adjusted. A 0.2 percent increase in average hourly earnings was more than offset by a 0.3 percent increase in the CPI-U. Real average weekly earnings fell 0.4 percent over the month. 

Also per the BLS, in the NY/NJ region, the CPI rose 0.4%, so employees went backwards in real terms

Combined with tepid job growth figures, our economy continues to have too many potential employees for current business conditions. Most B and almost all C level employers have not given raises or bonuses in years, reduced their workforces, and piled additional work onto their existing employees. Those employees who can be hired elsewhere are, or soon will be, looking.   As a rule, the A’s find work almost immediately, typically recruited from existing positions, even if the new job requires super-commuting. The high-B’s usually finding something in the short term and as for the C’s…  Both companies and candidates follow the laws of evolution.

Factories are returning to the US, such as the expanding Hyundai, Mercedes and BMW plants in the South, leveraging solid, well trained, relatively inexpensive and highly productive workforces. They will pull in the A’s and B’s in each local economy, leaving the just OK employer with a pool of C’s employees and candidates. These A employers will demand A performance from their vendors, and so C companies will have a rough time just keeping their existing business, let alone growing.

How do we retain and attract high-B’s and A?  First, there has to be a DNA upgrade strategy covering all levels, explained to the B and A candidate during the interview process.  Absent a look into the DNA upgrade plan, they’ll see their co-workers and direct reports are like beaten dogs, just trying to survive.  Cognitive dissidence will start almost immediately. Since not every employee is up for a DNA upgrade project, I suggest you get a 120 day replacement guarantee from the headhunter.

Next, the CEO has to change their spots.  Start trusting their own people.  It’s the daily unnecessary barriers and boundaries which drive A’s and B’s, newly hired, out of a company.  Severely limited spending limits, all decisions made by the corner office, lack of an at-home work policy are all signs of the CEO telling his employees “my workforce is so low I have to control everything or they’ll make a terrible decision”.  We talk of customer focused moments of truth.  Employees have them as well.

This last point is pretty ironic.  The abusive CEO controls virtually every decision such that, for example, people with 20 years of experience, and with EVP titles, have to beg for authorizations on a $5K spend.   These CEO’s lead public interrogations, not meetings, hold grudges and are incredibly thin skinned.  On one hand, you can understand why – nothing in their organization seems to turn out as promised.  What abusive CEO’s never seem to get is their direct reports only tell them 70% of the truth.  Bad executive direction setting can only be expected.  This filters down even to the best single contributors.  I recently bumped into a Super-A level friend who left a senior position because he would no longer tolerate the weekly public inquisitions.  Timeline: join, suffer interrogations in public for 5 months, find a new job starting Month 3, pick from best new job offers, and give notice during Month 5.

In the turnaround arena, there’s an old joke “why doesn’t [insert company name here] have an Olympic team?  Because everyone who can run, jump or swim already has”.    Out of respect to today’s date, April 15th, the 100 year anniversary of the Titanic disaster, I have to tell another inside’ joke.  “What’s the difference between [insert company name here] and the Titanic?  At least the Titanic had an orchestra”. Rest in peace.

Richard Eichen is the Founder and Managing Principal of Return on Efficiency, LLC, http://www.growroe.com and is one of their senior turnaround leaders/CROs, Program Rescue and Interim Executives with over 25 years’ experience reshaping companies, Operations, IT/Systems Integration and key initiatives. He can be reached at richard.eichen@growroe.com

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2 Comments
  1. Great article- spot on and all too true. My company just let go of 4000 employees about 10 days ago. Although expected and much hoped for on my part- I saw many people who built the company with sweat, tears and cost of their families torn apart only to be let go. It was a sad sight. Many A’s left in the wind. I for one have been looking for a while to leave and have seen the company abuse the employees to all end. While many chose to not work expecting the layoff- I chose to take on the task and there was no end in sight. As you stated, no raises for years- bonuses were down several years in a row even at goal- and there was nothing happening to reinvent this side of the market. Many will take interim jobs if they choose to stay in the industry and others will move on. I chuckled at your Titanic comment as that is a joke we often refereed to my company as- it was knows as the sinking ship less the orchestra.

  2. I do accept as true with all of the ideas you’ve introduced to your post. They’re very convincing and can certainly work.
    Nonetheless, the posts are too brief for starters.
    May just you please lengthen them a bit from subsequent time?
    Thanks for the post.

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