The Battle Against Executive Attrition
During the last one month, I have met with 70 senior managers in a variety of organizations. 64 of them (over 90%) have been in their jobs for less than a year. Attrition is not a new phenomenon and people will continue looking for greener pastures. The scale of what is happening, however, is rather frightening.
Does this mean there is no longer any value attached to attributes like loyalty? Or is it that executives no longer care? What are organizations doing to retain human talent, which at the best of times is scarce anyway.
On the one hand, we lay so much emphasis on the value of human capital. Models are available to quantify it and many organizations even publish this value as an annexure to financial statements. On the other, we do not seem to be doing enough to nurture and retain talent in a manner that would enhance organizational performance and also make employees happy and contented.
Among the factors responsible for executives hopping from one job to another every year if not more frequently, we have identified the following as the top three:
- Monetary considerations (unless you move, you won’t get more)
- Work environment (organizational culture does not recognize performance)
- Colleagues – bosses, peers and direct reports – there is no synergy with everyone working in silos
It has been established that between resources and capabilities, the latter are more difficult to imitate and hence are more sustainable. The source of many a capability is the human intellect. People generate ideas, people come up with new ways of doing things and ultimately it is people – not just technology or finance – who deliver results. Given this context, it is indeed paradoxical that organizations seem to be doing precious little to take care of the most critical asset they have.
One would like to imagine that all the answers have been found – 360 degree feedback systems, the balanced scorecard, the learning organization. How is it that in spite of all these powerful tools or techniques, organizations are still floundering when it comes to managing people?
One answer to this puzzle could be the relative dearth of leaders who can inspire and motivate; leaders who are so passionate about what they say and do that the effect rubs off on everyone else. Since leaders cannot be mass-produced, what is the way out?
Another answer could be in the human condition itself. The pursuit of materialistic possessions, while not inherently wrong in itself, has its limitations. We can easily satisfy our needs but we would be hard pressed to satisfy our greed. If key people happen to leave at regular intervals, how does the virtuous process of forget, borrow, and learn happen?
Organizations with high levels of attrition may be fighting fires most of the time instead of creating longterm value for the various stakeholders. Innovation, perhaps the most critical factor for business success, may be difficult if you have to constantly change gears in terms of the people you work with.
Any feasible solutions to solve the puzzle are most welcome.
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B V Krishnamurthy is the Director and Executive Vice-President of Alliance Business Academy in Bangalore, India, where he is also the ASI Distinguished Professor of Strategy and International Business. An engineer with post-graduate degrees in industrial management, systems engineering and business administration, and a doctoral degree in strategy, he has worked in corporations in Europe and Asia for 23 years (his last stint as CEO of a consortium) before entering academia in 1998. BVK also teaches in business schools in the USA, France, Switzerland, The Netherlands and Russia.
Comments
I find this odd. The number 1 issue is compensation but you pass this by and focus on intangibles like defining leadership. You are not alone. Every company I have talked to / worked for the last 10 years has acknowledged that all things being equal, they will always pay more for a new hire that they will for promoting a person in house. And they also go on and on about their employee retention programs and how they really work hard to reduce churn. Yet they will consider all kinds of options, except paying their current employees the market rate.
We have built a system that rewards people moving and punishes staying. And so people move.
Why cant we just say that pay is the problem? We do not have 'relative dearth of leaders who can inspire and motivate', we have a relative dearth of pay for people who stay. All the whizbang retention systems and high dollar motivation programs will not change the churn as long as there is a significant material gain to be had by moving.
- Posted by LightHouse
July 17, 2008 3:57 PM
LightHouse- Amen to that! Pay is Prime. You pay bananas, you get monkeys?
Talent, like water, flows down the path of least resistance and finds its level...you want to hold it, you got to dam it with leakproof support.
- Posted by amar irani
July 18, 2008 6:08 AM
Regarding pay: competing on price (salary, benefits, etc) is what commodity markets do. The answer to the long-term strategic goal of getting and keeping great people isn't paying more.
And I agree that there are probably societal shifts around what the collective "we" want out of life.
Now, maybe it's too simplistic or even a few years too early, but what about simple demographic shifts? The older part of the Baby Boom is getting pretty close to "retirement" age. When they start leaving the workforce there simply aren't as many people, and therefore fewer executive-types in the next generation.
- Posted by seth gray
July 18, 2008 10:24 AM
The corporate culture is a major factor leading to executive attrition.The corporate culture should fit the environment and those employees should also fit into the culture.
Employees often are interested only in finding out "How things sre done around here ?".They should know that they should develop an attitude of liking though not loving their company. just because employment opportunities are available, people cannot go on shifting. A rollig stone does not gathers momentum .
an ETHICAL Programme should be developed on LOYALTY.
S.Prabakaran,Princeton
- Posted by s.prabakaran
July 18, 2008 10:25 AM
I don't think compensation belongs at the top of the list. Leaders cannot be mass produced and passion is intrinsic. Many who obtain leadership positions don't seem to belong in the role. Because one is excellent with the numbers or the best salesperson with the most charisma does not indicate that the individual will excel at management and leadership. I think in some cases we are promoting the wrong individuals for the wrong reasons. I love to read stories about Sam Walton. I know people who worked with him. He had many characteristics that would be mocked today. Sometimes I wonder if executives of some of our companies are really human beings.
Where is the humility, humanity, and conscientiousness that are hallmarks of the good leaders? What ever happened to happiness and fun? Those characteristics are infectious and flow down through a company. I believe we are over looking the leaders that already exist in our organizations. We cannot see them because of our stereotypical biases.
A great place to work means far more than compensation in regards to long term satisfaction and stakeholder value. The pursuit of monetary gain alone will not satisfy one for long. Its natural to be open to new opportunities and greener pastures. Some organizations may offer an individual employed with another firm increased salary to fill a need.
Why not go to the boss and explain the offer before you leave? Any reasonable individual knows that in a free market economy deals can be negotiated anytime. I would rather an employee come to me first to explain the new offer so that together we might be able to compromise on a solution that would be a win-win for both parties and save the valuable employee.
I believe the employee and employer can work together to solve some of these concerns. Lets talk it over!
- Posted by P.S. Evans
July 19, 2008 2:14 PM
It is indeed sad that money has become the biggest motivator. In the process, everything else - value creation, commitment, dedication - has been put on the back burner. The author is right in assessing that those who keep changing jobs frequently cannot create long-term value for stakeholders.
I started my career, after college, with a company and have not changed my job for 32 years (No, I am not in the government). The company has provided me everything I would have wanted - a great job, passion for excellence, a work environment that stimulates and challenges at the same time, and a fine balance between my professional and personal lives. I have found contentment in this combination and stayed on. Alas, the same cannot be said of many colleagues who seem to believe that the only way to grow is to keep changing jobs.
End of the day, you need to have the courage to ask yourself whether you are a better human being than what you were at the beginning. If the answer is no, all the money in this world cannot help you.
- Posted by Bala
July 20, 2008 9:04 AM