Employee Turn-Over

Employees leave for greener pastures all the time. I learned a couple of the ex-employees quickly left where they went for: Amazon. They were starry-eyed to join this prominent employer in Seattle. “That’s not surprising at all,” said someone at the party when I brought this up. “They chew people up and spit them out.” Really? I did not know that about Amazon.

A bit search showed that Amazon tops the turn-over chart. It also has the policy to cap employee’s cash compensation to $160k and make up the rest with stock grants. This does not work when the stock price is not going anywhere. This brings up the topic of work culture, talent retention, and pay.

High-tech companies like employees who are self-motivating, a trait associated with individual creativity. Self-motivation promotes a bit driven personality and those with that actually enjoy being challenged at work. A good tech manager, therefore, does not baby his employees. He stretches them, sets a higher bar, and pushes the employees in ways not much different than a good coach of a sports team.

What happens after the talent has grown up and reached their optimal market desirability? Simple, they want to be rewarded.

There are two categories of rewards: the ones that motivate and the ones where the lack of them will be demotivating. Money, stock options, vacation days, etc. are the second kind. The key for managers is to make sure they are in sufficient supply so that they are not demoralizing.

The real motivating rewards are difficult to give, since they are all personalized: the more individualized, the better the effect. You can give an employee $1000 bonus and it will be forgotten in a couple of weeks. If, however, you give him a weekend get-away for two in the cozy romantic B&B on the seashore, it will be remembered for decades. The costs are probably the same.

The combined rewards of both kinds, in their relation to the marketability of the individual, is the dominant factor of talent retention. There are other factors: camaraderie, management style, culture, technological challenges, etc. They all play some role in talent retention. The strongest factors remain to be this “reward quotient” (RQ).

I suspect both Amazon and Google have low “RQs”. Amazon probably does not reward its people enough and Google’s people are probably highly marketable.

This entry was posted in Management Thoughts. Bookmark the permalink.

Leave a Reply

Your email address will not be published.