The Best Defense: Part I

What to do when a valued employee quits.

T. J. Rodgers, 50, founder, president, and CEO of Cypress Semiconductor Corp., based in San Jose, California, is one of the most fiercely competitive leaders in Silicon Valley. He believes that the best place for a great Cypress employee to work is Cypress--now and forever. He'd rather fight than let an employee switch companies.

Ten years ago, after he was called in to convince two executives that they shouldn't join other companies, Rodgers wrote a nine-point memo called "What to Do When a Valued Employee Quits." Lately, given the war for talent raging in Silicon Valley, this blueprint for action has become more relevant than ever.

"In the last year alone," Rodgers says, "we've saved 4 of our 10 vice presidents. Typically, they get offers to become CEO of another company. Without the policies outlined in that memo, we would have had a 30% turnover among our senior people."

Here are four of the memo's nine points:

1. Act fast. That means within five minutes. Cancel the next activity on your schedule. Any delay (even saying, "I'll talk to you after our staff meeting") is unacceptable.

2. Keep the news a secret. If other employees know that a resignation has occurred, then the employee who has resigned may fear the embarrassment of a public reversal.

3. Listen hard--then fight hard. Is the employee looking for a better job, more money, a fundamental career change? Ninety percent of the time, you can make a good argument that it's in his or her best interest to stay. The employee needs to know that quitting was a mistake and that you will single-mindedly work to rectify that mistake.

4. Call in the big guns. If it requires the president to get the job done, then the president has nothing more important to do than sit down with the employee.

Rodgers says his blueprint works, and he has war stories to prove it: "We had a guy with a PhD who got the 'seven-year itch.' It was during a period when our stock was off, so the value of his options wasn't high. He had an offer from a company that was doing new and exciting stuff. But I thought he was diminishing his opportunities here and undervaluing the risks at this other company. His boss talked to him, our VPs talked to him, and then I talked to him. We won-barely."

The Cypress game plan kicks in whenever a valuable person tries to leave. But in at least 20% of cases - there's a big financial upside to the offer, the change means a major promotion, the new company is a winner-Rodgers can't marshal an honest argument about why an employee should stay. "In those cases," he says, "we shake hands and say, 'Good luck, and remember us.'"

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