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Lessons Learned

Why Great Bosses Don't Worry About Employee Turnover

Trying to retain talent in the 21st century isn't just a lost cause, one expert says, it's also a strategic blunder.

Why Great Bosses Don't Worry About Employee Turnover
[Photo: B_Me via Pixabay]

The best bosses are innovators in how they think about talent. That's true for how they motivate, inspire, and coach their team members, but it also goes for how they think about employee churn. Not only do great bosses not fear people coming and going in their organizations, they actually embrace it.

Because "superbosses," as I call them, see uniquely capable recruits as business opportunities, they're rarely willing to pass up a candidate on the grounds that she "wouldn’t fit in." Instead, a great boss will usually give the person a try. If the new recruit isn’t producing according to expectations, then the boss will simply move her to a different position or let her go. The idea that an employee’s placement might need to be rethought isn't something that would cause a superboss even a moment’s hesitation.

Trying People Out

This willingness to try people out often results in higher employee turnover than most businesses like. Oracle founder and longtime CEO Larry Ellison acknowledged that his hiring practices resulted in an abnormally high rate of employees being let go or shifted to different jobs, but he said that was necessary if he was going to field the best team possible. Filmmaker George Lucas assumed that when his employees developed their skills up to a certain point, many of them would leave to apply them to their own projects.

Their casual acceptance of employee churn is an important way the best bosses chart their own course. Human-resources specialists, on the other hand, tend to consider it a failure if a new hire doesn’t stay long in the new job. Indeed, the length of time that new recruits stay is usually a key part of an HR specialist’s performance evaluation.

But great bosses tend to prize talent and creativity over the stability of their staff. They usually won't hesitate to hire a person who's "intellectually overqualified," who seems like "too much of a high flyer," or who might not "stick around."

Intentional Churn

Employee churn isn't just a side effect of the way superbosses view talent. It's actually a key feature of their playbooks. In fact, the best bosses actively manage the entire flow of talent within their teams, from hiring people to developing them and even, sometimes, helping them leave.

If that sounds strange, consider this: How many people entering the workforce today are looking forward to getting that proverbial gold watch after 25 years? Instead, companies are being confronted with a generational mind-set shift that values learning and engagement much more than job security. In this world, trying to optimize around talent retention—as many companies do—can hurt more than it helps.

The reality is that no matter what we do as leaders, no one can force people to stay. Yet so many companies operate as if that weren't the case. Wouldn’t it be much better to plan for talent leaving, to be more strategic in managing the outflow of even our best people?

Great bosses have already figured this out. Tommy Frist, the former CEO of Hospital Corporation of America (HCA), used to create spinoff businesses and offer the CEO job to one of his protégés. Think of the loyalty that engendered, not to mention the signal it sent to a wide swath of potential hires that working for Frist might be a giant career booster.

Frist and HCA isn't an isolated case. Lorne Michaels of Saturday Night Live has figured out how to leverage superstar talent by helping people like Jimmy Fallon, Seth Meyers, and Tina Fey establish independent careers post-SNL. He’s done this by investing in, or being executive producer of, their new shows. And celebrated hedge fund investor Julian Robertson of Tiger Management seeded some of his former analysts who were ready to run their own funds, thereby reaping the rewards of the talent he helped produce.

The Employee-Retention Paradox

There are two big benefits for leaders who are willing to break the hegemony of talent retention in their organizations. First, they become talent magnets, gaining a reputation as the place to work for ambitious and talented people who thrive on opportunity and growth. And second—ironically enough—by being open to and supporting the idea that some of your best people might leave, you actually end up retaining them for longer than you might otherwise. Superbosses not only create an attractive work environment, they also engender such loyalty from their people that many of their recruits do stay around—seemingly forever.

Newspaper boss Gene Roberts’s recruits didn’t just leave desirable jobs with prestigious publications to come and work for the Philadelphia Inquirer; they turned down offers of desirable jobs with prestigious publications to stay at the Inquirer. People who worked for great bosses like Norman Brinker, Jay Chiat, Alice Waters, or Bill Walsh often didn’t want to work for anybody else. When they moved on, it was usually because they wanted to run their own operations.

And when that happened, many superbosses actually encouraged their employees’ departure, applauding it as the right move for them—even if the employee happened to be a star protégé.

This article is adapted from Superbosses: How Exceptional Leaders Master the Flow of Talent by Sydney Finkelstein, with permission of Portfolio, an imprint of Penguin Publishing Group, a division of Penguin Random House LLC. Copyright © Sydney Finkelstein, 2016. It is reprinted with permission.

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