Sunday, September 17, 2006

Top Ten Reasons Why Large Companies Fail to Keep Their Best Talent

Whether it's a high-profile tech company like Yahoo!, or a more established conglomerate like GE or Home Depot, large companies have a hard time keeping their best and brightest in house. Recently, GigaOM discussed the troubles at Yahoo! with a flat stock price, vested options for some of their best people, and the apparent free flow of VC dollars luring away some of their best people to do the start-up thing again. To staunch the exodus, Yahoo! has tried to establish a brickhouse around their best talent.

Yet, Yahoo!, GE, Home Depot, and other large established companies have a tremendous advantage in retaining their top talent and don't. In our business, we see the good and the bad things that large companies do in relation to talent management. Here's our Top Ten list of what large companies do to lose their top talent (and keep an eye out for a future article on the Top Ten Reasons Why It's Usually Better for Top Talent to Stay at these Companies...):

  1. Big Company Bureaucracy. This is probably the #1 reason we hear after the fact from disenchanted employees. However, it's usually a reason that masks the real reason. No one likes rules that make no sense. But, when top talent is complaining along these lines, it's usually a sign that they didn't feel as if they had a say in these rules. They were simply told to follow along and get with the program. No voice in the process and really talented people say "check please."
  2. Failing to Find a Project for the Talent that Ignites Their Passion. Big companies have many moving parts -- by definition. Therefore, they usually don't have people going around to their best and brightest asking them if they're enjoying their current projects or if they want to work on something new that they're really interested in which would help the company. HR people are usually too busy keeping up with other things to get into this. The bosses are also usually tapped out on time and this becomes a "nice to have" rather than "must have" conversation. However, unless you see it as a "must have," say adios to some of your best people. Top talent isn't driven by money and power, but by the opportunity to be a part of something huge, that will change the world, and for which they are really passionate. Big companies usually never spend the time to figure this out with those people.
  3. Poor Annual Performance Reviews. You would be amazed at how many companies do not do a very effective job at annual performance reviews. Or, if they have them, they are rushed through, with a form quickly filled out and sent off to HR, and back to real work. The impression this leaves with the employee is that my boss -- and, therefore, the company -- isn't really interested in my long-term future here. If you're talented enough, why stay? This one leads into #4....
  4. No Discussion around Career Development. Here's a secret for most bosses: most employees don't know what they'll be doing in 5 years. In our experience, about less than 5% of people could tell you if you asked. However, everyone wants to have a discussion with you about their future. Most bosses never engage with their employees about where they want to go in their careers -- even the top talent. This represents a huge opportunity for you and your organization if you do bring it up. Our best clients have separate annual discussions with their employees -- apart from their annual or bi-annual performance review meetings -- to discuss succession planning or career development. If your best people know that you think there's a path for them going forward, they'll be more likely to hang around.
  5. Shifting Whims/Strategic Priorities. I applaud Yahoo!'s plans to build an incubator or "brickhouse" around their talent, by giving them new exciting projects to work on. The challenge for most organizations is not setting up a strategic priority, like establishing an incubator, but sticking with it a year or two from now. Top talent hates to be "jerked around." If you commit to a project that they will be heading up, you've got to give them enough opportunity to deliver what they've promised.
  6. Lack of Accountability and/or telling them how to do their Jobs. Although you can't "jerk around" top talent, it's a mistake to treat top talent leading a project as "untouchable." We're not saying that you need to get into anyone's business or telling them what to do. However, top talent demands accountability from others and doesn't mind being held accountable for their projects. Therefore, have regular touch points with your best people as they work through their projects. They'll appreciate your insights/observations/suggestions -- as long as they don't spillover into preaching.
  7. Top Talent likes other Top Talent. What are the rest of the people around your top talent like? Many organizations keep some people on the payroll that rationally shouldn't be there. You'll get a litany of rationales explaining why when you ask. "It's too hard to find a replacement for him/her...." "Now's not the time...." However, doing exit interviews with the best people leaving big companies you often hear how they were turned off by some of their former "team mates." If you want to keep your best people, make sure they're surrounded by other great people.
  8. The Missing Vision Thing. This might sound obvious, but is the future of your organization exciting? What strategy are you executing? What is the vision you want this talented person to fulfill? Did they have a say/input into this vision? If the answer is no, there's work to do -- and fast.
  9. Lack of Open-Mindedness. The best people want to share their ideas and have them listened to. However, a lot of companies have a vision/strategy which they are trying to execute against -- and, often find opposing voices to this strategy as an annoyance and a sign that someone's not a "team player." If all the best people are leaving and disagreeing with the strategy, you're left with a bunch of "yes" people saying the same things to each other. You've got to be able to listen to others' points of view -- always incorporating the best parts of these new suggestions.
  10. Who's the Boss? If a few people have recently quit at your company who report to the same boss, it's likely not a coincidence. We'll often get asked to come in and "fix" someone who's a great sales person, engineer, or is a founder, but who is driving everyone around them "nuts." We can try, but unfortunately, executive coaching usually only works 33% of the time in these cases. You're better off trying to find another spot for them in the organization -- or, at the very least, not overseeing your high-potential talent that you want to keep.

It's never a one-way street. Top talent has to assume some responsibility as much as the organization. However, with the scarcity of talent -- which will only increase in the next 5 years -- Smart Organizations are ones who get out in front of these ten things, rather than wait for their people to come to them, asking to implement this list.

Next time, we'll cover the Top Ten Reasons Why It's Usually Better for Top Talent to Stay at Larger Companies... who are hopefully following the advice laid out above.

PS. Thanks to Jason for loan of the image above.

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Jason Dowdell said...

Since you took the image from my marketing blog, how about a link back? eh, what do ya say?

Unknown said...

will do, jason

Anonymous said...

Excellent post. I have referenced it on and would be interested to know if that link generates views/new readers for you.

You blog is vey good. I like it.


Unknown said...

Thanks, Amitai. I will let you know how much traffic it drives. Thanks for the vote of confidence. Yours is great.


Unknown said...

Hi Amitai:'s mention of this definitely led to many more page views for my post. About 35 new people came to the site from on Tuesday when you posted it. Thanks, eric

Anonymous said...

I encorage you to visit and participate on

Anonymous said...

Eric, these reasons provide a great tool for savvy employees to use as a litmus test to determine whether the best option is to stay or move on. What one of these, in your mind, is the most critical?

Unknown said...

Amitai: I definitely will. Posted my first article there yesterday. Thx, Eric

Unknown said...

Hi Robyn: I would say #10. If you don't have a good boss, that's a killer. Thx, Eric

Anonymous said...

good post Eric.

I can honestly say that I have left organisations over these exact points (not to say that I've moved around a lot, but a number of the reasons flow together).

Shifting Whims / Strategic priorities is my pet "hate". I can tolerate a number of the other reasons, as many of them are just a byproduct of large organisations or government entities. Chopping and changing between priorities doesnt allow your top talet to actually produce anything concrete or usuable, which ultimately they want to do. Working at an organisation for several years and then not having anything to actually show for it because management changed their mind every three months is a sure-fire way to make your top talet look elsewhere

Unknown said...

Hi GJC: Thanks for your note. I agree that this is particularly a common problem in many large organizations. Best, Eric

Unknown said...

Brilliant and succinct. Precisely how I've felt over the last few years. I was beginning to think I was alone on this! :) The question then becomes: how do we fix it? Prior to my "settling down" and becoming a full-time employee, I was a consultant and have put time in pretty much every major company in my area. There isn't one I can think of that managed to even get it close to right. At my current place, turnover has been very low in the past, but I hear a lot of people issuing these kinds of complaints. Usually I hear they're planning on leaving and I tell them "It ain't no different elsewhere. The only reason you think it must be is because you've been here for 10 years, but I think you're going to be in for a real shock."

As an employee, I don't have any power to effect these kinds of changes, and typically management is staffed with "managers" who take any attempt at improving things as an attack. It's almost like every suggestion is heard by them as "you know, you're an idiot and have been doing things wrong all along and here's the reasons why and how to fix it..."

I guess that pretty much sums up the central problem: lack of leadership. The managers in most organizations have "Peter Principled" their way into their positions and are desperate to hold on to them at all costs, even if it means they're dragging the company down with them. Change requires some level of ability to admit things aren't working as well as you anticipated, so now you need a new tactic. Without that ability, change never happens.

Unknown said...

Great post!

Any interest in participating in a mini cross-blog discussion on the talent crunch? I'm attempting to moderate a mini-discussion over on Sourcing Innovation. My posts are under the Talent category.

Unknown said...

Thanks, Michel. I've left a comment.

Spooner: Nice comment. Tough situation. I agree with you that, without strong leadership that's willing to make mistakes, be wrong, and improve, you're in tough. I'm not so pessimistic as you that there are not companies out there who "get it." Yet, still too few.

A good way to start improving things is doing the opposite of what's discussed on the list.



Anonymous said...

Great Post. Even though I am reading it a year later, the information is still relevant and valuable.

Have you made the follow up post on reasons to stay with the company?


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Anonymous said...

interesting top ten reasons, this is very similar to what Sildenafil , a famous Russian leader once said "have your business partners close to you, but have your competence closer"