Once there was a team of bond traders at a large investment bank. They produced millions upon millions in revenue for the bank and sometimes they were well compensated for it. But there was just one problem. New management, brought in from outside, was invasive, overbearing and even verbally abusive at times. On top of this, the Managing Director lacked a strong grasp of the business. Work-life balance was near impossible with the micro-management. The team made this clear in the annual 360 Review.
To solve the problem, they were put through hours of team building exercises, personality tests and diversity training. The MD was assigned a leadership coach. What happened the following year? As it was described to me, the team convened and agreed: “Give them all high marks. Let’s not go through that again.”
Management didn’t change their ways. Upper levels thought all was solved. After all the 360 Review showed it. 4 months later the entire team left together. Another institution swiped them up…gave them the autonomy and actual support they needed, including senior directors that were experts in the area.
Hey, is anyone going to tell upper management that the 360 Degree Review Program is largely a waste of time? And that it is time to consider whether such programs are worth the time and resources at all?
“We train them. Then they leave. Train new people. They leave.”
This is what was happening to one client until they finally decided it was time to stop being the free training center for their competition.
You may not have a revolving door, but the cost of losing an employee is so high, every level of management must be concerned with retention.
The direct cost to replace salaried employees is estimated to be at least 6-9 months of pay and can be as high as two times the annual salary for a high-earner. For low-paid high turnover employees, the cost is at least 16% of their annual pay.
In addition to the direct costs, frequent turnover has a negative impact on employee morale, productivity, and revenue growth. Lost knowledge is a big problem as well, to say nothing of the stress and increased workload on other employees while new people are found, hired, and brought up to speed.
Even if you are sitting in an electric power plant, someone somewhere in the organization will say it:
”We need to be more innovative” or “What can we do differently to…?”
Every company needs new and imaginative ideas and the ability to turn those ideas into new or improved products and services.
Now, wouldn’t it be nice if there was an innovation river continually flowing? Just reach in and scoop up that next winning idea to implement?
While Apple seems to own a river, the Conference Board Survey reported that other companies around the world are challenged by it. CEOs ranked innovation as their #1 challenge in 2012 and it has remained in the top 3 since then.
Here’s what I have found. Innovation is a challenge largely due to two misunderstandings:
1. The innovative process itself
2. Management’s role in switching on the process