Retain your best – a framework for retention decisions

I was speaking with a tech entrepreneur friend of mine recently. He was lamenting about the high attrition he was seeing in his India team. His company does interesting work, generates revenue and is reasonably stable. But his firm is not a large company with a solid brand, nor is it a sexy startup in the next hot space with the kind of cash that recently funded firms have to throw around. He was struggling with how to retain people and when to take a call on retention vs letting go.

Now the best approach to retention obviously is to ensure that an employee doesn’t even get to the point of putting in their papers. But realistically attrition is going to happen. Then what?

Over the years I have developed a rough categorisation of the kinds of people you tend to have in a company and how to take a call when retention decisions come up.

If you think about your employees in a 2×2 matrix with their competence on the x-axis and commitment on the y-axis, you get a 4-quadrant matrix (We consultants love these 😀).

Heroes: These people are your stars. They are highly capable and highly motivated with a buy-in to your company’s mission. They will often go the extra mile, are comfortable with ambiguity and stay committed during the inevitable business downturns & setbacks that growing companies face. These are the kind of people you want to hire for your core team. For them, my advice is to do whatever you can to retain. Don’t be ad-hoc but also don’t get hung up on things like compensation bands. Take the time to understand what triggered their decision (tip: A founder or a senior exec should talk to them. Don’t leave it to just your HR team). If and only if you can address root causes, then make the best counter offer you can.

Pros (Professionals): Pros are exactly that – very good at their job, but they may not have the level of visceral commitment that your Heroes demonstrate. They usually have a pedigree degree or solid experience in blue-chip firms. You won’t often find these in very early hires, but they will come on board once you have traction and good funding. And you do need them for the strength of experience, skills and network they bring. They are sensitive to opportunity cost though. If your startup is going through a lean period or belt-tightening measures, they may not be ready to take the long-term view and weather the storm. If you are dealing with a Pro’s resignation, my advice is to understand the near-term goals and concerns they have. Whether you can actually address those concerns, and how critical a role they play should drive your decision to retain (tip: Don’t make promises you can’t keep)

Troopers: In my opinion, these are the heart and soul of any successful organisation. You can’t win with heroes alone. As you scale, you need (and will have) employees who can be counted on to do a competent job, consistently and with a high degree of commitment. Some of them with training or opportunities to learn can potentially transition to Heroes over time. You will have to accept some attrition here. These are good employees, and you probably don’t want to lose them, but my advice is not to be too tactical here when you are making exceptions to retain. Have a structure, perhaps based on your assessment of their potential, and invest in those you see as longer-term wins.

Fillers: As in “seat fillers”. This is self-evident. Ideally, such employees shouldn’t even be in your company. If there are, someone likely messed up in your hiring process. But it can happen, especially when you’re hiring like crazy in a super competitive market. If they quit, you really shouldn’t be trying to retain them.
A clarification here. The quadrants are obviously not to scale. IMO you’re lucky if 10% of your employees can be classified as Heroes. And your Fillers should be actively managed to be less than 5%.

Lastly, when someone decides to leave, thank them for their service and wish them the best. The exit process should be smooth and professional. Too often I’ve seen execs, managers or HR personnel go hostile when an employee quits. That’s just immature and speaks poorly of your organisational culture.
Employee engagement & retention is a complex topic, and this is only one small aspect of it. Anyway, this is what I shared with my friend, and I hope you find it useful too. Let us know your thoughts in the comments.