Tim on Leadership

Musings on Management and Leadership from Tim Parker

Attrition Is Inevitable

Some companies break the general trends about downsizing and reducing staff.  I've been lucky to work at a few companies that bucked the trends while the economy slowed, and instead of downsizing drastically to reduce costs they actually expanded their staff while there was a strong talent pool and invested in the company's future.  That's a clever and gutsy move by the few companies that do that, sacrificing short-term quarter-by-quarter returns (and the potential wrath of stockholders) in order to set themselves up strongly for the coming growth.  I was fortunate to work at Absolute Software in Vancouver during the last economic downturn, and instead of cutting staff they expanded it considerably, which paid off handsomely when the economy did slowly start to come back.  Kudos to the executives at Absolute Software (particularly the CXOs) for that stand!

With a recovering economy, the number of jobs available increases dramatically.  Quick counts of posts on some of the standard jobs sites for developers (in Canada I check workpolis.ca and working.ca almost weekly to get the feel for the job market) show that the number of available jobs grows exponentially over when the economy was slowing, often out of proportion with the recovery as companies struggle to fill the roles that were depleted during their layoffs as well as meet expected growth targets.  So, instead of a market where there were no jobs available, suddenly the reverse is true.  And that means people are looking around at new opportunities.

Attrition from a company is normal.  A typical tech company experiences between 5% and 10% attrition a year.  During good economy years, attrition is higher (in Canada in the late 2000s it was averaging around 12% for example), but that is in a strong market.  When the economy is not doing well, people tend to stay with their companies as job security and to reduce risk, and attrition drops considerably.

A lot of people like to know they are marketable, too, but often don't actually change jobs.  They just want the feeling of knowing they could find another job if they had to.  Some realize that the "grass is always greener" approach really is true.  While each company has its own problems and advantages, every company has issues.  Even highly-touted companies have their share of politics and conflict; every company has these to one degree or another.  The real measure of a company as an employer is how much these issues affect the average employee.  Typically, when a company lets issues get down to the employee level, attrition rises dramatically. When the issues are managed properly, attrition stays fairly steady.

Attrition is actually a good thing, both for a company and for an individual.  For individuals, knowing they are marketable and have options always helps self-confidence, even when it's just a casual curiosity.  Moving between companies is the usual way (in tech, at least) to move up the ladder, have major chances to your compensation, and learn in new environments.  Moving to different companies tends to round out people's skills and capabilities, and the industry average is changing jobs every four to five years.  For a company, losing a valued member of the team is always hard, especially when they have valuable domain knowledge and a good relationship with their peers, but it also does allow for changes in a team that almost always foster fundamental changes for the better.  new people bring new ideas, new experiences, and new processes, and add some dynamics to a group.

There are, of course, downsides to attrition.  Since it takes time to train replacements, there's usually a 3 to 4 month lag between hiring someone and getting them productive.  That hurts the group's overall progress.  In addition, there's a morale issue in that seeing colleagues leaving, especially respected ones, can make people feel less confident and secure in their own positions.  But, attrition is a natural event for all companies, and almost always is a good move for the individual leaving.  For that, we should be happy. For the company, replacing someone who is leaving is an opportunity to bring in some new blood with new skills, and the entire group can benefit from that.

Far from being worried about attrition, it's always best to realize that attrition, like income tax, is inevitable and needs to be factored as part of a technical working environment. We lose some friends, but we also make some new ones.  We lose some valuable skills, but we also gain some new ones.  And a stagnant workforce is never a good thing!