HR – The Business of Social Games and Casino

When you might lose some of your team

There was an interesting article in the Harvard Business Review, Why People Quit Their Jobs, that provides great analysis on when your team members are most likely to leave. I have written repeatedly on the importance of recruiting a great team, and the logical next step of retaining the great people you have recruited, and one key to retention is understanding when your people are most likely to leave.

Why people leave

Before looking at when people leave, it is important to recap why people leave. Traditionally there are three key reasons people will leave a job they have held for several years:

They do not like their boss
They do not see opportunities for promotion or growth
They get a better opportunity (and often higher compensation

When people leave

Research cited in the article shows that there are certain events that trigger people to review their situation and thus exacerbates the above reasons people leave. The strongest of these events is work anniversaries, a natural time of reflection on whether joining the company turned out the way the person expected, when job-hunting activity increases 6-9 percent. These anniversaries are not only limited to joining the company but also starting a new role. Also, a formal review is likely to trigger a job search, especially if it does not include a promotion or clear promotion path.

The research also showed there are triggers outside of the company that also prompt heightened job search. Birthdays, particularly milestone birthdays (30, 40, 50, etc.) prompts employees to reflect on their life situation and whether they should pursue a move. School anniversaries serve a similar purpose, as they prompt employees to compare themselves against their classmates. The research shows a 16 percent increase in job-hunting activity after reunions. The key is that events outside of the workplace have a strong impact on whether an employee will be looking for another position.

Other clues to leavers

In addition to the extrinsic and intrinsic factors that trigger job search, there are other ways to identify employees (or teams) more likely to leave. Computer monitoring can identify higher usage of LinkedIn or other job search websites. Tracking employee badges can detect those leaving the office frequently, presumably to interview or speak with recruiters. There are even technology firms that can predict likelihood to leave based on who people are connecting with on LinkedIn.

What you should do

As I wrote, you should always be recruiting your own team to minimize their chance of leaving. Realistically, not everyone has the time or resources to do this so at a minimum you can use the above triggers and hints to focus on those employees when they are most likely to leave. Ensure that you have clear conversations with them their career path in the company, and if they do not have one you should work to create one. Also, encourage your HR team to recruit internal candidates who are likely to be job-hunting for other positions at the company, so if they are going to move they still stay within in the company. Research shows that pre-emptive intervention is much more effective that waiting for someone to get an offer and then making a counter-offer, as 50 percent of those you retain by counter-offer will still leave within twelve months.

Key takeaways

Retaining employees is important as recruiting them, and understanding when they are likely to start looking for other positions allows you to pre-empt a move
Employees generally leave because they dislike their boss, do not see opportunities for promotion or growth, or get a better opportunity
They are most likely to start or increase their job search during work related events (work anniversary, position anniversary, performance review) or life events (major birthday, class reunion, etc.).

Recruiting, or why you want to Coach Team USA

Key takeaways

A critical key to success is attracting the right talent to your team. This provides a competitive advantage over other companies.
A key element to successful recruiting is for leadership to own and drive the process, rather than relying on HR (who are a critical component, however)
The other key is proactively finding opportunities to raise your and your company’s profile to help your long-term recruiting capability, particularly speaking and writing openings.

This past summer, Duke head basketball coach Mike Krzyzewski (Coach K) led Team USA to its third consecutive gold medal under his leadership. Coach K took over Team USA in 2005 and while his accomplishments for Team USA are impressive, it points to a bigger story about the value of recruiting. In that time, Coach K has won two National Championships at Duke and coaching Duke is his primary job. Many of his fellow coaches are upset that the high profile nature of coaching Team USA helps him recruit (and succeed at Duke). Regardless of whether it is fair, it shows a clear path to success.

Recruiting is different in the US and Europe

Having worked in both the US and Europe, one clear advantage I see from US companies is their focus on recruiting. In the US, recruiting is seen as a responsibility of all management, and the more senior you are the more you are expected to bring great people into your team or company. Many American leaders are judged by the team they put together.

In Europe, although the company may actually have more employee-friendly policies, recruiting is left to the recruiting team or external placement firms, with it being a tertiary activity for leadership. While most leaders understand the value of hiring the best people, they do not see it as part of their job responsibilities.

What drives US recruiting

It is helpful to understand why recruiting is treated differently by US and European companies. There are two things that drive the US focus on recruiting:

The sports ecosystem. In the US, collegiate (university) sports are as important if not more than professional sports. While professional sports teams (both in the US and Europe) can secure talent by paying more, in collegiate sports payment is not allowed (I can write multiple posts about the reality of the situation but not important for this point). Thus, the successful teams are primarily the ones who can attract the best players.
Talent is very mobile.

As LinkedIn Founder Reid Hoffman once wrote, the US is a free agent economy. Employees often look at their job as a short-term opportunity and move on to better new opportunities frequently. This liquidity means for companies to succeed they need a constant stream of good talent with the right skillset.

Lessons from Coach K

As somebody who went to Duke and followed sports my whole life, the American philosophy on recruiting is embodied by Coach K. While you cannot have great results without being a capable floor coach, he has excelled by generating a steady and deep continuous flow of talented recruits.

There are two lessons that I learned from Coach K that can help anyone, including European business leaders, recruit more effectively.

First, recruiting must start at the top. While some university coaches rely on their assistants to attract talent, great coaches make recruiting their top priority. They show up for high school games, have dinner with recruits and their families and personally call and contact recruits. While their assistants do much of the work (breaking down film to prioritize candidates, coordinating schedules, answering questions),the great coaches take the lead in the process. In business, great leaders also do not rely on their HR team but work in concert with HR. They identify the talent, work with their coaches and players to build an environment attractive to the recruits and “close the sale,” they are not simply added to an interview list and done with it when they tell HR who they want to hire.

The second element and one that prompted this post is they use all opportunities to improve your odds of recruiting the best talent. Coach K could have spent his summers at the beach but instead he coached Team USA. What this effort did was raise his profile and give him a great unique selling point when sitting with a potential Duke recruit: do they want to be coached by the same person who is coaching LeBron James, Kobe Bryant and Kevin Durant. Additionally, every time Team USA played on television (which is effectively everytime it played), it was a long commercial for Coach K.

While in business there is no direct equivalent of Team USA, there are many comparable opportunities. At the top of the spectrum are shows like The Apprentice or Shark Tank, this exposure greatly helps the underlying business’ ability to recruit. Even if you cannot get a slot on television, speaking at conference or writing articles for trade press (or even blogging) generate exposure and a unique selling point when recruiting. The critical thing is to seek out these opportunities as part of your overall strategy to use recruiting as a competitive advantage.

The Key

The key is to use recruiting proactively, and put the necessary emphasis and focus on it, to gain a competitive advantage for your business. This effort requires that you lead the initiative, do not rely on others, and look at all opportunities as long-term ways to improve your recruiting effectiveness.

Why reducing headcount hurts profits

I find it surprising when investors, particularly Wall Street, cheer a company for reducing head count because it is usually not a good business decision. I am not making a moral statement; it is about the underlying business reasons. While reducing head count does immediately reduce the cost side of your business (outside of redundancy expenses), it usually has a greater impact over time on revenue.

People create revenue

Your team is how your company creates revenue. They build the products customers pay money to purchase. They provide support so customers return and continue spending with your company. They market the product so people learn about the product and buy it. At the root of business, companies employ people because they make money for the company. The logical extension of this argument is that if you reduce the number of people, you will have less people generating revenue.

Julian Simon trumps Malthus

Malthus and Julian Simon were two economists of different eras but more importantly different philosophies, and history has proven Simon correct. Malthus lived in a time when people had a short life span and had to spend most of their time on difficult work. He theorized that as the population grew, the situation would get worse as there would be less food, more disease and overall fewer resources to go around.

Julian Simon, conversely, argued that people were incredibly resourceful and always came up with more efficient ways to use resources. Thus, as the population grows, there would actually be more to go around and people would live better. When people argued that oil would run out or we would not have enough food to feed ourselves, he argued that these would not be problem’s due to human intellect.
Simon famously bet Robert Ehrlich, a Malthusian economist, to pick any five metals and Simon argued the price would decrease over time. Simon won the bet. Continue reading “Why reducing headcount hurts profits”

Don’t forget to recruit your own team

The value of a good team cannot be overstated, it is more important than strategy, technology and even cash available. I have written before on some of the principals for recruiting a great team and how you should never stop recruiting. It is ironic how much effort companies put to recruiting the best but do not put the same effort into their existing team members until it is too late.

While most companies acknowledge the importance of recruiting, they often neglect the complementary principle that you need to put as much effort in keeping your existing team satisfied. Just as increasing user acquisition costs intensifies the value of retaining existing players, the increasing difficulty in finding great employees intensifies the need to minimize employee churn. There are multiple costs of replacing a good employee

Losing an employee is more costly than you realize

The hard costs of recruiting a new employee. This can be payments to a recruiter, referral fees to employees, travel costs to attend recruiting, travel costs to bring candidates in for interviews, etc.
The lost time spent evaluating candidates. The time you and your team spend reviewing resumes/CVs, interviewing candidates and discussing options. These days, almost all candidates go through multiple rounds of interviews before being offered a position. Each of those interviews takes 30 minutes or more of someone’s time, if you value that time based on the interviewer’s salary, you quickly get into the thousands of dollars (even more for a senior candidate who meets with leadership).
Training costs. These are both direct and indirect. You may have to send the new employee to various external training courses to prepare him for the job. More likely you will need to spend you time or your colleagues will training the new person on how the company works, practical issues (i.e. where the bathroom is), systems, interactions with other teams and what they need to perform their tasks optimally. Again, there is a cost for every minute that you and colleagues spend getting a new hire up to speed. When you break out salaries by how much the person earns per hour, this training cost often runs into the thousands of dollars.
The lost productivity in losing a high performer. You should never consider replacing an employee as an upgrade. If there are better people on the market, you need to recruit them proactively and replace weak team members. Assuming you adhere to this principle, if someone leaves voluntary, it means their replacement is not likely to be as good as the existing team member. The cost can range from minimal to huge in having somebody not as good performing a role on your team.
Less output. If you employ somebody, they should be providing a valuable service (or else you should proactively have eliminated the position). When you lose somebody, that task either does not get done until a replacement is in place or you must take other people off of their tasks (which again are worthwhile or you should not having them doing it). In either case, the overall output of your organization decreases.
Stronger competitors. When a good employee leaves, by definition they go somewhere else. That somewhere else is often a competitor, so not only are you losing their services but a competitor is likely improving. If Messi were to leave Barcelona for Real Madrid, the loss to Barcelona would be magnified by the improvement of their arch competitor.
Higher risk. Regardless of how rigorous your recruitment process, there is always risk that you make a bad hire. Many people interview above their actual competence, while others may just not be a good fit for your organization and processes. Thus, you have the risk that not only will the new hire be slightly weaker, they may prove incapable of doing the job and themselves have to be replaced. Then you have both an extended period of the job not getting done (or people being pulled off other tasks) and a repeat of the costs above.

Continue reading “Don’t forget to recruit your own team”

Define your own tour of duty

A few weeks ago, I wrote about Reid Hoffman’s book Alliance and his innovative ideas on how to structure the employee company relationship. One issue that some people raised to me was it sounded great, but if your company does not believe in creating tours of duty, it was not very useful. I am not much for giving non-actionable advice (hence why I am not a consultant ☺), so I wanted to address the situation by discussing what you can do to leverage this powerful concept even if your company does not.

What is a tour of duty

I do not want to go into too much detail since you may have read my post in October, but to recap: A tour of duty occurs when the employer and employee mutually agree on a finite project, with goals for the employees contribution. It also includes how the tour of duty will benefit the employee. To create a fictitious example, say Uber wants to open the Las Vegas market to its service. When recruiting a VP, rather than pitching them on working for Uber for life, the hiring manager specifically lays out that the task will be a two-year project to penetrate Las Vegas. The employee will need to work with the legal team to counteract the local taxi companies and then recruit drivers. The candidate would learn how to lobby local governments and launch a location-based tech product. Both agree that at the end of the two-year tour of duty, there may be another tour of duty at Uber that is mutually beneficial or the employee might use the skills he learned to help another company. Continue reading “Define your own tour of duty”

Using tours of duty to have a better company employee relationship

One of the best books I read this year is The Alliance: Managing Talent in the Networked Age by Reid Hoffman. The core concept in the book is that there is no longer employment for life but there is still a way to build a win-win relationship between employers and employees. Hoffman and his co-authors suggest a tour-of-duty type relationship, where employer and employee agree to a short or medium term engagement with a defined goal.

The current reality

Hoffman begins by pointing out that in the at-will era (when employers can and do fire employees at their discretion), employees thus think of themselves as “free agents,” seeking out the best opportunities for growth and changing jobs whenever they get a better offers. He points to a 2012 study that found even though about half of employees wanted to stay with their current employer, most of them felt that they would have to take a job at a different company to advance their careers. Hoffman writes, “loyalty is scarce, long-term ties are scarcer, but there’s plenty of disillusionment to go around.”

Related to this point, employees’ trust of management is at an all-time low. One reason employees do not trust their employer is that the foundation of the relationship is built on dishonesty. When employees are courted, they are told about the fantastic long-term opportunities. When they answer interview question, they comment on how there goal is to spend their life contributing to the company. Both parties know this is nonsense but feel they must utter these phrases. It creates a relationship built on lies and a relationship without trust is a relationship without loyalty. A business without loyalty is a business without long-term thinking. A business without long-term thinking is a business that’s unable to invest in the future and thus one doomed to fail.

Tour of duty concept

A tour of duty is when the employer and employee mutually agree on a finite project, with goals for the employee’s contribution. It also includes how the tour of duty will benefit the employee. To create a fictitious example, say Uber wants to open the Las Vegas market to its service. When recruiting a VP, rather than pitching them on working for Uber for life, the hiring manager specifically lays out that the task will be a two-year project to penetrate Las Vegas. The employee will need to work with the legal team to counteract the local taxi companies and then recruit drivers. The candidate would learn how to lobby local governments and launch a location based tech product. Both agree that at the end of the two-year tour of duty, there may be another tour of duty at Uber that is mutually beneficial or the employee might use the skills he learned to help another company. For example, he may go over to Peapod to open the Austin market with the skills he learned at Uber. Uber benefits by having a successful launch in Las Vegas, and the employee is more valuable and has a great new opportunity. The important thing is both parties are honest with each other and they have built a mutually beneficial relationship. Continue reading “Using tours of duty to have a better company employee relationship”

How to find talented employees

Finding strong members for your team is one of the most important skills needed to succeed and a recent Harvard Business Review article, “21st Century Talent Spotting” by Claudio Fernandez-Araoz, provides some strong insights on how to optimize your talent search. With skills and competencies now the key to finding employees, rather than past experience, you must become skilled at judging potential. This situation is exacerbated by the rapidly changing nature of the tech and game spaces, what worked yesterday are not necessarily the skills you need today.

In the last millennium, workers were selected for physical attributes which readily translated into higher success at physical labor, from building a canal to fighting a war. Business then evolved to judge candidates on intelligence, experience and past performance. Much work was standardized, so if you were looking for an engineer or an accountant or a CEO, you would find somebody who has already succeeded in such a role and there was a high likelihood they would replicate this success. Then hiring evolved to the competency model, which stipulated that managers (and other workers) be evaluated on specific characteristics and skills that would help predict outstanding performance in the roles for which they were being hired. Hiring managers would decompose jobs into competencies and look for candidates with the best combination of these skills. Continue reading “How to find talented employees”

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Why people leave

When people leave

Other clues to leavers

What you should do

Key takeaways

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Key takeaways

Recruiting is different in the US and Europe

What drives US recruiting

Lessons from Coach K

The Key

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People create revenue

Julian Simon trumps Malthus

What is a tour of duty

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The current reality

Tour of duty concept

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Hire adults and treat them like adults

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Suster’s friend’s advice

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