In the May 27th, 2011 issue of CFO Online there was an article entitled "What Makes High Performers Stay?" Based upon research from the Corporate Executive Board (CEB), compensation was found to be one of the least important factors (ranking 35th). Not surprisingly, the most significant high-performer retention driver was Manager Quality, ranking number one in importance. What is surprising is the number of organizations that lack any effective internal review processes to assess bad management choices when employee attrition rises over internal norms. Yes, most Human Resource organizations are structured these days to be able to note and alert on trends where the turn over rate in a particular area rises above company or industry averages. However, both effective internal processes and executive willingness to address such problems remains distinctly absent from a majority of corporate America.

Often Human Resources's procedure, for a spike in employee departures, is to notify the area manager and his or her immediate supervisor. Using two real world examples nearly a decade apart (and hence illustrating that not much has changed), one case was a newly hired VP with high turn over within their area reporting to a Sr. VP/CFO and the other was a newly hired VP reporting to an EVP/COO. In both cases, while dialogs about the high rate of turn over took place between superviser and new hire, neither executive wanted to address the issue decisively, as any obvious failure of the new VPs reflected a failure in their own judgement in the hiring process. In one case, the VP hired was not their first or even their second choice but was a compromise to appease disagreements with one or more of their peers in the organization. To act decisively to replace the newly hired VP would have been a double-whammy - illustrating not only a bad decision in the compromise, but in the hire as well.

In both these cases, the newly hired VP's poor management led to substantial losses in productivity and added costs within their organizations. Large turn over meant lost institutional knowledge, delayed projects, project cost over runs, and and rework to conform to new preference and procedures. Further, there is always a certain change in "brand" preferences with turn over in senior management,  and millions of dollars were spent in switching out various service and technology vendors for alternative brands as some amount of the blame for poor performance was diverted on historical vendor choices. In both cases the newly hired VPs were replaced within 18-24 months. In one case, the career of the EVP/COO was dealt a severe blow by the poor choice and lack of prompt correction. In the case of the Sr. VP/CFO, it remains to be seen how long before repeated errors in hiring judgements offset their skill at their other duties as a CFO.

In both cases, had the executives in charge been willing to recognize the symptoms communicated to them from Human Resources (and more informal sources) and act decisively within typical probationary periods, substantial cost and losses of critical talent could have been avoided. An argument can be made that, in senior management positions at least, a full budget cycle is needed before a Director's or VP's performance can be fairly evaluated, yet the cost to allow that long of a grace period for a poor manager can be massively damaging to the organization. Human Resources should be empowered with access up to and including board level oversight to act on problems of a poor hire at a senior management or executive level promptly. If the executive with the poor hire is unwilling to take prompt action, procedures should be established, formal or informal, to escalate and ensure that failure to act is worth the investment as it amounts to millions!