case in point - retaining talent

Rowley & Associates

Rowley & Associates is a management consulting firm that specializes in strategy formulation

and implementation, process improvement, performance management, and other services.

The organization serves Fortune 500 companies seeking to sharpen their competitive edge

through enhancing management quality. Worried about rising expenses during the current

economic downturn, the CEO has decided that Rowley & Associates is staffed too high. To

control costs, she has asked the firm's managing partners to look for opportunities to take

advantage of natural attrition as a way to reduce headcount.

Marta Ferreira, Chief Executive Officer

Marta has been Rowley & Associates' CEO for seven years. With a strong background in

finance, she has earned a reputation as someone who can generate creative ideas for

managing costs and boosting profitability. She also uses her deep knowledge of the

management consulting industry to keep tabs on what rival companies are doing and to

ensure that Rowley maintains its leadership position in the marketplace during tough

economic times.

Arthur Bentley, Managing Partner

Arthur, the case protagonist, became a managing partner at Rowley two years ago. He

oversees several small, close teams of consultants, including the Strategy Group. Before he

DocumentsPDFComplete

Click Here & UpgradeExpanded Features

Unlimited Pages

http://www.pdfcomplete.com/1002/2001/upgrade.htm

came to Rowley, Arthur had founded a startup consulting firm with several associates.

Unfortunately, his company dissolved when one of the partners decided to join a large,

established consulting organization. As a relatively new managing partner at Rowley, Arthur

relies heavily on Marta's guidance in matters such as cost management and hiring.

Warren Giacomin, Senior Associate, Strategy Group

Warren came to Rowley six years ago as a junior associate in the Strategy Group. After three

years, he was promoted to associate level in the same group, in recognition of his savvy

client management skills, his ability to work well with others, and his solid knowledge of the

strategy consulting field. Warren enjoys close teamwork and finds enormous satisfaction in

grappling with the challenges of strategy consulting. As this case begins, he is promoted

again—to senior associate.

Thursday afternoon

To: Managing Partners, Rowley & Associates

From: Marta Ferreira, CEO

Subject: Cost Management

Following up from our meeting yesterday, I want to confirm the importance of managing

costs during our current economic downturn. As we discussed, we're staffed much higher

than our competitors, and I urge you all to use attrition as an opportunity to reduce

headcount. For example, as many of you may have heard, Eleanor Massoud, the senior

associate who was leading the Strategy Group, is taking a job at ConsultPro. This opens

opportunities to draw upon additional talent from that group without taking on new hires. —

MF

Monday morning

To: Strategy Group

From: Arthur Bentley, Managing Partner

Subject: Eleanor Massoud's Farewell Lunch

Please let me know if you'll be able to attend the farewell lunch for Eleanor Massoud

tomorrow at noon. Eleanor has done a superb job leading our Strategy Group, and we're all

sorry to see her go. If you're coming to the lunch, please let my assistant know whether you

want the chicken or the fish. Thank you.

Arthur Bentley

Monday afternoon

To: Arthur Bentley, Managing Partner

From: Nan Brockleman, Associate, Strategy Group

Subject: Re: Eleanor Massoud's Farewell Lunch

Arthur, definitely count on me to attend the lunch for Eleanor. Our group of eight won't be

the same without her. She challenged and supported us, and we're going to miss her greatly.

ConsultPro is lucky to get her.

Nan

Wednesday



Unlimited Pages


ARTHUR. . . So, Warren, that's why I think you'd be ideal for the job. With your tenure here at

Rowley, knowledge of the field, impressive presentation skills, and strong rapport with the

team, I think you'd make an excellent senior associate for the Strategy Group.

WARRENThat's great! I'm flattered. But somewhat nervous about taking on all these new

responsibilities. Eleanor did an amazing job, and I'm not sure I can fill her shoes. Frankly, I

thought you would hire someone from the outside to replace her.

ARTHURMarta wants to give people here a chance to grow, and she also thinks we're staffed too high.

Believe me, Warren, we wouldn't offer you the job if we didn't think you were qualified. My

advice is to simply keep the group working together the same way they always have. To help

you ease into your new role, I've drafted suggestions for assigning subprojects to various

team members—to spread out some of Eleanor's work.

WARRENAll right. I'll take a look at this. Thanks for your confidence in me.

ARTHUR

Warren, I know you're going to do a fine job.

One month later

ARTHURWarren, Arthur here. I've been checking my mail while I'm on vacation and I noticed your e-

mail on the subprojects. And I wanted to see how things are going.

WARRENThe new job is definitely an adjustment. People have been complaining about the subproject

assignments. And I'm exhausted from working late four nights this past week. How come

nobody mentioned burnout as a hazard of being a senior associate?!

ARTHURHey, promotions and raises come with new demands! I remember burning lots of midnight oil

when I first started. But seriously, I'm sorry you've been so busy. It'll get better. So, tell me,

what's up with the projects?

WARRENWell, we assigned Nan financial analysis, but she says she's more interested in the contract

negotiations work. And Toby said he'd rather focus on finding new business than producing

client presentations.

ARTHUR

With our smaller team, it's important to leverage each member's skills. Nan has an amazing

mind for financial detail and is the best person for the project. . . . Of course, do as you see

fit, but I think the current assignments best leverage individual strengths.

WARREN

Hmm . . . I see your rationale. You know, dealing with the team is taking more time than I

expected. I've been thinking. What if we hired a junior associate to do the easier parts of my

job? That way, I could focus on managing the team—

ARTHUR

Unfortunately, we can't take on new hires just now. But let's be sure to revisit that idea as

soon as the economic situation improves. I know you're busy, and I'd definitely like to get

you the help you need as soon as I can.

WARREN



Unlimited Pages


I was afraid that would be your answer. Well, I appreciate your checking in.

The following week

To: Arthur Bentley, Managing Partner, Rowley & Associates

From: Joel Ferguson, Vice President, Raymar Enterprises

Subject: Raymar Contract

Arthur, I want to let you know my concerns about going with Rowley for our strategy

implementation initiative. Yesterday, Warren gave a presentation, pitching Rowley's plan for

handling the project. Usually Warren delivers a very compelling, thoroughly prepared

presentation—he's one of the reasons we keep our business with Rowley. But yesterday he

was off, distracted. As a result, we're not sure we'll go with Rowley for this project. We can't

risk a subpar performance. I'll get back to you on this. I hope Warren's okay.

Joel Ferguson

Voicemail from Arthur to Warren

ARTHURWarren, Arthur here. I just got an e-mail from Joel Ferguson about your presentation at

Raymar yesterday. He had some concerns and wasn't sure whether to give the project to

Rowley. He mentioned your presentation in particular. I know you've been under pressure

lately, so I'm guessing that you were just tired. Raymar's been a good client and can bring in

a lot more business. Give Joel a quick call and make sure he knows you're on top of things.

You might want to do a follow-up presentation.

Voicemail from Warren to Arthur

WARRENGot your voicemail, Arthur. It's Warren. Look, I know I wasn't in top form yesterday at

Raymar. I had much more time to prepare earlier presentations. Instead, I spent most of the

previous evening resolving job assignments for my team. I'll call Joel first thing tomorrow

morning.

A few weeks later

WARRENHey, Arthur. It's Warren. Listen, I won't be able to make this afternoon's company meeting—

something's come up and I need to head out now. Would you mind briefing me later on

what's discussed? Thanks—I appreciate it.

The same day

ARTHURWarren, Arthur here. Just got your message. Too bad you can't make the meeting. Must be

something serious if you have to skip out. Yes, I'll fill you in later. . . . I have to say, I'm

concerned. This makes two meetings in a row you've missed. What's up? Is anything wrong?

What do you see happening at Rowley & Associates? If you were Arthur, what would you do

next? Consider these questions:

l In your view, how is Arthur interpreting Warren's new behavior?



Unlimited Pages


l How would you interpret Warren's behavior?

l If you were Arthur, would you change anything about the way you're managing

Warren? If so, what?

l What would you do next?

Several days later

ARTHURYou know, I've been thinking about the meetings you've missed—and how busy you've been.

I'm wondering if perhaps we missed the mark with the salary increase that came with your

promotion. We can't offer a lot more these days, but what would you say to another three

percent?

WARREN

I appreciate the gesture. . . . But could we talk about it later? I've got a group meeting I'm

already late for.

ARTHUROkay. Swing by when you have time, and we'll go over the details.

The next day

WARREN

Arthur. It's Warren. I need to speak with you about a decision I've made. It's about

ConsultPro. They've offered me an opportunity that I just can't turn down. It's been a very

tough decision, but I do think it's the best choice for my career.

That same day


From: Nan Brockleman, Associate, Strategy Group

Subject: Giving notice

Arthur, please see my letter of resignation, attached. I didn't want to dump this on you so

abruptly, but an opportunity to take on a stimulating new role at ConsultPro came up very

suddenly, and I felt I had to jump on it. Hope you can understand. Nan.

The following morning



Subject: What's going on in the Strategy Group?

Arthur, What's with the mass exodus from the Strategy Group? You've lost the top three

people in the original team—to our biggest competitor. It was good that you promoted

Warren to replace Eleanor, but why did Warren leave after just a few months? What's your

plan for replacing him and Nan? I want to see a detailed breakdown of the costs involved

here. And I want to know how you intend to keep the rest of the Strategy Group from

heading over to ConsultPro. —MF

The next day

To: Marta Ferreira, CEO

From: Arthur Bentley, Managing Partner

Subject: Replacement cost breakdown



Unlimited Pages


Marta, here are my calculations of the potential costs for replacing Warren and Nan:

Later that day



Subject: Focus on retention

Arthur, I've reviewed your summary of replacement costs. You didn't include ramp-up costs—

training to get new hires up to speed. Not to mention indirect opportunity costs. I'm not

happy with the impact of these resignations on our budget. Going forward, we have to

balance attrition opportunities with retention needs. I suggest you take a hard look at the

people in all your groups, and decide which ones we can't afford to lose. Then figure out how

you're going to keep them. This brain drain has got to stop, or the rest of us will soon be

looking for jobs. —MF

Warren Nan Total

Recruiting (including commission to

recruiting firm)

$50,000 $40,000 $90,000

Hiring bonus $20,000 $15,000 $35,000

Salary increase $5,000 (5% of

$100K)

$3,000 (5% of

$60K)

$7,000

Relocation costs $60,000 $60,000 $120,00

TOTAL $135,000 $118,000 $252,000

Arthur encountered some difficult challenges when using attrition to reduce headcount while

retaining high-performing employees in the Strategy Group. His experiences offer a number

of important lessons for any leader faced with similar challenges.

Tailor job content and job conditions to improve employee retention. When Arthur

promoted Warren to senior associate of the Strategy Group, he missed opportunities to tailor

the job content and conditions in ways that would strengthen Warren's commitment to his

new role. For example, Arthur never asked Warren what his professional interests and goals

were, or what kinds of work he found most fulfilling. Thus Arthur couldn't define Warren's

new responsibilities in ways that enabled Warren to satisfy his interests.

Arthur could have changed the conditions of Warren's new role in ways that encouraged

Warren to stay. When Warren suggested hiring someone to take on the easier parts of his job

so that he could focus on management, Arthur assumed that hiring someone wasn't an

option—owing to Marta's request to reduce headcount. Creative thinking on Arthur's part

could have revealed a solution. Perhaps Marta would have approved hiring a part-time person

to ease the burden on Warren. Or perhaps another of Arthur's groups could have spared a

few hours of a junior person's time each week to assist Warren.

Finally, by suggesting subproject assignments for Warren's team and then advising Warren

not to change the assignments, Arthur deprived Warren of a sense of ownership of the new

job—which is essential for commitment to one's work. Arthur also dissuaded Warren from

assigning work in ways that increased job satisfaction within the team. Instead, Arthur made

the common mistake of assuming that just because an employee is good at a particular kind

of work, he or she finds that work interesting and satisfying. Assigning projects based on

interest and skill, not skill alone, boosts a leader's chances of cultivating more on-the-job



Unlimited Pages


satisfaction and commitment among employees.

Know the signals that an employee is thinking about leaving. The first mistake was

made long before Warren began showing signs of leaving. Arthur and Marta should have

responded more promptly and thoughtfully to the departure of Eleanor, a strong and

respected performer. If they failed to notice impending signs of defection in Eleanor, they

should have analyzed the reasons for her departure after she left. Then they could have

applied their learning to their management of the rest of the Strategy Group—and perhaps

have kept Warren and Nan. Arthur and Marta should have known that others in the group

might follow Eleanor—and worked to retain the group's top performers.

With Warren, Arthur failed to see or correctly address signs of impending defection. For

example, when Warren complained of burnout—a common sign—Arthur should have

discussed the issue more with Warren. He should have expressed how much he valued

Warren, explored possible causes of the problem, and discussed ways of resolving it. Instead,

Arthur merely recalled that he himself had worked long hours when he first started out in the

business—then he jumped into discussing the subproject allocations.

Arthur mishandled another sign of defection: Warren's performance during the Raymar

presentation. In addition to prompting Warren to take steps to reassure the client, Arthur

should have explored the reasons behind the performance decline with Warren.

When Arthur noticed Warren had missed meetings (indicating possible withdrawal, a sign of

defection), he offered Warren more money. Studies show that job satisfaction stems from

more than financial compensation. Additional drivers include pride in an organization, a

positive relationship with a supervisor, a sense of belonging, and meaningful, satisfying work.

Arthur didn't consider using motivators other than money to increase Warren's commitment.

Regularly "re-recruit" your top talent. Talented employees feel more committed to their

company if they know that the organization values them. To inspire commitment, Arthur

should have identified the people he wanted to retain—and then "re-recruited" them. His re-

recruitment strategies could have included signaling his appreciation of team members'

talents and scheduling professional development meetings (often called "stay interviews") to

identify way to make their jobs even more satisfying.

In this case, Marta set the stage for what happened in the Strategy Group by viewing people

primarily as costs rather than as prized assets. During a downturn, she focused on reducing

headcount. Though reducing headcount may have been important, she should also have

thought about how to keep talented employees engaged and on board.

Use loyalty to colleagues and teams to retain valued employees. When Warren and

then Nan left Rowley to follow Eleanor to ConsultPro, Arthur discovered firsthand that

employees often feel more committed to colleagues or a team than to a company. Arthur

should have taken steps to strengthen collegial commitment within the Strategy Group after

Eleanor left. For example, he could have set up group outings and events to cultivate social

connection within the team. He might have advised Warren to form subteams within the

Strategy Group to build a sense of collaboration.

Understand the high costs of replacing talented employees. Managers often

underestimate the cost of replacing employees. Arthur omitted training in his estimated

costs. Some replacement costs are obvious, such as ads or recruiting firms. Other costs are

less obvious, more difficult to quantify, yet still significant: loss of customers who follow an

employee to a new company; overload on teams who must perform extra work; and work

put on hold until a replacement is hired and trained. Some experts estimate that the cost of

replacing an employee can be twice the person's annual salary.

When Warren and Nan left, Marta should have asked, "Why did they leave? How could we

have kept them? How will we stabilize the group?" Marta alluded to these questions, but put

more emphasis on replacement costs. Replacements costs are insignificant compared to the



Unlimited Pages
