An enology professor from Berkeley University of California told his students more than twenty years ago that France is the country where the best wines in the world are made but also where the worst wines are made. As a oenophile, I concur with the first statement but not so much with the second; several countries compete for that. In IT, as in winemaking, it all comes down to the volume or the arithmetic of large numbers, as I like to call it. Corporations employ hundreds of thousands of people, and it is pretty safe to assume that their quality is distributed statistically based on a Gaussian distribution. So, we find around 5% of the people at an exceptional level and another 5% at the poorest level; let's call them low performers. In between is the average Joe, which counts for 85-90% of the population. There is nothing wrong with being in this category, and it doesn't have a pejorative connotation; these people bring the most revenue to the companies. They are the ones that enable the 5% of extraordinary people to do their magic.
Being in the top 5% percentile of the staff could mean different things; one could be a nominee for a Nobel award as a technical genius or an Oscar nominee for a Sales manager with superpowers, could be a brilliant finance, accounting, or operations person, a strong leader followed by a massive number of people or simply an exquisite project manager. In other words, an employee who is outstanding in his line of work, a differentiator. Large companies would not survive without these personalities as thousands follow, trust, and admire them. They are the influencers within an IT company. At the other pole, we find a group of people who are unwanted as their performance is lower than the average and, more importantly, are rotten apples that could infect others. There are two categories here: one composed of people who are simply wrong at what they do and the second who do not care or are unhappy with the organization but fundamentally have the right skills. While the second group will organically remove themselves or are removed, the first one is a more significant problem. These people stick with the company and, in many cases, reach essential roles in the organization. They are promoted if the company cannot get rid of them at a decent cost or because they have well positioned sponsors. It is almost the same as in communism, where the Party promised everybody, irrespective of the quality or skills, a place to work and a ball of rice, as they claimed in China during Mao's leadership.
Interestingly, this category of sticky underperformers includes mostly managers or bureaucrats and not technical people. Even if they are not great, technical IT people could find jobs easily on the market. For the others, it is more complicated. We will debate the subject of managers and bureaucrats again in the following chapters of our saga.
Now, once we touched the people's quality distribution, let us discuss attrition, one of the major cost elements for a significant player in the IT market. How do companies keep the best people around, and what do companies do to remove the low performers, the unwanted percentile? Most management theories accept a 10% attrition as healthy, maybe a bit more for service providers and a bit less for companies that build and sell products. Having less than 10%, one loses fresh thinking and creativity, or the unhappy low-performers replacement. More than 10% could bring unbearable costs for hiring and quality problems to the programs.
Based on my experience, I would say it is preferable to fight a smaller attrition. One method that companies are using in this case is to have a very tight control of performance, specifically for low performers. This results in a so-called performance improvement plan. People tend to look for jobs once they end up on such a plan of action, and one gains a few points of organic attrition at low cost. This often helps a company that expected and planned for a higher attrition which doesn’t materialize.
On the opposite side is fighting against a high attrition. Based on the many surveys I have seen, income is very seldom the main reason for regrettable attrition. I am thinking of those 5% extraordinary people who make a difference. Their average salary is amongst the top reasons but not necessarily number one, and not a reasoning alone. For these people, an exciting job or project is crucial, gaining knowledge about the hottest technology on the market is their priority, and experiencing challenging programs to be part of is more important. Other significant reasons for attrition could be the quality of the direct manager and the organization's culture, including the bureaucracy. Training opportunities and poor communication within the organization are always present, as well as reasons. Considering actions against every one of them helps the companies fighting high attrition.
I am not finishing this chapter about People before mentioning one last thing. Almost all IT companies, services, or product providers put the people as one of their main priorities. They all claim they care about people and that people are their number one asset, so it is essential to keep them happy. I will leave it to you to believe it or not, according to your experience. I think this declaration should be refined and classified based on the different organizational levels. This might be very true at the lower levels. Still, it is significantly diluted at the top in most corporations where figures and KPIs are more important, and people come second, third, or fourth, or in some companies, not even making the list of priorities. Very similar to the communist model I would add.
Another chapter next week: 5. The Skills.
