

Ask Startups: Is Employee Retention Overrated? - tiffanychan
http://scale.cc/

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tom_b
Speaking about hackers, retention is probably _underrated_.

I have personally observed that a tremendous amount of software knowledge and
understanding simply walks out the door when a really great designer/hacker
leaves a team. The ability to simply ask the hacker who built some part of the
function a quick question about the "big picture" rather than reading through
lines (sometimes many, many lines) of code is a costly loss.

My extremely limited experience with acquisitions has been that employees at
the acquired company are given large time-based retention bonuses. This is a
market recognition of _employee_ value. In some cases, this is kind of a waste
- not everybody at a company is equally valuable. But there are always a
couple of hackers on board who built the original codebase and you need to
hang onto them if possible.

Of course, I've also seen companies acquired in what appears to be a strategic
move to simply acquire the customer base too.

I believe the idea of employee value is at the heart of what Y-combinator is
trying to do - recognize that some _people_ can produce software that is
capable of creating greater value than having that same hacker sit in a
cubicle writing the next drop-down menu item in MS Word/Quicken/Oracle.

~~~
bmj
Further, there is always the domain-specific knowledge that walks out the
door. We can read source code and eventually understand it, but the reasons
behind the algorithms might be the result of years of experience in the
domain. That's not easy to replace quickly.

The core team at my employer has been together for two and half years, and
four members of the seven person team have been together since day one.

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mattmaroon
I feel like this is taking Zuckerberg's quotes out of context. I watched that
interview, and more got the impression that he was simply pointing out the
reality of the situation. Of course Facebook wants to keep great employees,
and of course they try their best to do so.

The problem is that they know that great employees in a startup are, by
definition, the people who always want to be working on the next big thing,
and nobody is ever the next big thing for long. Facebook knows they took a lot
of talent from Google when the next big thing moniker shifted their way, and
they know the next big thing after Facebook (maybe Twitter, maybe someone not
yet in business) is going to do the same to them. There's simply no avoiding
it. You can only IPO once.

I didn't take his quote at all to mean they don't want to retain good
employees or that you shouldn't bother. He's just pointing out that to a
certain extent that's impossible and it's best to just admit that and work
around it.

Also if I'm not mistaken Zappos is based in Las Vegas, and keeping programmers
around there is a lot easier than SV.

~~~
cookiecaper
I think the postulation that most programmers like to hop jobs is incorrect.
It's always been quite a hassle for me. Programmers, like others, prefer
steady income. They prefer steady insurance and easy taxes, and all of the
other benefits of staying at a job.

Facebook, afaict, is losing talent because its management is out-of-touch,
overbearing, and ineffective. Google is losing talent because it's well on its
way to becoming just another corporate entity.

People want to work somewhere fun and small. This usually describes startups.
Google is now huge and is suffering some symptoms of that hugeness, and it's
driving developers who were attracted to Google's startup culture out.

I think that it has much more to do with an acceptable atmosphere than "the
next big thing".

~~~
falsestprophet
They also have an open office in what is essentially a warehouse. It must be
deafeningly loud.

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raganwald
Given two companies, one with above average turnover and one with below
average turnover, What can we say? I think we can say very little without more
investigation. The high turnover place may be terrible. On the other hand, it
may be unafraid to hire really great people. It may try really really hard to
keep them. It may be a tremendous victory for that company when a great person
stays.

The other company may be very cautious about hiring. It may pass over great
people that might leave, choosing instead to hire average to below-average
people that have fewer options and little ambition.

There are other explanations, of course. I'm just pointing out that Mark and
Tony might both be right, or neither might be right. It's all in the day-to-
day execution of hiring people and managing them and running the business.
Turnover alone is neither good nor bad in and of itself.

~~~
pchristensen
They also said those were their _goals_. They didn't mention their actual
turnover. So while Zappos may have lower turnover than Facebook, it's because
they're optimizing for that condition. Zappos is explicitly creating a culture
of longevity.

~~~
raganwald
I agree that Zappos is optimizing for low turnover. I cannot comment on Zappos
specifically because I don't know them, I'm just pointing out that _some_
companies optimize for low turnover in a very poor way, so I suggested that
_how_ a company achieves its turnover is more important than the turnover
itself.

I suspect we are in violent agreement on this, just saying it in different
ways.

~~~
pchristensen
Violent agreement indeed! I said also because I was adding to, expanding on
your point :)

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quant18
Better link: [http://scale.cc/2009/10/30/ask-startups-is-employee-
retentio...](http://scale.cc/2009/10/30/ask-startups-is-employee-retention-
overrated/)

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kmavm
As a current facebook employee, who is in no way empowered to officially speak
for the company, I would not be in too big a hurry to extrapolate Mark's
observations out to infinity. Facebook is putting together one of the very
best software teams in the industry, and trust me, we care about keeping the
band together. From my perspective in the trenches, facebook is doing a
better-than-fine job of it.

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j_b_f
I had a great conversation with another small business owner the other day.
She runs a small design firm that he wants to stay small and nimble. She
encourages turnover because more senior employees demand higher salaries and
better benefits, and upsets the overall balance of power for such a small
firm. So 3-4 years is the longest they let anyone stay, unless they're on a
partnership track (which one staffer currently is).

Obviously the dynamic with is different for hackers, and especially those
working on a single product over time, but it was a refreshing perspective.

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mseebach
My guess is that the answer is an unsurprising "It depends".

A high turnover can (emph. _can_ ) facilitate an upbeat, fast culture. Someone
comes in, gives his fresh perspective on that particular problem-set and moves
on. I sincerely doubt that Facebook doesn't full-heartedly encourages
retention for key employees to ensure stable operation, testing and so on.

~~~
cookiecaper
What you've described is called "consulting". It can be useful occasionally,
but not very often. You don't hire on full-time employees as consultants
without specifying that, it's a recipe for bad things. Employees expect a
steady and fulfilling career; consultants consult, employees are employed.

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cookiecaper
Facebook is so backwards. Everything I hear about Facebook as a corporate
entity bodes very poorly.

Employee retention is one of the number one most important things in any
company, especially software companies, and double-especially in software
startups.

A lot of executives and executive-types have absolutely no comprehension of
the real cost of training a new programmer. If you have any kind of complex
codebase, it's going to take _several months_ before a new hire can acquire
ideal productivity -- and no, pair programming doesn't make this possible in a
day and a half.

Startups have more than enough problems as it is getting something off the
ground even in cases where all the founders stay with it all the way from
concept to launch to profitability. Many startups whose original teams are
intact die out before they become profitable.

Changing the lineup is just going to make things that much less likely,
especially if your tech guy drops, because the tech guy knows all of the ins
and outs of your actual product, which is probably undocumented and messy, and
it will take a good programmer a long time to acquire the same level of
familiarity with the product.

There are times when you don't have any other options to cut someone loose,
but I would avoid it wherever feasible. Your company's essence is its
employees; they run the company, their philosophies, management, and
implementations are delivered to your customers, and they understand your
domain, your products, and your accounts -- this isn't just intuitive
knowledge that any qualified person (in whatever profession; accounting,
sales, etc.) can waltz in and pick up, and retaining that wealth of
information is critical to any successful business.

At least at most of the places I've worked, poor retention occurs when there
is poor communication, disregard for an employee's cares and well-being, or a
combination of the both. I don't understand why so many managers and
executives have such a complex and insist on abusing subordinates, but it
should be seen that doing so gets you nothing but angry ex-employees and ever-
diminishing market share, relevance, and cashflow.

Fast turnover is such especial death for programming departments, and fast
turnover almost always indicates serious systemic issues in the company.

Zuckerberg is crazy to think that this is legitimate strategy; it must be that
he has seen the retention rates at Facebook and is now saving face by claiming
it's part of some overarching corporate strategy so that the unprofitable
Facebook can keep getting funding to maintain and purchase its servers.

~~~
joeythibault
This is not to mention that kick ass programmers that leave can end up being
competitors. Any employee that's valuable knows the ins and outs of your
company/software (what's good about it, where the limitations are, what
customers want/don't want). letting them walk away is a risk.

Setting up an environment where employees often walk is even worse, i.e. where
there is rampant "poor communication, disregard for an employee's cares and
well-being, or a combination of the both". I've been there and watched great
programmers leave unhappily. It causes morale issues and leaves a huge hole in
institutional knowledge.

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sscheper
Simple idea. Simple answer:

If your employee kicks ass, retain them. If your employee is average, let them
go.

~~~
allenp
This is the netflix mentality, right? Don't keep anything less than stellar?

