Ask Startups: Is Employee Retention Overrated?
During Startup School 2009, Mark Zuckerberg, chief executive of Facebook, and Tony Hsieh, chief executive of Zappos, talked about two contradicted theories on employee retention and hiring:
Facebook aims to recruit talented, entrepreneurial hackers who may not want to stay for long, while Zappos wants to hire the best people to fit its culture and try to keep them as long as possible.
Obviously, these two fast growing internet startups are highly successful. So is it possible that these very different approaches can actually achieve the same goal? Is employee retention really that important to startups?
In my opinion, Facebook’s current method can only produce strong near-term outcome. After all, technology is one of the most talent-intensive fields. If your employees think that moving out is more attractive than moving up inside the company, your corporate culture probably is not designed for a long-lasting company.
If you expect many of your best talents are going to leave the company in 3 to 4 years, will you still provide any career development planning for them? It is not only bad for the company’s effectiveness but also creates extremely expensive costs.
To reinforce the idea that employee retention is essential to create a great workplace, let’s look at one more internet company which is using Zappos’ method – Netflix.
In the famous 128-page presentation about their corporate culture, Netflix talks about something interesting related to “loyalty”:
People who have been stars for us, and hit a bad patch, get a near term pass because we think they are likely to become stars for us again. We want the same: if Netflix hits a temporary bad patch, we want people to stick with us.
And of course, this doesn’t apply to every case:
Unlimited loyalty to a shrinking firm, or to an ineffective employee, is not what we are about.
As you can tell, Netflix truly values their employees and they are trying to build a long term relationship together. Given Netflix’s successes as a fairly large company, it would seem that their strategy is working quite well. They are creating a high performance culture and attracting stunning employees.
Besides, Netflix expects their employees to seek what is best for the company, rather than best for themselves. Just like any sport teams, some players have to sacrifice their own interests for the good of the team. A coach will never ask a player to come and learn all the skills, and feel equally happy when the player wins a championship for another team after 3 or 4 years later. Great teams will try their best to keep all their best talents. I believe startups should do the same.
If an extremely talented hacker didn’t want to stay in your company for long, I would argue that if you should hire him/her in the first place. Ultimately, ability and loyalty of an employee should be equally important to every business.
What is your view on employee retention? Which way do you prefer? Facebook’s or Zappos’? And how do you view your employees? Are they long-term or short-term assets? Let us know in the comment section. Your feedback is priceless to us. Thanks.
Photo sources: Mathieu Thouvenin @Flickr, mathoov @Flickr
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If you're building a small house, then who cares about employee retention or risk of failure– just walk away if your venture dies. If you're building a skyscraper, you better have the right laid plans and the right people to see it through.
It's like renting versus buying. The cost of firing, rehiring, and retraining is enormous.
If you're building a small house, then who cares about employee retention or risk of failure– just walk away if your venture dies. If you're building a skyscraper, you better have the right laid plans and the right people to see it through.
It's like renting versus buying. The cost of firing, rehiring, and retraining is enormous.
First of all, thanks so much. I am honored to have you comment on my blog. Your posts on TechCrunch and your blog are unbelievable.
You're right. Facebook obviously is a skyscraper and that's why I think they should be careful when they made a public comment on their employees like that. While Mark is a great entrepreneur and visionary, I believe Tony is better at company building.
First of all, thanks so much. I am honored to have you comment on my blog. Your posts on TechCrunch and your blog are unbelievable.
You're right. Facebook obviously is a skyscraper and that's why I think they should be careful when they made a public comment on their employees like that. While Mark is a great entrepreneur and visionary, I believe Tony is better at company building.
Vincent, your content is excellent. Next time you have the inspiration to write about Internet marketing, I'd welcome you to guest post on my blog, which is PR5.
Vincent, your content is excellent. Next time you have the inspiration to write about Internet marketing, I'd welcome you to guest post on my blog, which is PR5.
Thanks for your invitation! I will let you know once I have finished the draft post.
Thanks for your invitation! I will let you know once I have finished the draft post.
If you're building a small house, then who cares about employee retention or risk of failure– just walk away if your venture dies. If you're building a skyscraper, you better have the right laid plans and the right people to see it through.
It's like renting versus buying. The cost of firing, rehiring, and retraining is enormous.
First of all, thanks so much. I am honored to have you comment on my blog. Your posts on TechCrunch and your blog are unbelievable.
You're right. Facebook obviously is a skyscraper and that's why I think they should be careful when they made a public comment on their employees like that. While Mark is a great entrepreneur and visionary, I believe Tony is better at company building.
Vincent, your content is excellent. Next time you have the inspiration to write about Internet marketing, I'd welcome you to guest post on my blog, which is PR5.
Thanks for your invitation! I will let you know once I have finished the draft post.
I think that employees would show far greater loyalty if they were in a company where they know they are being invested in rather than somewhere where they are just a number. Companies like complaining about the lack of employee loyalty in IT but at the same time they don't want to invest in their staff, keep staff interested etc. With that kind of mentality, can you blame staff for keeping an eye out for a greener pasture?
I've recently moved to a new job with a company which focuses on long term hiring & I can honestly say it has made a huge difference to my sense of well being. My previous companies have all been rat races & eventually I just got tired of working myself to death to be better than everyone else only to get a slighly better than average increase.
Excellent points! I am glad that you find a place that you love to work at. Awesome.