If We Lose One More Top Performer...

Simple tools for anticipating preventable losses of your best people

Are losses of top performers predictable?  If so, can you prevent these losses?  In many instances, “Yes!”

You’ll notice that I said, “MANY instances”, not all.  My crystal ball isn’t any better than yours when it comes to predicting which top performers will get unsolicited offers or when those offers will arrive.  You can, however, anticipate when your top performers will get the itch to move by comparing their interests to your product’s life cycle.

Employee interests

Employees typically fall into one of three categories:

Product developers

Business growth specialists

Optimization specialists

Each of these three categories requires different skills and interests.

Product developers enjoy painting on a blank canvas.  They include not only your R&D folks, but the marketing, finance, customer service, production and HR people who love being associated with new initiatives.

Business growth specialists excel when product development and initial marketing efforts are complete.  They take existing offerings and drive the profits and cash flow to new heights by increasing market share, improving quality and controlling costs.  Business growth specialists are great at establishing systems and creating the order that product developers abhor.

Optimization specialists love maximizing profits and cash flow in difficult situations.  In another life they may have been turnaround specialists.  They love accomplishing more with less.

Top performers possess an insatiable desire for variety, challenge and growth.  They want to be part of a company that is striving to be better, stronger and more successful every day of its existence.  The key is that top performers in each of these three groups view challenge differently.  When you understand their needs, you can do a better job of relating their interests to your company’s product life cycles.

Product life cycles

Products move through a very predictable life cycle beginning with product development and ending with product decline.  The development stage is fraught with tight deadlines, heavy investment and little return.  Product developers find this stage EXHILARATING.  They love the challenge.  It feeds their belief that they can accomplish anything they want.  Product developers love regaling others with stories of obstacles they overcame.

The second stage is the growth stage.  The product gains momentum as evidenced by increases in revenue, market share and profitability.  Profits are huge because there is little, if any, competition for the new product.  Product developers LOVE this stage because they’re harvesting the fruits of their labor.  When success seems assured, the product developers lose interest.  This is the stage at which you are most vulnerable to the loss of your product developers.  It’s also the stage at which business growth specialists take over.  

Maturity is the third stage of the product’s life cycle.  Competition has entered the market to share in the “obscene” profits your company has enjoyed during the growth stage.  The focus is now on market share, product differentiation, quality and cost control.  These are the ways you improve profit margins in the maturity stage.  These are the challenges that drive your business growth specialists.  They love outwitting your competitors.   

When your product becomes a commodity - there is very little that you can do to differentiate your product from your competitors’ offerings, your business growth specialists get the itch to move.  They have an insatiable desire to build and the opportunity to build no longer exists in this product offering. If you don’t act quickly, they WILL look elsewhere for opportunities to satisfy their desire.  

When your product hits the decline stage (when it becomes a commodity), your optimization specialists shine.  They, like the product developers, love regaling others with their success stories.  Their pride comes from producing results in situations where most people would fail miserably.  

Folks who optimize your profits and cash flow in the decline stage provide additional return on the investment made during the development stage.  These people are such tenacious fighters that someone above them will have to tell them that it’s time to give up and move on to something else.  If there isn’t something else (another declining product) to tackle, you risk losing them to other organizations, especially those needing a severe turnaround.

By evaluating each of your products, where they are in their life cycle and the interests of your employees in terms of these life cycles, you can, indeed, improve your chances of retaining your top performers.

A plethora of products

I am sure that many of you are wondering how you are going to keep up with the thousands of products your company offers.  This daunting task becomes much simpler when we realize that most products of a similar nature are grouped together into strategic business units.  Interestingly, the life of a strategic business unit parallels that of its products.  As you look at each business unit ask yourself the following questions:

• Which are 3 or 4 top selling products in this unit?
• What has happened to the profit margins for each of these products in the last year?
• Has the unit’s market share increased, held steady or declined during the year?
• Are revenues increasing, holding steady or declining?  What’s the outlook for next year?  What about the profit margins for next year?
• Which competitors’ products are offering the greatest competition?  Why?
• How do the top sales people view your offerings vs. those of your competitors? 
• What new products does this unit have in the pipeline?  When will these new products hit the market?  How close is competition to offering similar products?
• How well do the answers from top management agree with those of the top sales people?  Is this unit’s top management in denial about its position vs. competitors?

The answers to these questions will help you assess where each unit is in its life cycle based on its top performing products.  Now you have the basis for making predictions.

Predicting needs

When a unit is in the development stage you know that its management is going to need more product developers in the very near future.  A unit that has nothing of consequence in the pipeline and its profit margins, revenues and market share are slipping, is on the verge of losing its product developers and, possibly, its business growth specialists.  

Armed with this knowledge you can develop a staffing and retention plan that will make your company more successful and please the majority of your workforce.  Here’s one approach to developing that plan.

A sample plan

Let’s assume that you have three strategic business units.  The first has products in the development and growth stages, the second is entering the maturity stage and the third is in the decline stage.  The goal is to retain and effectively utilize your human capital especially your top performers.  

Unit one requires people who can create from a blank canvas, who thrive on overcoming adversity.   Unit two requires people whose creativity lies in building efficiencies into existing operating systems.  Unit three needs people who are creative in squeezing the last bit of profit and cash flow from declining products. 

Now it is simply a matter of establishing and managing a trade policy between business units.  Will you get resistance?  Of course!  No one likes to admit that his or her group is maturing or declining.  That’s why it is so important for you to have the facts about the unit’s product offerings.  It’s very difficult for people to fly in the face of facts, especially when the facts came from within their own organization.  

Gaining acceptance

Here are some keys to gaining the acceptance of leaders from units two and three.

Help the directors or VPs identify the issues critical to their bottom line performance – typically systems improvement/efficiency for mature or declining units.

Explain to the directors or VPs why they are likely to lose the top performers anyway.  Ask them if they would prefer to get some talent in an exchange with other units or simply lose that talent when a top performer leaves.

Remind the directors or VPs that the more top performers the company retains, the easier it will be for them to get the talent they need when they need it – when they have new products under development.  (This approach offers an incentive to any unit Director or VP who might be resting on his or her laurels.)

Call to action

The Federal Reserve Bank governors have a list of leading economic indicators to help them define interest rate policy.  Within your organization you have leading indicators of your company’s performance – product life cycle information is one of them.  Combine these indicators with the knowledge of your employee base and you won’t find yourself dealing with the issue, “If we lose one more top performer…”

Copyright © 2001, Dale Furtwengler, all rights reserved