If money is the ONLY reason someone is working for you, do you really want them in any kind of role, much less a “mission-critical” one? Aren't they then really a vendor/ consultant vs. an FTE?
When you start a company, everyone is connected to the vision, shares the passion, and is there with you to create something great. When you're small enough and young enough, this common thread amongst all employees is intrinsic, and management is almost not necessary. As you grow, you must create the conditions that naturally attract those that must work with you, and repel those that shouldn't; your values and integrity must be intrinsic and permeate the whole company. This is the best of management.
I recently wrote about how I thought Google might implement a growth strategy that would be more in keeping with its original premise and the ethos of its founders. Over the last five years, they've grown more than seven (7) times in revenue, and their employee base has grown almost five (5) times to 23,000+.
Impressive! There is no arguing their success in advertising, email services, video provisioning and of course search, and there is no arguing their competence in these.
Sadly, success has a price (especially for American companies that wish to play in Europe, and eventually other regions); but it can be avoided. They have to be open to growing by becoming smaller, recognizing that spinning off little "Googlets" can enable both the organization and its people to progress and achieve; and they have to be committed to great management.
When Brin and Page (Google founders) wanted to hire a CEO, they needed someone who spoke their language, that had chewed the same dirt that they had; otherwise they wouldn't be able to relate to, or trust him. They found Eric Schmidt, a fellow-nerd. Of course there are other critical functions (HR, PR, facilities, etc.), but they were viewed by the nerd collective as "non-core," nothing more than corporate overhead, and there was less focus on hiring in these areas.
In some high-tech companies, HR/Operations, etc. are roles where executives are relegated (penalty box), or where "core" people are assigned because there are no other (real) senior openings. Since these roles are "different" and aren't valued (or understood), there is a tendency to not only not pay for, but mistrust really capable outsiders; so if at all, these roles are filled with inadequate leaders. You can't be cavalier about any management role.
Now we read that Google is struggling to retain their employees (ConnectCV, NY Times), and the risks of not caring about "non-core" things like effective management surface. I'm singling Google out, but this is true of most (all?) high-tech companies. When asked about their recent brain drain, Schmidt's response was "the company’s attrition rate for people it wished would stay has been constant for seven years."
My interpretation: "We think of our people as numbers and don't regard or value them as individuals with unique abilities, gifts and interests. Our numbers are consistent; we don't suck any more than we used to, and we don't see a need to change." What do you think that response says to the 23,000 people that stayed behind and still work for Google?
This answer was not crafted by anyone that cares about the people of Google, it was written by a PR person whose job is to spin a story and control the message. It speaks volumes that Schmidt was quoted saying this. Alas - most high-tech leaders blindly parrot PR/HR talking points.
If it were me: "Of course it hurts when people like Lars or Matthew leave - they are amazing and talented, and this is our loss. But I am excited about people like XXX and YYY who are doing fantastic things; and we just recruited ZZZ and QQQ who are brilliant and passionate, and already making a difference. Our strength is that no one person is Google; together all of us are Google. I wish Lars, Matthew and everyone else who has worked at Google the very best in their futures; we are proud of the fact that Google 'graduates' are sought after by other companies; it's a compliment to the great people who work at Google now, and we are honored that they chose to spend time here and make a difference with us."
A statement like this must be a genuine reflection of management's philosophy and approach. When senior executives companies so obviously feign knowledge of their own products and customers, or worse knowledge of their employees or interest in their well-being, it's time to short the company.
Google recently gave all 23,000 employees a 10% raise; from the NY Times article: "The motivation was, in part, the “war for talent,” Mr. Schmidt said. People who have other job offers have been persuaded to stay with seven-figure bonuses. Google says 80 percent of people who get a counteroffer stay put."
The interpretation is either "Doh! We suddenly realized you're underpaid!", or "When we learn that you're not happy, the only thing we can think to do is buy your loyalty." Neither is a message I want to share with current/future employees or investors. What kind of people does this say Google is recruiting? Those bent on creating profound impact, or those just looking to make a buck?
Goog-ups (high-tech screw-ups) happen when you grow to a certain size (when leaders no longer personally know all the employees), but because you're still "small" (~250 employees), you feel that it's "frivolous" to burn valuable FTEs on mere people management. Here is my corollary to the Mythical Man-Month - a well-run and well-managed company is much more sustainable and likely to succeed than one that is lean but un- or badly-managed.
Goog-ups only value "core" skills. Everything else isn't just overhead, it's commodity. Or in the old IBM parlance, plug-compatible - anyone can fill those roles, and they're utterly replaceable. A mature player sees and appreciates the whole chess or Go board, and plays the whole board, not just that one pawn or stone.
According to a Feb ‘09 survey, the top three reasons employees stay are: good relationship with co-workers; job security; and desirable commute. The top three reasons for leaving are inadequate compensation; inadequate professional development opportunity; and insufficient recognition. High tech compensation is already excellent, but rather than focusing on why people stay, and optimizing for that, most obsess only with why people leave. Addressing the latter is about sucking less. Addressing the former is about being the place people would work for free. Which would you prefer? Which is more sustainable?
A well-run company has the maturity to look at the whole board, and plays not just to win today, but to keep winning always.