How important is retention for performance?
In my last post I outlined that the winning team in competitive battles is build on people, computers and superior procedures of interfacing between the two. I even highlighted that in order to achieve outstanding performance teams do not need the best people. This might be a somewhat controversial statement as almost every organization from time to time claims that people are there most valuable asset. This might be true to a certain extend, but processes might be more valuable.
The management consultancy industry shows this very well. The staff turnover in this industry is very high. Every year many recent graduates from business or engineering schools are hired and put to work in advising senior management of their clients. This is not value adding because of the IQ of the consultants but the firms models they trained to use; hence, processes and human interfaces to those processes. Also note that the consulting firms like McKinsey, Bain, BCG etc can replace its consultants relatively easy with recent graduates. In other words, when the value adding part of the business is in the processes and interfaces to those processes the retention of people is not all that important for the organization’s long term performance. Of course, people the retention of people that interface well with the processes may work to the firm’s advantage but what I like to say is that they can be replaced.
Thus, in order to secure long term performance organizations would better invest in processes and training its people in interfacing with those processes. As discussed in my previous post those processes could very well be based on computers. How the interfaces between the people and the artifacts should be depends on the particular circumstances of each organization. However, in general we can say that it is the objective that the human focuses on intuition and creativity and that the artifacts ensure that the human’s reasoning are error-free. With error free, I mean that they do not see obvious flaws that can have major consequences from the firm’s performance. In chess terms this might be giving away a Queen by mistake.
