Give it Away

Pfeffer’s column in Business 2.0 talks about the cost of turnover. The cost of recruiting, training, and adjusting to new employees is huge. So if you invest in keeping what you have, you can save money in the long run. In the example he cites, a consulting firm (apparently 25% turnover for the industry) keeps its people and grew its profits. How did they do it? They paid their people more money (they keep more of what they bill), and they gave them more autonomy (if they want to go to a conference, the firm pays half. No questions asked). It’s a simple message, but worth repeating.

So being generous, with the distribution of both revenue and decision-making authority, is actually good for a company’s bottom line.