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Many years ago I was privileged to work inside The Coca-Cola Company under the leadership of Roberto Goizueta. After a long and dedicated career with the company, Robert died at age 65 of cancer. The day he died was the first board meeting he missed since he became chairman of the soft drink giant 16 years earlier.

During Roberto’s tenure at the helm of Coke, he was credited for turning a cranky, old, conservative company into a global marketing and branding juggernaut. Case in point: from the time he became CEO in 1981 until he died in 1997, total return on Coke stock exceeded 7,000%. No, that is not a typo – if you had invested $1,000 in Coke stock in 1981, by 1997 your money would have grown to $70,000. You can read more about Roberto’s amazing life and career at http://www.cnn.com/US/9710/18/goizueta.obit.9am/

Roberto’s motto was return on investment and stock price (like most CEO’s today). Yet he was mourned as deeply by employees as any beloved political leader who died an untimely death. The outpouring of grief from the top to the bottom of the employee ranks filled a massive wall in the atrium of company headquarters, as we all left messages of condolence to his wife and family.

During the 1980’s, business re-engineering (including “right-sizing” aka layoffs) became a popular and prevalent corporate strategy. Roberto however famously said that he never could find the logic in attempting to grow a company by cutting its people. To him, the only way to grow a company was to grow its talent.

Current day CEO Jim Goodnight of SAS (the world’s largest privately held software company), distills Roberto’s growth strategy down to a simple premise:

“My chief assets drive out the gate every day. My job is to make sure they come back.”

From where I sit, way too many companies are now dangerously smug in their belief that they have the cat-bird’s seat. The horrible economy of the past 18 months has translated into the misguided conclusion that employees are under the corporate thumb. Corporate math seems to add up something like this: a bad economy = no jobs = we can treat you any way we want = you will stay and work even harder than before = we will increase our revenue and profits.

Forget for a moment about the “soft” implications (the impact on individuals, families, communities, etc.). That is seriously flawed math. The result is (sooner or later) a bad business model that will spiral profits down, not up. That downward spiral will come from two things: a) having laid off workers during the bad times: and b) having created a work environment that your best workers will leave in the good times – if not before. The costs to the company are both deep and serious:

• Yes, money walks out the door, literally – in hiring costs, training cost, and productivity costs. I’ve seen the estimates range from as low as 25% of the average worker’s salary to 1-2x the salary and benefits of one exempt employee
• Loss of corporate knowledge and experience – the unique history and experience and relationships that employee took with him/her (within the company and more importantly, with customers and the community/marketplace)
• Increased customer dissatisfaction – even if you hire as good or a better replacement, at a minimum you create disruptions to customer service while the new hire gets up to speed and tries to recreate the credibility, trust and loyalty your key customers felt with your previous employee.
• Increased sales and marketing costs – to keep the now unhappy old customers or to find new ones to replace the ones lost. It takes 5-11 times more investment to develop new business than to expand existing business.
• Decreased retention of key talent AND increased cost and difficulty in hiring new talent:
  • The pool of new talent is increasingly shrinking – the number of baby boomers who are/will be retiring is starting to outnumber the number of replacement talent (new hires) available. And you are not the only company out there wanting to hire them.
  • Good talent takes other good talent with them – in this brave new world of social media (Linked In, Facebook, etc.) with ever increasing ease does your talent stay in touch with other talent. At one of my clients – a very large, high tech firm – a young high-potential talent jumped ship to a competitor. He stayed “friends” with many of his colleagues on Facebook. Six months later, three of his buddies had joined him.
  • Your brand as an employer in the talent marketplace – it is so obvious that technology connects employees and customers 24/7. And yet so many companies still seem to think they fly under the radar like some kind of stealth bomber.

The fundamental question for any company to ask themselves is really this: Is your corporate talent strategy to find and retain top talent who can grow your business, now and in the future? Or to hire people who just need a job?
In the growing talent war for the best and brightest, who do you think will win?

Take the dismal job numbers at a high level and you might assume that most workers are staying scared and staying put – no matter how bad their job is or how toxic their work environment may be.  So you think you’re stuck where you are? Maybe not.

Head hunters are calling again (from what I’m hearing on the front lines in my work with leaders and high-potential talent).  And check out the information below from The Wall Street Journal on May 25th:

“As the job market begins to loosen up, human-resource managers might increasingly be surprised by an announcement from employees they haven’t heard in a while: “I quit.”

“In February, the number of employees voluntarily quitting surpassed the number being fired or discharged for the first time since October 2008, according to the Bureau of Labor Statistics.”

“The number of employees quitting could continue to grow in the coming months. In a poll conducted by human-resources consultant Right Management at the end of 2009, 60% of workers said they intended to leave their jobs when the market got better.”

http://finance.yahoo.com/career-work/article/109636/more-workers-start-to-quit?mod=career-worklife_balance