Why We’re Losing Fewer Employees Than Our Competitors

'Connected leadership' is not about turning the company into a happy farm—it's about producing higher quality.

The legendary baseball manager Leo Durocher is remembered for his equally legendary quip about nice guys finishing last. I’ll leave it to the sports experts to debate whether he was right.

But in my experience, a variation of the Durocher maxim has since become an indelible part of how the business world views the role of the CEO.

Starting in the 1980s, when the media began churning out profiles of tough and demanding executives, like Jack Welch and “Chainsaw” Al Dunlap, we witnessed the creation of a new archetype for the successful CEO, one whose monomaniacal obsession with the bottom line seemingly trumped all else.

It’s time we rethink our approach.

That’s not to suggest we stop paying close attention to the bottom line. Companies are obviously in business to make profits. But when it comes to running a company, particularly in the IT services industry, it’s all about the people. This is more than a business bromide. The people we employ are more important to an organization’s success than the totality of its laptops, desktops, and office furniture. If a company’s employees don’t feel motivated, energized, or good about what they’re doing, they’re not going to produce the desired results. All this testifies to the importance of leaders who can connect a shared purpose and vision.

When I started my professional career in the 1980s, that wasn’t always the case at most organizations—even in Europe, where company culture was generally more people-oriented than in the U.S. But over the years, I witnessed a steady shift take place and by the 1990s, more voices arose to challenge the conventional wisdom about how to generate a productive workplace.

I was particularly struck by a seminal thinker named Ricardo Semler, a Brazilian businessman who espoused ideas judged radical at the time. Among other things, Semler suggested that productivity and employee satisfaction go together and that companies can create better workplaces by building cultures that devolve power while encouraging employees to question why things are done the way they are.

Semler’s people-oriented approach made a major impression on me when I was younger working at a computer services firm called Rendeck International. The company had great camaraderie and management showed real interest in the person behind the employee. The managing director back then even knew everybody by their first names as well as their family situations. We also had people on staff who were charged with helping employees manage their career development and offer support for their assignments.

So, when CTG acquired the company in 1991, I was terrified. An American company? It’s all about money. Nothing else counts. This is going to be the end.

I couldn’t have been more wrong. It turned out that one of the founders, David Baer, was wont to describe his company in four words: “happy people produce quality.” It’s a mantra that spoke to what I believed in at the time and a conviction that’s remained with me ever since.

Connected Leadership and the Enterprise

Again, this isn’t just about being compassionate. It’s a smart business approach that works to foster great results. I’m talking about authentic leaders who demonstrate attributes such as compassion, empathy, and trust to foster a vibrant, motivated work culture. There already was a large literature examining this concept prior to the pandemic. In the new normal that we’re now entering, it’s even more vital, particularly as we consider the importance of employee retention and the cultivation of strong relationships with customers and partners. Talk about competitive advantage; top executives who embrace this approach will burnish a reputation for transparent leadership that will strengthen their ability to attract and retain talent.

Now, imagine the converse situation when employees simply hate their jobs, detest their company, and go through the motions. When they start work Monday morning, they’re already thinking about Friday evening, five o’clock. Customers will pick up on the negative vibe and everything will ultimately get reflected by poor financial results.

Let’s not underestimate what’s involved here. Companies need to be ready and willing to make the necessary investment in time and effort to create this kind of environment. It requires more than an inspirational speech or two and we’re done. This is hard work.

But it’s in a company’s enlightened self-interest to embrace this approach if for no other reason than it helps retain coveted employees at a juncture when the competition for talent is fierce. People don’t stay at companies if they don’t like their surroundings and losing them adds to the cost of doing business. Clearly, retention and attrition rates depend on a number of factors, but organizations can help themselves by making sure they’re doing whatever’s possible to help their people build their careers. If you do this right, direct benefits drop to the bottom line. Consider the following:

We believe our retention rate at CTG is 4% to 5% better than the competition. In other words, for every 100 people, that translated into five fewer recruitment processes to undergo. That meant five project problems we avoided because we left a client in the lurch. That’s five times we didn’t need to pay the clients a fee due to that disruption. And that’s five times we didn’t need to onboard and train new hires.

These successes didn’t come our way because we’re nice guys or tough guys. Our goal isn’t to turn CTG into a happy farm. Sometimes, frankly, we do need to make tough decisions as we work hard to produce quality results. And if someone on the team isn’t performing, we hold them accountable.

In the end, this works out to everyone’s advantage. The argument that happy people produce quality is no longer controversial or open to dispute. As our results improve quarter after quarter, the numbers provide ever more proof that we’re on the right track. And yes, it’s a lot of fun to see people who are energized, happy and motivated to do the best job they can.

It’s also why I’m still with the company after almost 35 years. Because of that culture we’ve built.


Get the CEO Briefing

Sign up today to get weekly access to the latest issues affecting CEOs in every industry

upcoming events