Patty McCord: Let Your Employees Go

(This Q&A is part of a series of articles based on HR experts’ reactions to a report about employee retention that Founders Circle conducted along with them. For a different point of view—and advice on how to increase retention—read “How to retain star performers: Tips from HR pros.” Also, our conversation on culture with VC and entrepreneur Chris Barbin offers a broader take on the idea of building an environment that fosters employee loyalty.)

Patty McCord literally wrote the book on how to recruit, motivate and build the kind of effective teams that are the backbone of today’s most successful enterprises. Based on her 14-year tenure as chief talent officer at Netflix, Powerful: Building A Culture of Freedom and Responsibility cemented McCord’s position as the foremost authority on what it takes to create a motivated, engaged and productive workplace culture in the 21st century.

That’s why when McCord reacted with a shrug to a Founders Circle report showing that hyper-growth tech companies had surprisingly high attrition rates (25% in 2017, compared to a tech industry average of 13%), we couldn’t help but be intrigued. In a conversation with Founders Circle (edited for length and clarity below), McCord further explained why these types of fast-growing companies should think like sports teams, where retention is secondary to fielding the best players. 

Q: Were you surprised to see such a high turnover rate among these high-flying companies?

A: I don’t find the results shocking at all. I actually find them completely predictable. In earlier stage start-ups, I think retention is a false goal to pursue.

Q: Let‘s go to your first point, which is why it’s predictable.

A: [Many employees at these types of companies are] in their early thirties. They are now starting to think about starting families and not working 24/7, and having a different kind of life. That’s No. 1. No. 2 is that a lot of people mature into wanting to solve bigger, more complex problems, and so they want to go to companies that offer that kind of thing. No. 3 is that a lot of people are builders, and they like to come and build new stuff. What happens at a startup is there’s not a lot of stuff to build when you become a bigger, more complex company. You build something, and it works, and then it needs to be maintained, and that’s not the same job. 

So, they’re not leaving because there’s no opportunity. They’re leaving because there’s not the right opportunity for them.

Q: The survey showed that as some of these companies grow, some employees don‘t feel they’re growing with it. Workers may see one or two people hired above them, and all of a sudden, they feel like they’re a cog in a machine.

A: No. They’re a junior person that may not possess the breadth of experience needed by a  rapidly growing company. So, the company grew faster than them. And let’s take that example. That person could stay and be terribly unhappy, and we could work really, really hard on retaining them because they were an early person, and we don’t want them to go because they’ll feel bad. But they: A) may be the wrong person because they don’t have a lot of experience; or B) they could come up to speed quicker if management made sure that the new people above them can make sure that this person grows rapidly.

But everybody needs to have an honest conversation about that. It’s not about keeping that person because that person may not be the right person anymore. For me, it’s about timing. You can spend a lot of time training and mentoring people to keep them in the organization. But if it takes five years to train and mentor somebody into a position that you need nextweek, next year, it’s not going to happen. It’s the wrong thing to do for the company.

Q: When Founders Circle says that by calling attention to the scale of the retention problem and sharing tips to reduce attrition it can “help start an important conversation,” you think that’s the wrong conversation?

A: I don’t want to make a blanket statement that it’s a bad conversation to have, but I don’t want to say that retention is critical to success. It’s not true. Because if we look at successful companies, they’re companies that are made of completely different people than they started with over and over again. The percentage of people who stay 10, 15 years in a company, particularly in tech, is very small. And, from my perspective, that’s as it should be.

Q: So, you argue the focus shouldn‘t be retention for retention’s sake, but to do what’s right for growing the company?

A: Yes. And have honest conversations about that. That’s where HR departments get all twisted. On the one hand, they’re in charge of retention. On the other, they’re in charge of having the right talent in the organization. And when those two things collide, the answer is to get the right talent.

Q: It sounds as if the best response to high turnover is to not assume it’s a bad thing?

A: My response to the survey is it’s important to focus on what you’re doing to make sure the right people stay and are engaged, and to understand that the right people change as the company grows. The right person at 100 people may not be the right person at 350 people — and you may not be the right company for them. 

I remember counseling [Eventbrite CEO] Julia Hartz, and she said to me: “What if I spend seven years pouring my heart and soul developing these incredible employees, and they leave me?” And I said, “Julia, if Eventbrite becomes the company you want it to be, the last thing you want is a company full of people who have only worked here.”

Q: What can HR departments do to make sure the right people stay?

A: I believe what successful companies do is [become] great places to be from. Making products that they’re proud of is what makes people happy. People are happy when they go home at night and say, “Wow, we just accomplished something that we didn’t think we could do. That was hard.” Almost everything that you feel proud about at work is something that was difficult to do, right? 

It’s about creating stuff, accomplishing things. You see it in the survey, right? That yearning for mentorship. What they really want is someone they can learn from. They want to be around people that can teach them stuff. They want to learn where they’re going. Some of that learning at a startup is just making stuff up, and having it work. 

But [a job] is not forever.