Wandering In the Tall Weeds

An unfolding brain drain in the year-end shadows of poor management

In the bizarre, carnivalesque world of corporate mismanagement, there's a special kind of insanity reserved for companies that bungle talent management.

It's like watching a bunch of blindfolded clowns trying to defuse a bomb, each ludicrously confident in their misguidedness, blithely ignoring the ticking as they toss their best people out like yesterday's newspaper. The air is thick with the stench of desperation and decay, as these once-mighty titans stumble, drunk on arrogance and ignorance, toward an avoidable demise.

I could write shorter sermons. But once I get started, I’m too lazy to stop. Alas, let us ascend to a more constructive discussion.

Companies fail for a variety of reasons.

Sometimes because they don’t react to innovative discontinuities (Polaroid) or engage in denial about the direction of their market segment (Blockbuster).

Other times because of shifts in consumer behavior that exceed strategic agility (Kmart) or because of complete financial disarray (Toys-R-Us).

Sometimes companies fail because their entire business model is dubious or fraudulent, and eventually they can no longer hide from or conceal this reality (Enron).

But sometimes, companies fail because they end up short of the talent they need to conduct a complex and challenging endeavor in a dynamic and competitive environment.

Human performance determines corporate success, and when companies become careless with talent, the impacts are catastrophic.

High turnover strains financial resources. It separates companies from critical institutional knowledge, tribal knowledge, and continuity. Gaps from talent loss strain the morale and productivity of remaining team members.

This all sucks. Which is why good companies obsess over talent retention and seek to understand the intricate details of losses they didn’t want to happen, dubbed regrettable attrition.

Except sometimes they don’t. Far from rueful, they are sometimes indifferent, oblivious, or even cool with it. Despite the admin label.

Let’s [bracket] that thought for a minute.

People leave their jobs for all sorts of reasons, most of them branches on the tree of poor management.

Work/life balance, insufficient compensation, lack of growth opportunity, and diminishing horizons are commonly cited.

Many people leave over a bad boss. Every professional experiences occasional bouts of ambivalence. In a positive environment, they hang on and work through it. In a toxic environment, they disappear faster than the door can swing shut behind them.

Bad bosses don’t just drive attrition, they also feed on it. When a strong performer leaves, this opens the door for a weaker performer to grab the next promotion and carry their mediocrity to higher levels.

This can create a vicious cycle culminating in poor decisions feeding strategic failure. See Yahoo, Compaq, and Woolworth’s.

But there is one particular branch of the poor management tree on my mind as ‘23 ticks down. Unless something changes, we might be citing Amazon, my former employer, as an example of this phenomenon in a future postmortem.

Security. And by this I mean psychological security. The feeling of not only being safe in your job (provided you deliver), but the feeling of stable expectations.

In the past few months, I’ve watched as a parade of killer talent has walked out of Amazon. Highly-trained, educated, and seasoned specialists and generalists alike, from operations, administration, HR, finance, and other support roles. Each inflicting a cost of between 20% and 200% of their annual salary in backfill cost.

These are strong, superb, sought-after people. Their departures make Amazon a weaker company.

Many of them left before having a new plan or role, as if they were running from something rather than to something. And I know of many others readying to follow suit.

The root cause for many of these departures isn’t something taught in business school.

We can understand it through the security dilemma, a concept extracted from classical realism. This is a situation where uncertainty and tension trigger actions between parties in a relationship with a power imbalance.

Both parties act to preserve or increase their sense of power and control, but in doing so create and react to misperceptions in ways that further degrade the situation, which eventually unravels chaotically.

This is primarily a way to understand geopolitics.

But it’s also a way to understand spiraling attrition of the sort that can fundamentally hobble a company, no matter how large or powerful.

In early ‘23, Amazon reacted to the strategic environment in two key ways.

First, it started slashing salaried staff. While the press coverage construed this as corporate restructuring, positions were also removed from the operational teams that pick, pack, ship, and deliver customer orders. Warehouses were told to run with fewer managers, stretching support for frontline workers.

This happened via top-down edict, without meaningful debate or collaboration. And contrary to the subtext, not every one of these individuals had some sort of performance problem. Many were delivering strong results, leading others to wonder if they might be vulnerable in spite of good performance.

Second, it reduced salaried compensation. Even in teams where performance had been exemplary and massive value had been created, many saw a year-on-year drop. Even some deemed “role models” in their position and level in the company took a big hit.

Downsizing and pay cuts, especially when delivered top-down without clear rationale, have a way of spooking the herd. What might be well-reasoned triggers the security dilemma when it is mishandled.

Pretty much everyone I knew back in early ‘23, as these inputs landed, immediately updated their CV and started looking around for new opportunities.

This is a key moment in the life of any company. It's a paradigm shift from security to insecurity.

Once people feel unsafe in the environment, their minds open to other possibilities. Once their minds are open, ideas which would have previously bounced off have a way of entrenching until they drive action.

And this is how regrettable attrition starts. With false moves and poor communication. Amazon’s senior executives surely had clear ideas regarding why they insisted on staff and pay cuts. But by not explaining themselves, they have triggered broad insecurity.

People aren’t sure what’s going on, what will happen next, or why things are changing. In these conditions, they will seek a new path that they feel gives them more control and power. And the strong performers who have plenty of options will be the first to go.

As this plays out, mediocrity becomes unavoidable as the best talent is replaced by something less.

There is a way to stop the bleeding, and that is to actually regret the regrettable attrition.

Conduct exit interviews. Listen. Understand the psychology of those who’ve decided to leave. Have honest talking sessions with those who remain. Unearth their anxieties. This becomes the foundation for adjustments to avoid sending unintentionally destabilizing signals, and to increase the feeling of safety and security among teams.

My observation is that Amazon hasn’t been doing these things in ‘23. Which means it isn’t regretting its regrettable attrition. Which could be reflecting either cold rationalism or clownish corporate drunkenness. No matter which, the sound of floppy shoes is audible as we close out the year.

Hey, on one level I get it. It is nigh on impossible to enact desired personnel cuts without some spillover into undesired losses.

But to accept that as an explanation for unplanned talent loss is lazy at best and strategically reckless at worst.

Success is a narrow path. Failure is the broad thicket of poisonous weeds surrounding it. Staying out of those weeds can sometimes be tricky. But other times, it’s as simple as choosing to read clear signals and react accordingly.

As we close ‘23, it seems like my former employer is wandering into some tall weeds for silly reasons. Reasons unbecoming such a smart company.

Perhaps things will be different next year. We’ll find out starting tomorrow.

Happy New Year to all, and thank you for reading my newsletter.

TC is a leader with three decades of experience and strident views on how organizations should treat people as they create shareholder value.