by Margaret Heffernan - Thursday, 6th September 2007 -

Two CEOs discussing their businesses. Both successful. One complains about employees.

The other comes out with the deathless line, “I don’t mind doing the HR thing.”

I don’t mind doing the HR thing. In other words, he grudgingly conceded that he could devote some time to his staff, thinking about their professional development and providing some structure and guidance, without feeling too, too annoyed that they were taking him away from the wheeling and dealing that was, frankly, so much more fun.

Where did his idea of business come from?

In service businesses like his, there are no assets – only people. But while almost every manager I’ve ever met will pay lip service to people being their greatest asset, most of them don’t act that way.

If it were true, then people would get the lion’s share of a manager’s time and attention – instead of being tolerated as a peripheral issue or a necessary evil.

This particular CEO is in advertising and he dimly perceives that he needs to hold on to his star creatives. But every worker he loses costs him.

The most conservative estimate for replacing someone is the full cost of their salary: in other words, in the year they leave, that employee costs you double. Other estimates say you’ll spend two to three times salary to find a replacement.

That includes your time, the headhunter or advertising fees, training time and attention drawn from other managers.

The issue is more pressing because data shows that retention problems are the highest they’ve been for 15 years.

Most British workers stay in a job for less than two and a half years. And no, this isn’t because everyone’s fickle and disloyal. Almost half of companies concede that they offer little in the way of career progression or training.

When managers believe that looking after people is peripheral, it means that people are peripheral. And they notice. Nearly three-quarters of workers say they’re unhappy in their present careers.

Any manager who expects HR to fix these numbers is barking up the wrong tree. Attracting and keeping the best people is a key challenge for any company leader. In a services business, it’s the people your customers are buying.

And if your people aren’t loyal and committed, do you think your customers will be? There isn’t a noncompete agreement in the world that will keep those customers once their favoured rep, sales person or account executive has left.

Moreover, staff turnover is the bane of every business person who, having invested months in a deal, watches it fall apart when a key player leaves.

You have to be very big and successful indeed to recover from the impression that your business is not stable enough to rely on.

SAS Institute, a private software company in the US, enjoys a four per cent staff turnover – in an industry where the norm is 20 percent. This, they reckon, saves them $100m on sales of $800m.

It’s a far more stable picture than that presented by US supermarkets, which reckon that their entire profit margin is regularly obliterated by the high costs of staff turnover. Some will argue that staff turnover is good, that if you had none your company would be moribund.

Of course we all need fresh thinking. And if you hire ambitious people, it is inevitable that some of them will have to leave, if they’re to continue to grow.

But it should be a rare instance when you welcome a departure: if the employee is that bad, you shouldn’t have kept them in the first place.

The rhetoric and drama of business is all about wheeling and dealing, closing the ball-breaking deal, crushing the competition.

Somehow we are supposed to think that is where leaders flex their real business muscle. It’s a mythology nurtured by the Industrial Revolution and Robber Barons – just as old and, frankly, just as anachronistic.

Because every time I visit a really successful business these days, instead of crushing the competition, I hear managers rave about their workforce.

I watch as they proudly introduce me to their colleagues. I notice when CEOs insist that I meet their leadership teams, rather than hog any glory for themselves. And I really pay attention when they talk about how long people have worked together.

The CEO who “didn’t mind” the HR stuff got short shrift from me. When I look at his peers, they all know that the people stuff is the real stuff.

It builds and secures their customer base against competition. It distinguishes them in the marketplace. It enhances margins. It fuels growth and innovation.

Just what, beyond those things, is a CEO supposed to do?