Most companies make the biggest mistake of handling HR as a linear asset when it has exponential behavior.
The negative effect comes as an exponential catalyst when the best resources start to depart. Suddenly, after a 10% release, the performance drops significantly.
Remember the Pareto principle: 20% makes up 80% of the output. If you start the release process, you can ensure the people will leave from the most performant 20%. Even the 10% linear drop could generate more leaves. If you apply the Pareto principle, your performance drops at least 40%, but it is most likely about 60%.
It also works in the other direction! If you can attract the top 10%, it can give you a significant performance boost! Even if you hire expensive people, the output on a company level will be more significant, so looking only at the costs is a weak mindset, but certainly with an MBA degree.
This article idea comes from my LinkedIn feed, where I hear Google and Facebook CEOs making calls to attract talents!
I also see the weird phenomenon in my LinkedIn stream; at least daily, I see a post where Google comments under their employee's post.
I have heard several times that employee motivation at Google is the worst of decades! I think these HR tools - such as recognition do not work well - if the company is not healthy and word of mouth does not attract talent!
HR can pat their back; we do all the best practices today; however, I remember the book of Laszlo Bock - which shows the award-winning culture of the past.
Now those days are gone - the train is already leaving the station.....
This example can be a warning sign for other organizations if they are wise enough to recognize the issue. Otherwise, they will see from the business numbers - and then comes the cost cuts, which catalyst the beginning topic of this article.