Lateral quitter
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The Human Resources military-industrial complex
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Lateral quitter
ˈlætərəl ˈkwɪtə (n.)
One who voluntarily leaves your organisation to work somewhere else. A greatly unexamined constituency.
Management will steadfastly deny any lateral quitter is missed. The trend towards “exit interview by chatbot”, if you get one at all, suggests corporations systematically undervalue the problem.
HR appears gripped by the conviction that having employees at all is a matter for regret. It makes scant effort to discourage, impede or even identify those who are thinking about leaving, let alone asking those who eventually do for their motivations.
This is an oversight. On the premise that all staff bring some value, and a good half bring more than they cost, lateral quitting is, broadly, negative-sum game. That is, a game businesses should try to avoid playing.
Lateral quitters tend to be good employees: ones you didn’t want to leave, who contribute more than they cost. They will be, at any rate, if your HR capability is functioning passably, because if it is, it will already have dealt with the laggards you did want to leave, and made them. Right?
Maxim: employment should not be a hostage situation. Either way.
The competence phase transition
Now, it is true: there is a “bid/ask spread” between staff you genuinely value and those you would be just as happy never to see again. This we call the “competence phase transition”. It is a sort of purgatorial state, occupied by earnest plodders who don’t really earn their keep but do no real harm, such that you can’t quite summon the bureaucratic energy to proactively whack them, but nor would you shed crocodile tears if they did decide to push off.
It is a remarkably stable state: staff of tepid bearing can comfortably inhabit this zone for decades. Some do, every now and then, have a rush of blood to the head and throw in the towel, often at times of mass exuberance: you know, dotcom booms, crypto mania, that kind of thing, when in a fit of irrational (and uncharacteristic) madness, they join fly-by-night stablecoin start-ups and legaltech ventures, and are not then heard of again until they show up in the fossil record as evidence of one of these mass extinctions that the financial service industry undergoes every decade or so.
God speed all our friends in operation roles at DogeCoin and Lexrifyly right now, by the way: hope it is fun while it lasts.
Lateral quitters are good staff, QED
Anyway. Leaving aside these anomalous situations, lateral leavers will tend to be your better employees. Ones that provide more value than they cost. Being smart, they are likely to know they are being undervalued and, being proactive, energetic people, do something about it. By contrast, those who provide less value than they are worth are unlikely to do anything about it — especially if they are smart — and even the dumb ones who try to do something about it won’t be able to.
There is a negative feedback loop here, therefore: say all people you hire have an equal chance of working out well — competence is evenly distributed — and those who work out better than expected are progressively more likely to quit while those who disappoint are progressively likely to stay. The competency of the workforce will quickly skew mediocre. We call this “mediocrity drift”.
Those who leave will be replaced — at necessarily greater cost, ceteris paribus, because the one and only time you are obliged to mark to market is when you hire— by a person having , QED, no institutional knowledge, no network, and, even so, a no-better-than-even chance of working out well.
The loyalty discount
“But excellent employees will be rewarded with better pay and progression” is an objection only offered by someone who has not heard of the loyalty discount. HR will have forged ironclad compensation bands, based not on any assessment of the quality of the workforce (because how could HR, of all functions, possibly know?) but by some opaque benchmarking operation carried out by consultants “gathering data” from industry peers. Where exactly this data comes from, no-one will know. Assuming the consultants don’t just make it up out of whole cloth, assume it will be volunteered by other HR departments. Now think for a moment, about interests here. If you were the highest payer on the street — therefore having a natural advantage over your peers in the lateral hire market — wouldn’t you want to keep quiet about that? Wouldn’t you be inclined to undercook the data you submitted to benchmark surveys?
But come on JC: surely, regulated institutions wouldn’t knowingly skew important market data to suit their own financial interests, would they?
Once they have successfully “benchmarked” their salary bands against the market, HR’s main concern will be not setting a precedent. Your manager will shake his head mournfully and say, “my hands are tied.”
Look after what you have
How to stop this? Well, for one thing, focus your attention on your employees who deserve it: the good performers.
Try to stop them leaving.
If HR were worth the commodious space it occupied, it would ask who these lateral quitters are, and why, in general terms, they are walking away. On the other hand, it takes no towering intellectual insight to figure it out. In broad strokes it boils down to: money, progression, and quality of work.
Another way of looking at that continuum is this: you pay poor employees more than they are worth to you, and good employees ,less than than they are worth.