Want to avoid employee churn? Map out a career path for new hires.
Before starting a new company, most founders write a business plan -- or at least a mission statement. They almost certainly determine how much capital they'll need. And many entrepreneurs decide on a few key positions they'll fill, once they get some funding.
Hardly anyone imagines the positions that a company's entire staff will hold five years down the road. Hardly anyone, that is, except Rene Larrave. To Larrave, hiring any employee without planning for his or her future is a drastic mistake. And it's a mistake that virtually all small companies make.
Six years ago Larrave and two friends began imagining their ideal company -- a fast-growing consulting firm that they could lead to booming success. The methodical cofounders dreamed up an apt name -- Tactica -- and set about planning it. Before they even opened the doors of their Dallas-based firm, they had charted the career paths of their not-yet-hired employees -- and developed the performance-review process that would lead all of their then mythical staffers to the next promotion. That process, now described in Tactica's Employee Atlas, included a five-level, 13-category system that spelled out every aspect of what a new hire must master to ascend from entry-level consultant to partner.
The cofounders' vision of a strict, predictable system was hardly surprising. Detailed promotional ladders are the linchpins of growth at the brand-name consulting companies where the three had previously worked. In any service business, Larrave says, predicting ahead of time the number and types of people who will be needed is the only way to grow profitably. His projections seem to have been accurate: by last November his company had revenues of $40 million and nearly 200 employees, virtually all at the levels that the cofounders had planned for them in 1996.
From the moment a new employee walked in the door, he or she learned how to get promoted. The Atlas detailed the expectations at each step on the road to partner -- consultant, associate, manager, and principal. In the technical-skills category, for example, entry-level consultants had to meet seven standards in order to win a promotion. "People use this kind of like a scorecard," explains Larrave.
The evaluation process was equally clear. It began with a self-assessment, which the employee submitted to a randomly assigned reviewer (who was at least two levels senior to the reviewee). The reviewer compiled "360-degree feedback" from the person's peers and supervisors, wrote a review, and sent it to the employee, the human-resources department, and two review committees -- one consisting of consultants in local offices and the other including partners who reviewed principal and partner candidates. Finally, the committees determined compensation and promotion.
Many consulting companies perform such reviews annually. Tactica engaged in the painstaking process twice a year. "You cannot imagine how many hours we spend on this," says Larrave, with a laugh. But he insists that the system helped the company keep its annual turnover at about 5% in an industry with a notorious churn rate. "The type of people we want to attract are very driven, type A people, and achievement and progression through the ranks is important to them. It drives them. So having [the promotion plan] very well laid out is a critical piece of the value proposition for them," he explains.
In November, Experio Solutions, a $100-million consulting firm in Dallas, acquired Tactica. Experio was attracted to the smaller firm in part by its finely drawn promotions plan, claims Larrave. "There was a realization that [the Atlas] was a strong contributor to the culture and to the quality of our people, to their intensity, their passion, and to overall client satisfaction," he says. Now he and his new colleagues are building a framework that's even "bigger and better." And, presumably, even more tactical.