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Lately I was struck by different studies concluding median job tenure at Google, Facebook, Amazon, Microsoft and Apple is 1 to 2 years, very low compared to the Bureau of labor statistics which is a little over 4 years average job tenure.

Sources: DeepTalent Payscale Paysa

Turnover is uniformly described in literature as costly and avoidable. Given the fact they have near unlimited power for generous policies, that they let turnover get this high comes as surprising, possibly is a result of a cost calculation.

Is tech giants turnover cheap or unavoidable ? How do they manage turnover costs, generally speaking ?

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  • $\begingroup$ Just a hypothesis, but it could partially be a matter of deciding which costs lead to better ROI: cost of retaining existing employees vs. cost of hiring new employees. $\endgroup$ – AlexK May 18 '19 at 0:33
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Companies like Google and FB are talent focused. Turnover is high for a few reasons: 1). Because the employees tend to be VERY good at what they do, thus their opportunities are vast; and people tend to gravitate towards who pays the most. 2). Stress. 3). Contracts. Many employees in these big firms tend to only have short term contracts for specific projects. 4). These companies demand some of the best talent and work, and if an employee isn't reaching par consistently, no reason to keep them. I'm sure there are more reasons, but those are researchable. =-)

Hope this helps.

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  • $\begingroup$ Well, it sounds a bit partial explanation, because if a new "talent" costs 2 months of low productivity and administrative overhead to get properly onboarded, a company like Google might loose close to a billion a year in onboarding overhead and that certainly look costy compared to a few raises here and there, hiring contractors for definitive job, and switching to a less demanding management style. $\endgroup$ – Arthur Hv May 17 '19 at 19:00
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Having done a bit of research, i found a few things to explain the phenomenon.

  • Companies like these are in demand of profile that are scarce resource on the market and are willing to acquire the best of them at any cost. In order to do so, they aggressively market their open positions, salaries and supposed employee happiness. This is especially true for Google and Facebook, might be less so for others.
  • Many employees then realize things aren't so bright than advertised. The salary might be good, but their input is not valued as much as promised, they have trouble changing things, or find themselves unchallenged. There are management issues, and issues related to the fact the company they work being too big to provide key roles to everyone.
  • Being highly qualified and on demand, employees can find other opportunities at any time, and are targets of aggressive job marketing from other companies as well.

Another factor is that since tech giants also serve as a selling point on one's CV, they might as well hire people already planning a limited experience to improve their career perspectives, but I found little evidence supporting that it'd be a massive factor.

So I came to the conclusion that the high turnover is the result part of the market being tense, part of the management (e.g. being too greedy for high profiles and then being unable to challenge them), and part of the company size, factors that are fairly hard to fight.

Regarding costs, the answer would be then the costs are left partly unmanaged because of how difficult it is to address the root causes of these departures. Being well established, the companies simply pay it with the return of past investments.

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  • $\begingroup$ Was your question about why there is a high turnover, or about how these companies manage the cost of high turnover? $\endgroup$ – AlexK May 18 '19 at 7:34
  • $\begingroup$ @AlexK I added a small paragraph. I think it's important to understand why to understand why it is (not) managed that way. $\endgroup$ – Arthur Hv May 18 '19 at 11:09

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