Company with a 10% lifetime employee turnover shows their real secret is trust | Hacker News Reader

Company with a 10% lifetime employee turnover shows their real secret is trust

fortune.com

77 pointsmacbookaries72 comments

Since the article doesn't directly link to the company they reference, its:

https://www.frameryacoustics.com

The company is only 12-years old.

It should be no surprise that, for a company still in business after a decade but also not a super old company either - that they have hired way more than let go.

(Seems a bit of confirmation bias combined with survivor bias going on)

It's not just "let go", it's also "left". That's the surprising bit.

Is it that surprising considering the company went from 0 to 400 people in 12 years? Most of these people will have been onboarded towards the tail end of this and won't have been there that long. The few that were there in the early days are likely in cushy jobs riding a rocket ship that has yet to have a period of pointing back to earth. Neither is particularly surprising.

It is pretty much a marketing piece, overall. I'm from Finland and there are tons of layoffs all the time. No one wants to do layoffs, sometimes companies just have to do them to survive.

> The company is only 12-years old.

That explains a lot. Not only is it not much time for turnover, but it almost certainly means the original management is still running the show. Trusting in a person is easy, but keeping that company trust for year after year is very hard, especially if the company grows. It only takes one asshole manager to break that trust and once broken it takes many many years to rebuild, if ever.

This happened a lot in the US where companies would cultivate loyalty in their employees throughout the 50s and 60s and even into the 70s. Then the old guard retired and new management came in and started abusing the trust in the name of a higher bottom line--doing mass layoffs, cutting pensions, slashing benefits, outsourcing, engaging in huge stock buybacks with the funds instead of investing in R&D, typical 80s and beyond behavior. Then they went all Pikachu face when employee loyalty dried up and their competitiveness faltered and the companies found themselves unable to compete without government assistance.

Just because it's 'not much time for turnover' doesn't mean there's plenty of younger companies with much higher lifetime turnover.

In the tech industry, the average annual turnover rate is 13.5%. If I'm doing my math right, that amounts to a lifetime turnover of 77% for an average 10 year tech company assuming flat employee count over the time period, or 51% for the same company with linear growth from zero over the time period. Both are well above the 10% this company is claiming.

(The 77% came from 1 - ((1-0.135)*10), and the 51% came from 1.0 - ((1-0.135)*10)0.1 - ((1-0.135)*9)0.1 - ((1-0.135)*8)*0.1 ... to sample even cohorts of 10, 9, 8, etc. years making up equal portions of the population.)

I'm pretty skeptical of an analysis of a company's turnover rate written by that company's head of HR. It's just too easy to leave out relevant factors to draw any conclusions from reading this. If their real secret were something unsavory like "we have large golden handcuffs" or "our employees don't have good options", would they share that?

My favorite version of talking about this sort of stuff was from a company that acquired the startup I was at.

"We retain 90% of our top 10% of talent".

Riiiiight.

These articles are so silly. Of course you have low turn over rate, you live in a city in the middle of nowhere with little to no competition.

And like someone else said, the company is only 12 years-old. Of course I've seen start-ups with insanely high turnover rate. But if you've not existed long enough to see people stay until retirement then you don't really have a significant data set. If a company like IBM or GE could claim a 10% lifetime turnover rate that would be something to marvel at (only used them because of how long they've been around for, I'm sure they are far from the most wonderful places to work).

That and the focus of the company being relatively niche with little to no competition in the space.

Like sure, there are other fancy furniture companies who could probably pay you more, but you'll most likely have to uproot yourself and move to a completely different city or even a different country.

With all this in mind, low turnover is natural.

What is the origin of the high/low trust society theory? It seems to be quoted as fact when talking about places with low crime like Finland and Japan, but I’m not sure what its empirical basis is. Even the Wikipedia entry is low on quality citations.

Some balance of homegeneity and wealth seem to produce high trust societies. You can see many wealthy nations with low trust (US) and likewise very homogenous nations with similar issues (SEA, India, African). You could argue that tribal/ethnic/caste differences cause the issues but regardless, homogeneity appears to be a contributing factor.

At the same time you could chalk it up to cultural differences. Japan is unique, and Finland is sparsely populated. Smaller communities tend to be higher trust, even in the US.

Interestingly, Japan and Finland are also legendarily friendly with one another. Many small towns in Finland are sister cities with small towns in Japan, and it forms a kind of clandestine EU-Asia corridor for skilled workers looking for a change of pace.

All high trust societies alike, all low trust in their own special way, perhaps?

India is not homogeneous. Neither are most (all?) countries in Southeast Asia or Sub-Saharan Africa.

Homogenous is a pretty loaded term imo. You could have two genetically identical groups claiming they belong to different ethnicities or tribes and are thus, not homogenous. Or in the case of Japan you have two major ethnic groups, evenly disperses and so intertwined no one thinks about it, making them homogenous.

Homogenous thus in my opinion is more like a mix of homogeneity of appearance/culture. Indian people largely share the same appearance and culture, so in that regard, they are homogenous. Africans likewise. Whether some sub-groups have their own distinct appearance, or cultural practice, they are largely similar.

Unfortunately this (overfocus on genotype) is the mistake the west made when it came to determining homogeneity (and creating nationstates out of whole cloth) and it (plus other phenomena, not meaning to shift blame) has resulted in much of the ethnic cleansing of the 20th century.

As an example, the formation of African states, cutting across traditional tribal lines which resulted in the ethnic cleansing of the Igbo in former Yorubaland/Nigeria.

India has so many complex cases of this that covering it is an essay of its own.

Even Japan, with its claims of being an ethnostate, became one by force of ideology -- force so strong that it seems like common sense even though it was not true then or now.

You can form your own empirical basis by just traveling to a bunch of different places. The differences will pretty much smack you in the face (or the wallet).

I assume majority of the hacker news readers, no matter how good their job is want to quit and do their own thing.. do you think my assumption is correct? is that the norm? or am I just abnormal ?(wanting to do my own thing)

It depends on how realistic one is being. In a perfect world? Maybe. In the actual world? I think a lot of people get to a point in their career where they want a solid, steady paycheck with minimal drama. There are also a lot of “deep tech” areas where it makes more sense to be in a larger firm than to be out on your own trying to do a startup or whatever.

You’re not abnormal, many people would love to do their own thing in an ideal world. There are various reason (cost of living, family, location, responsibilities, capabilities…) most of us stay in our current positions and don’t move out of our comfort zones.

IMHO each one of us needs to ask/answer the reason for wanting to do something on its own. Is it for the money? Is it out of love for a specific activity? Is it out of need for success? Is it because of a need for a different lifestyle?

This is why we need to transition to a post-scarcity world and eliminate the need for finance and economy.

I'm not advocating for communism (as it doesn't work when money is involved), it merely allows certain people to accumulate power while everyone else works for free. Capitalism is better because it offers the opportunity to climb the ladder, but it still leaves poor people suffering. More people might find happiness under capitalism compared to communism.

Universal Basic Income (UBI) will not work, as it is still similar to printing money, and poor people might end up worse off in the long run due to UBI-powered inflation.

In any case, I do not know if we can achieve a post-scarcity world. Will it lead to corruption and accumulation of power, similar to communism? I do not know. However, we can at least try to educate people more so that we can aim for a post-scarcity future in the next generation.

That's only true until you've quit and done your own thing for a while. There are benefits and drawbacks, it's not for everyone.

I for one prefer focusing on engineering and team building over sales and marketing, which means that to "do my own thing" I end up spending half or more of my time doing things I don't enjoy, which is just not worth the headache.

If I had a significant cash reserve I would probably have a lot of fun building a product in the context where you didn't have to grind for every dollar... but that's also just known as a hobby I think.

Freedom to pick a job with work that you love can be much better than doing your own thing. I am a scientist working at a biotech startup. I "hired" a CEO and a few other folks to run the business so that I can do the science. I didn't even have to front my own money.

Problem with startups is that it can be great like this or worse than any normal job (60+ hour work weeks). Also the potential of failure is there.

Getting a good gig like this is like winning a lottery.

I think you're very wrong. I think if most of us could even find a good job then we would stick with it. The problem is that a good job is extremely hard to find and a good job is a moving target. What is a good job five years ago for us might not be a good job anymore. Compensation, what you're working on, technologies used, the coworkers you have, the progression you want from your career, etc.

I think the reason some people on HN want to do their own thing is because the jobs we have suck so much and they feel that by doing their own thing they will take back control and be able to have the life they want.

I think it's somewhat delusional. Founding your own company, finding a great revenue stream, and getting adequate compensation with it is incredibly challenging and not a common route at all. If I want to make $500k+/yr, I am much better off joining a big public tech company.

Money is the wrong excuse to do your own thing. Ideally you have something you really enjoy doing or something that fascinates you endlessly then find an angle to do it for a living. It doesn't really matter if you succeed. If your thing is [say] fitness and you get to fool around in your own gym for a few years you've done well. You wanted to DJ and started your own club. You enjoy bowling and got to own your own bowling alley - for a while. Go do those things you wanted to do when you had all that money?

It's not a realistic approach to life. Homes cost money. Children cost money. Wives cost money.

You can't just go pursue whatever passion you have unless you are willing to say give up having children, a wife, and/or a home. Especially true when you live in a place like silicon valley like so many readers on HN do. Homes are now $2-3m. If you're married - your wife isn't gonna be happy with the massive downgrade in lifestyle either. You just can't do these things, unfortunately.

This just reads weird with the “wives cost money” and “your wife isn’t gonna be happy with the massive downgrade” angle. You understand why that’s poorly phrased, right?

Is it actually inaccurate though? Try to tell me a wife who wants to live in SV in her typical $2-3m home is going to be okay with moving to BFE and giving it all up including the nice private schools for her kids.

I mean, this is predicated on so many out-of-touch aspects it seems like it is written by someone in a bubble or on the far reaches of an antisocial spectrum.

1) not everyone needs or wants to live in SV

2) there are plenty of people who manage to “survive” on a home worth less than $2M-$3M

3) public schools are a thing

4) not everyone views the primary goal of a relationship as a transaction for a certain quality of life. “For richer or poorer” and all of that.

It reads like those op-eds during hard times when relatively well-off people lament about how the economy is battering them too, because after the Lexus payments, and private school, and SAT prep courses, they are forced to scale back on things like their annual Aspen vacation. That can all be very true, but also completely disjointed from the experience of most people that it lands flat.

I agree with Homes and Children cost money.

Wives cost money - this depend on the wife/partner you have. I'm teaching my wife computer science, when she have a job I can reduce my work hours to do my own thing. Might have to downgrade (move out from greater london). But would be worth it.

In my case I just want to work on open source projects and make some money to live from that.

Not at all for me. I want other people to deal with "the rest of it" so I can do something cool with computers instead of running a business. HN has both types here, which is great for someone like me.

At the place I'm at now the founders hired a CEO and associated folks to run the business after it got to a certain size so one could focus on running sales and the other could focus on doing engineering.

I'd love to do my own thing IF I was independently wealthy. I could just do cool shit and see what sticks.

Doing that while also worrying about how I'm going to pay the mortgage and get food on the table for next month? No thank you.

I'm perfectly happy being a well-paid problem-solver in Someone Else's Company. I won't get filthy rich, but I have close to zero work-related stress and I live comfortably.

> I assume majority of the hacker news readers

Why would this be limited to HN readers? A lot of people would rather be independently wealthy. A lot of people play the lottery. The more interesting question is after the boring things with the lottery winnings - cocaine, strippers, cars, houses; what is "your own thing"? Open source contributions? Software consulting? HN commenting? Something not having anything to do with computers?

>The trust that’s given to employees will be returned tenfold–or even hundredfold. Everyone wins.

I must be a mercenary because that still reads to me as "we can do these things instead of paying you more". In fact, there is no mention of where their compensation falls, so it would be especially rude to do all of these things and then underpay your employees.

Pay is just part of the story. I'm so frustrated with the current company that I'm willing to cut my TC to transfer to something I'm happier with.

I mean we know that compensation isn't the primary factor for most people's happiness and satisfaction in their professional life. Put mercenary in and get mercenary out if you want, but for most people that's not the optimal strategy.

>I mean we know that compensation isn't the primary factor for most people's happiness and satisfaction in their professional life.

It isn't, but housing is, and housing costs money, a lot of money in the last few years.

Is there data showing that housing is the primary driver? I vaguely remember Sebastian Junger's book Tribe describing how people in low socio-economic community housing generally were happier than more well-off people in individual housing. I think his thesis was modern life, with suburban living, tends to disconnect us from community. From that perspective, it would seem like community is more of a primary driver than housing.

There are also communities of well off people. In Europe. Not every well off person lives alone in a huge ranch 500km away from the nearest town.

I wasn't making a dichotomous claim about wealth. I was pointing out that housing may not be the primary driving of well-being. It's easier to illustrate with an example where lower income people report being happier, despite having less resources for good housing. Similarly, we could point out to poor people who are isolated and unhappy but that also misses the point.

Back to the original ask, I would be curious if there's data that shows housing as a primary driver of well-being, above those other elements.

Well, self reported happiness is all relative. Someone who has two goats in a town of no goats will be very happy while someone owning a small apartment in a town of McMansions will feel very unhappy.

Yes, that's part of the problem with defining happiness in terms of external status and materialistic wealth. Hedonic adaptation tends to erode it rather quickly. With that said, happiness is a subjective measure so of course the measurement will be relative.

But that still diverts from the issue. It wasn't about relative wealth. It was about the claim that the primary driver of happiness is housing. Absent any additional evidence, it doesn't seem to be the case.

Ironically, there is evidence that money is still the primary driver of job selection (above meaningful work), based on the assumption that money will make them more happy.

https://giesbusiness.illinois.edu/news/2023/10/23/paper--hig...

Yep, people tend to have different (even contradictory and self-defeating) preferences over different time horizons. Many such cases.

I'm not sure that motivation follows from the preference. Money is an extremely good proxy for all sorts of desirable job attributes like respect, better working environments, and social status.

I would tend to agree, in part because of hedonic adaptation. I suspect the impact on happiness from more money is relatively less enduring.

This has been my strategy. I would rather be paid less working for a lower-stress company that treats my colleagues and me well than to get paid a higher salary working in a stressful, less respectful environment.

With that said, I’m paying for this decision with inflation outpacing annual merit increases at work, which means my effective pay is getting reduced as the prices of everything else rise around me. I still rent an apartment; I got repeatedly outbid in 2021 when I attempted to buy a home, and then the interest rate hikes of 2022 and 2023 completely priced me out of the market. I’m still living fine, but this inflationary environment is highly demoralizing.

My guess is they aren't seeing how much they're going to need for retirement (maybe it's much cheaper in Finland than the US), or have not thought about it, or have accepted/decided that they will work for more of their lives.

I'm more curious if people are able to find another equivalent job if they leave. 10% turnover is a lot less impressive if you're the only game in town.

Can we trust the turnover rate or is something else keeping it down?

I've worked with a few companies where a significant portion of the staff have been there a long time--the sort of place where you join after high school and stay until retirement and the "new guy" has been there over a decade.

One CEO told me their secret to employee retention:

1. Compensate people a little better than you need to

2. Promote internally

3. Be one of the few employers in town so that 1 and 2 compound

"we can do these things instead of paying you more"

In short, yes and it makes sense. If a company treats you as shit, the compensation needs to be higher. If they treat you as a human and you know they don't screw you whenevery they have the chance - at least I rather work for such a company even with lower compensation. But for sure, every employer would like to have more money and also better work conditions ...

If a company does all those things and the employees are happy to keep working there, how can anyone argue that they're under compensated?

Pay is part of compensation and compensation includes what going to work feels like.

If I'm at a reasonable level of pay I'll absolutely optimize for work that feels enjoyable vs. wringing out a few more dollars. And my definition of reasonable is quite low (intentionally because I live as cheaply as is possible in the US with a chronic illness).

In general, salaries are “hygiene factors” for retention — you lose people by underpaying, but you don’t in most cases improve retention by overpaying. There’s an interesting wrinkle in Finland in that income tax payer data are considered public records, so if you wanted to benchmark your salary you could simply request applicable data from Verohallintm, so theoretically — a very big “theoretically” it must be said — that should work against companies paying below-industry comp.

Hm. Why is this "theoretically"? I live in Finland and wouldn't mind requesting this data. It couldn't be more than a few days' crunching numbers to figure this out.

“Theoretically” only in the sense that most people won’t do it (since the data isn’t easily available, and you’d need to figure out who you were benchmarking against before requesting it), so the practical effect may be negligible.

What percentage of the population do you think would equally not mind submitting a formal governmental records request followed by a few days crunching numbers?

Your point of view is sad but understandable. Companies that show no loyalty deserve no loyalty, and that's pretty much all medium and large businesses today.

The biggest looming factor is that many jobs in the US are at-will employment, so while people can have good intentions and share those with you, the person or company can turn around and fire you for almost any reason. There's no penalty for going back on their word.

Finland has something different than that though and it sounds like it's harder to fire people.

I did like the Open Door Policy. That is a good idea for enabling transparency I believe.

I used to think so too, until I heard Cy Wakeman's perspective. Too often an open door policy turns into a venting session or, in her words, "a portal for drama." I got to witness this first-hand when I had an office across the hall from my former boss.

https://hrdailyadvisor.blr.com/2017/09/25/hr-department-reth...

I think that the open door policy needs all of the other layers of trust.

What Cy Wakeman experienced was an open door policy independent of any other culture change.

Yes, people don't just vent because the boss's door is open, they vent because some pressure has been built up. Closing the door doesn't make the drama go away, it just buries it underground were it will continue to make certain groups of employees who are unable to ignore it continuously more uncomfortable and less dedicated to their jobs.

Again, the link is not against an open door policy. It’s saying an open door policy itself won’t fix anything without focusing efforts towards a solution. Without that nuance it risks creating a toxic culture of endless complaining and limited accountability.

This feels like a clickbait framing. She says at the end that she didn't shut the door, just tried to drive the conversation in a helpful direction rather than letting people engage in unlimited unstructured venting. I'd still call that an open door policy.

Yes, I meant that an "open door policy" isn't sufficient. It also needs the framing to avoid the drama and focus on solutions. Relating back to my personal experience, an open door policy without those elements just wastes everyone's time. I didn't mean to imply that open door policy is bad per se, but just often badly implemented/understood. The title of the article is about "rethinking" open door policy, not getting rid of it. Adding nuance to a point shouldn't be conflated with being against it.

I agree, but the irony is that this company (Framery) is producing soundproof pods and booths for people to work in. Check their products page :-)

Absolute gold :)

cue the scam artists flocking over there to "con those rubes."

What's the data on pluralistic societies and trust? Does having a mish-mash of different ethnicities, value systems, and political outlooks tend to make for a low-trust society?

It’s odd that a simple comment making no claim is getting downvoted. They does seem to be some evidence that homogeneity is related, however.

>High trust countries are characterized by ethnic homogeneity, Protestant religious traditions, good government, wealth (GDP per capita), and income equality.

Delhey, J. and Newton, K., 2004. Social trust: global pattern or Nordic exceptionalism? (No. SP I 2004-202). WZB Discussion Paper.

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