Numbers Mislead

I recently posted an article that dealt with the idea that employees and clients are both volunteers and you will do better if you treat them as if they will be here so long as they want to be here.  Managing volunteers

I mentioned the person at Google. My friend Brian MacKenzie was kind enough to offer some interesting information.  The median tenure for an employee at Google, the leader in best places to work, is about 13 months, fourth worst among large companies.  Better than Amazon but worse than Yahoo and some other similar companies.  Maybe not such a good place to work after all.  At least you could reasonably assume that based on the implied turnover.

Long tenure leader is Eastman Kodak at 20.0 years.  GM is 10.3 years.

I know Brian to be a bright, curious and thoughtful guy, but he has fallen into a statistical trap.  By itself, median tenure tells you nothing about whether there is high turnover among the employees.  In Google’s case, their workforce has grown from 9,500 to 28,500 in the past seven years.  Also important is that the people are in demand elsewhere in the industry.  With a high enough growth rate, median tenure will be very small.  In Google’s case given a growth rate of 17%, their average tenure would be 4.4 years if not a single employee left in those seven years. 

At the other end, the companies with high tenure, typically have little growth and few growth prospects.  If they lost half their employees tomorrow, their average tenure might be longer.  Certainly true if they were dismissed based on seniority.  In these industries, there is little recruiting from outside to steal the best employees.  There is less mobility for employees.

There are two lessons here:

  1. Statistics are not useful except in context of underlying driving forces.
  2. If you are looking for a job, seek companies with relatively low median tenure if you want a dynamic and growing environment.  Choose one with high median tenure if you want to just plug into an organization chart.

If only life were as simple as numbers appear to make it.

Contact: don@moneyfyi.com  

Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

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