The good news of the turnover is that it creates the potential for new ideas to come into the company. The bad news is that a lot of talented people who came initially energized and filled with good ideas leave all the time. What happens in between? Employees and the company see their interests as being opposed rather than being mutually supportive.
Next, let’s look at the customer base. A similar level of turnover will occur there as well. Customers will see themselves as better served by going elsewhere at some point in the future. Does such turnover suggest that the company is fulfilling its potential? Probably not. Competitors’ offerings are frequently similar.
Research shows that the typical reason for switching is because a company makes the customer feel abused and not respected through poor service. Errors can be forgiven as long as people are sincerely interested in doing the right thing. Taking advantage of customers’ ignorance is particularly infuriating. How hard to you think that customers try to help improve the companies that annoy them?
Now, consider suppliers. For a typical company, 60-70 percent will be gone or be receiving dramatically lower orders within five years. If a supplier decides that their company has little chance of being a survivor, how hard will most work find new ways to improve the customer’s business model?
As you can see from these examples, the typical company takes actions every day to drive off most of its potentially most committed allies, those who invest their working lives and hard-earned money to the company.
A starting point for breaking this cycle of uncaring relationships is to establish a level of trust and cooperation that seeks to build something greater through continuing relationships than is available elsewhere. Xilinx seems to be a leader in focusing on this opportunity and has been recognized as one the of the best U.S. companies to work for by Fortune.
Xilinx is the leading provider of programmable logic devices and attributes much of its success to a long-standing practice of creating an environment that fosters innovation throughout the workplace — from its marketing activities and how products leave the shipping dock to the way the company keeps the financial community informed. Xilinx employees are urged to take risks and are not punished when they fail. The company’s philosophy is that occasional failure is natural and a necessary part of building the “learning organization” that Xilinx wants to be.
The company’s business model has always provided for outsourcing the fabrication of its products. That way Xilinx has been free to concentrate on three key competencies: chip and software design, marketing and technical support. With this potential to fascinate and focus, Xilinx succeeded in having an enviable employee turnover of less than 5 percent a year in the job-hopping Silicon Valley environment where 20 percent annual employee attrition has been the norm.
When Willem (Wim) P. Roelandts arrived as CEO from Hewlett-Packard in 1996, he saw an opportunity build on this sound internal teamwork and cooperation to move to higher levels of cooperation with suppliers and customers. For fabrication suppliers, this meant going from 5 to 2 companies. As a result, Xilinx got access to the most advanced fabrication technology sooner. Xilinx’s designers and the fabrication suppliers worked closely to accelerate the technical development of state-of-the-art semiconductor manufacturing processes used to make Xilinx programmable chips.
The Xilinx value proposition has always been reducing time to market for its customers. By themselves, Xilinx chips offer the fastest way for customers to create unique logic circuits in silicon. But in other areas of its business, Xilinx began to take responsibility for looking for ways to speed products through the whole supply chain to the end user.
Any place where they were delays or inefficiencies, Xilinx began to place its attention. That included companies that distribute its products, the semiconductor foundries that make the silicon wafers, and companies that package the chips and perform final tests on them.
In another area, Xilinx pioneered the use of “intellectual property cores” in its chips; these predefined and pretested cores — from Xilinx or one of its partners — are programming files that make the Xilinx chip perform a specific standard function. Cores alleviate the need for customers to “reinvent the wheel” for, say, a communication protocol they want to put in a Xilinx chip. Thanks to cores, customers don’t have to recreate the function from scratch, and as a result, they can shave weeks or months from their product design cycles.
More recently, Xilinx began offering turnkey design services. Xilinx’s engineers, not the customer’s, create the unique logic circuits in the chips for a particular piece of digital electronic equipment. This kind of service is especially attractive for new customers who want to reap the time-to-market benefits of programmable logic chips, but don’t have the expertise in-house to take a design from the drawing board to completion and still meet stringent product delivery schedules.
Having created a solutions-oriented focus that extends outside its operations to teamwork with its partners and customers, Xilinx will probably continue to extend its connections into stronger and more effective relationships with long-term customers, partners, and suppliers.