Thoughts on Apple's Employee Retention "Problem"

Bloomberg published a story late last week on how Tesla has been hiring Apple talent over the past few years and now has more than 150 former Apple employees on payroll. Anyone who has been tracking Tesla would be familiar with this issue considering that several current (and former) Tesla executives were former Apple employees. I think this issue says more about Tesla than it does Apple. Tesla CEO Elon Musk is a charismatic leader with a clear vision on rethinking the automobile and energy industries.  Who wouldn't want to be part of that type of project? 

The primary issue with roping Apple into this discussion and analyzing the company with a negative tone is that by doing so, one is comparing Apple's strategy and product roadmap to Tesla. The assumption is if 150 employees were willing to leave Apple to work at Tesla, then that must mean Apple was unable to retain talent with exciting ideas and projects. I disagree.

As we have seen over the years at Apple, there should be no expectation that talent responsible for bringing a collection of raw ideas into a finished product, such as the iPod or iPhone, will stay around until the next big thing is developed. Many people on these teams held positions and responsibilities focused on specific tasks. Instead of being shifted into another role these employees may join other companies that have their own "iPhone-like" project under development.  When I hear that an Apple employee left for another company, I often look at it as a positive for the company they are joining, not necessarily a negative for Apple.

The Apple employee retention debate boils down to two questions: 

Does Apple have an employee retention problem? I spent the past few days rethinking the question and concluded it may just be too loaded to answer completely. Apple's structure necessitates the need to continuously hire outside talent since Apple's mission is focused on coming up with new products. It is not reasonable to think that Apple's current employee base and skill set can fully realize Apple's mission without looking outside for help.  Accordingly, the much more important question may be does Apple have an employee acquisition problem?

Apple is a somewhat routine acquirer, often hiring teams of people, or at the minimum acquiring technology, and Apple is constantly searching for new people to fill talent holes. Some of Apple's recent high-profile hires include:

  • Luca Maestri (CFO)
  • Angela Ahrendts (SVP Retail)
  • Kevin Lynch (VP Technology)
  • Dr. Michael O'Reilly (VP Medical Technology)
  • Paul Deneve (VP Special Projects)
  • Ravi Narasimhan (R&D)
  • Dr. Roy Raymann (R&D)
  • Marc Newson (Industrial Design)

As seen with some of Apple's very high profile executive hires, does Apple have an employee acquisition problem?  Will most of these employees stay for the rest of their careers? Is that now a retention problem for Apple? I'm sure if Apple management had its way, some of the former Apple employees currently working at Tesla would still be at Apple. The Bloomberg piece mentioned that Apple had increased financial incentives to entice Tesla employees to join Apple. I wouldn't want to be so naive as to assume Apple management is able to retain everyone they want, but I just don't see employee retention as one of Apple's pressing issues given the company's product-centric model focused on new products in new disciplines.   

Is employee retention a risk factor for Apple? Yes. Employee retention is a risk factor for any company. The mistake that I see many people make is equating "risk" with "problem." Just because something is a risk factor, there is no claim being made that it is currently a problem. In addition, employee acquisition is just as big of a risk factor for Apple, if not bigger, than employee retention.

The primary pushback I have received on this subject is that Apple's success is not dependent on high level executive hires but software engineers, and recent "issues" with Apple software and services is a sign that Apple is indeed having issues retaining this talent. It is no secret that Apple is lacking in resources, with engineering talent being one example, but there is simply not enough evidence to suggest that employee retention is the culprit of recent software "issues." Rather, Apple's focus on acquiring the next marginal customer and the corresponding pressure to ship new and exciting software features at a increasingly fast pace has produced tradeoffs with software quality taking the brunt of the fallout. I'm not convinced that having more chefs in the kitchen would necessary change the outcome. 

Ultimately, a properly functioning Apple organizational structure and business model will appeal to the best and the brightest. Judging from some of Apple's recent hires, this is still the case. Once Apple ships a product and resources shift to the next big thing, a certain level of turnover should be expected within Apple ranks as materials and resources are reallocated. Finding the people needed to turn ideas into reality is Apple's biggest risk factor. Apple is expanding into new areas in which company resources had historically been underemphasized such as health, wearables, and content discovery and curation. Apple has made progress in terms of employee acquisition and retention in these areas. Given Tesla's success at appealing to those Apple employees with a desire to work on automobiles and energy projects, this issue will become much more interesting when it's time for Apple to see if there is anything they can add to the transportation and energy industries. When that time comes, the quality and excitement of the potential plans and projects will dictate how successful Apple will be with employee retention and acquisition.