NEW YORK (Real Money) -- When I first broke in at Goldman Sachs (GS) in the early 1980s, I was in charge of tabulating turnover in what was then known as the Securities Sales Department. It was my job to keep track of who stayed and who went, and to be sure I knew the details of each departure. I was told that, historically, Goldman Sachs tried hard not to lose anyone it wanted to keep, even as it was willing to see the others depart -- and, for the time when I did the tallying, the division's record was perfect on that score.
When I was first assigned the project, I had no idea why it was so important to keep track of how few people actually left the firm, other than for boasting rights vs. the competition, which always seemed to be losing people left and right.
But once I was in the fold, I realized the reason Goldman closely observed this number had to do with the tremendous cost of training people, and how departures -- any departures, of good people -- meant a total loss on an important human-capital investment.
In the division in which I worked, Goldman Sachs aspired for zero turnover because the firm spent, on average, six months teaching associates how to do their job -- and, during that period, these trainees were dead-weight losses to the firm. Trainees were sunk costs; you couldn't afford to lose the good ones. It could really hurt your firm's P&L, or profit and loss statement.