In most professions, one or more firms can be identified that have clearly chosen a high target rate of turnover. Partners (or shareholders) can routinely earn a surplus value from the juniors without having to “repay” them in the form of promotion. This high turnover rate also allows a significant degree of screening so that only the “best” stay in the organization. Not surprisingly, firms following this strategy tend to be among the most prestigious in their industry.

This last comment gives us the clue as to why such firms are able to maintain this strategy over time. Individuals continue to join these organizations, knowing that the odds of “making it” are very low. In the eyes of many potential recruits, the experience, training, and association with the prestigious firms in the industry make the poor promotion opportunities at such firms worthwhile.

Young professionals view a short period of time at such firms as a form of “post-postgraduate” degree, and often leave for prime positions they could not have achieved as quickly by another route. Indeed, most of the prestige firms following this strategy not only encourage this but provide active “outplacement” assistance. Apart from the beneficial effects that such activities provide in recruiting the next generation of juniors, such alumni are often the source of future business for the firm when they recommend to their corporate employers hiring their old firm (which they know and understand) over other competitors.

Excerpted from ‘Managing the Professional Service Firm’ by David Maister, page 15