Olivia: Alright Jackson, let's do a quick cost-benefit analysis. What do you think is more expensive for a company: a completely failed marketing campaign or one single retail employee quitting? Jackson: The campaign, obviously. That's thousands, maybe tens of thousands, in ad spend and creative work just vaporized. An employee quitting is a hassle, but it can't cost that much. Olivia: You would think so. That’s what most leaders believe. But a fascinating analysis found it costs a staggering fifty-seven thousand dollars to replace that one retail employee. Jackson: Whoa, hold on. Fifty-seven thousand? For a front-line worker? Not a VP, not a senior engineer? That sounds impossibly high. Where does that number even come from? Olivia: It comes from a deep dive in the book we're exploring today, Misplaced Talent: A Guide to Making Better People Decisions by Joe Ungemah. And what makes his perspective so powerful is that he's both a registered psychologist and a Principal at Ernst & Young with an MBA from Oxford. He's looking at the hard business numbers, but also at the human brain behind them. Jackson: Okay, a psychologist looking at balance sheets. I'm intrigued. That combination explains why the book has this reputation for being incredibly practical, even if some readers find it a bit dry. The ideas themselves are anything but. Olivia: Exactly. He’s not interested in corporate fluff. He’s interested in why we keep making the same expensive mistakes with people, and how to stop. And it often starts with that shocking fifty-seven-thousand-dollar figure.

Jackson: I'm still stuck on that number. How is that even possible? Are they giving them a golden parachute I don't know about? Olivia: It’s the slow, invisible bleed. Ungemah’s client did the math. First, there's the cost to advertise the role. Then the salary of the recruitment team spending hours sifting through hundreds of applications. Then the time managers spend interviewing. But the biggest hidden cost is lost productivity. The role is empty, so customers are waiting longer, sales are missed, and other employees are stretched thin covering the gap. Jackson: Right, the team morale hit. Everyone else has to pick up the slack and starts getting resentful. Olivia: Precisely. And then you finally hire someone. Now you have onboarding costs, training costs, and it takes months for that new person to get up to full speed. When you add all those direct and indirect costs together, for this company, it was $57,000 per front-line vacancy. And some industries have turnover rates of 30 percent a year. The numbers become astronomical. Jackson: That’s terrifying. It’s like a hidden tax on being bad at hiring. So what’s the root cause here? Why are companies so bad at this? Olivia: Ungemah’s central argument is a lack of a rational framework. He says, "Without having job criteria in place, there is simply no way of predicting with any degree of confidence whether your people decisions are fair and rational." We’re just guessing. Jackson: It feels like that as a job applicant sometimes! You see a job description that’s just a word salad of corporate jargon, and you have no idea what they actually want. Olivia: And that’s a modern problem with ancient roots. He tells this great story about Imperial China back in 1115 BCE. To be a government official, you had to be tested on six specific skills: writing, arithmetic, music, archery, horsemanship, and ceremonies. They had a framework. They knew what they were looking for. Jackson: So even three thousand years ago, they knew you couldn't just appoint your cousin who's 'a good guy'. Olivia: Exactly. It reminds me of that quote from Abraham Lincoln, who complained about the "inefficient and wasteful results of political appointments." He was dealing with the same problem. When you hire based on gut feelings or vague criteria, you get misplaced talent. Ungemah even brings up Diderot in the 1700s, who was so disturbed by the lack of clear job definitions in the trades that he created a massive encyclopedia just to classify what people actually did. Jackson: It’s wild that we’re still struggling with this. We have all this technology and data, but companies are still making decisions like 19th-century political bosses. It feels like we’ve gone backward. Olivia: In some ways, yes. The focus shifted from defining tasks to defining behaviors, using these generic competency models that apply the same vague language—like 'demonstrates leadership' or 'is a team player'—to wildly different jobs, like a software engineer and a salesperson. The framework became so broad it lost its utility. Jackson: So the very tool designed to solve the problem became part of the problem. That’s a perfect corporate paradox.

Olivia: And to solve that paradox, to avoid just 'winging it,' companies now pour millions of dollars into something called 'employer branding.' They create an 'Employer Value Proposition,' or EVP, which is basically the company’s pitch for why you should work there. Jackson: Ah, the EVP. This is where you see all the corporate website photos of diverse, smiling people playing ping-pong in a sun-drenched office. Olivia: That’s the marketing end of it, for sure. The goal is to get on those 'Best Companies to Work For' lists. And there's a powerful incentive. The book points out data from the Great Place to Work Institute showing that companies on their top 100 list have almost double the annualized stock market return compared to the S&P 500 average. Jackson: Okay, but that feels like the classic chicken-and-egg problem. Are these companies successful because they have a great culture and free kombucha on tap? Or can they afford to have a great culture and free kombucha because they're already wildly successful? Olivia: That is the million-dollar question, and Ungemah leans into it. He suggests it's likely a 'virtuous cycle,' where success breeds further success. But he also tells this anecdote from his consulting career where he’s seen executive boards make it an official company target to appear on a top 100 list. Jackson: Wow. So it’s not an organic outcome of being a great place to work; it’s a strategic goal to be seen as a great place to work. It’s a marketing objective. Olivia: It can be. And what does 'great' even mean? The Great Place to Work Institute's model is built on employee trust—do you trust your leaders, take pride in your work, and enjoy your colleagues? But other platforms, like Glassdoor, are based on anonymous employee feedback about things like pay, work-life balance, and senior leadership. They measure different things. Jackson: So a company could be a 'great place to work' on one list and a toxic workplace on another, depending on what you measure. It’s not a universal truth. Olivia: Exactly. The book argues that instead of chasing these external labels, companies need to get brutally honest about their actual workplace reality. Ungemah quotes these consultants, Hill and Tande, who pose a fantastic question for any leader: "What would we say or do to attract and retain people if we had to pay 20 percent below market?" Jackson: Oh, I love that. That question strips away all the easy answers. You can't just say 'we have great pay.' You have to talk about purpose, respect, autonomy, the quality of the work itself. Olivia: It forces you to define what you truly offer beyond a paycheck. And that offering, that unwritten deal, is at the heart of the entire employment relationship. When that deal is broken, it doesn't matter how many 'Best Place to Work' plaques you have on the wall.

Jackson: That idea of an 'unwritten deal' is so powerful. It feels like that’s where things really go wrong. It’s rarely about the formal contract; it’s about the promises that were implied but never spoken. Olivia: Ungemah frames this perfectly using the concept of the 'psychological contract.' It’s the set of unwritten beliefs and mutual obligations between an employee and an employer. It’s formed from the very first interview, through every interaction with a manager, through every company-wide email. It’s the real deal, the one that governs how people actually feel and behave. Jackson: And it’s so fragile. It can be broken in a heartbeat. Olivia: And often with the best of intentions. This is where the book gets really personal. Ungemah shares a story from early in his own career. He was just three months into a new job, still trying to figure things out and prove himself, when his division rolled out a mandatory annual self-awareness program. Jackson: Oh no. I can see where this is going. Olivia: He was forced to participate. His co-workers barely knew him, so their feedback was superficial. But because he was new and lacked confidence, he fixated on every tiny criticism. He said his confidence took a major hit, and he couldn't see any positives. The program, designed for development, ended up doing real harm. Jackson: That’s brutal. And I think everyone has a version of that story. Maybe it wasn't a 360-review, but it was a promise of a promotion that vanished, or a project they were passionate about that got canceled without explanation. It’s a feeling of betrayal. Olivia: It is. And the book argues that employee development is one of the most powerful ways to invest in that psychological contract. When a company invests in your growth, it’s signaling that they see a future with you. It’s a relational act, not a transactional one. But it can be easily subverted. Jackson: How so? Olivia: Well, think about it. Is the development for the employee's benefit, or is it just to make them fit the company's needs better? The book critiques how many programs are designed. The criteria are all based on organizational competencies, not the individual's broader career goals or motivations. It becomes about shaping a cog for the machine, not nurturing a person. Jackson: So the company says, 'We're investing in you,' but the unspoken message is, 'We're investing in you to be more useful to us.' And if your personal goals don't align, that investment can feel hollow, or even manipulative. Olivia: Exactly. It can actually weaken the psychological contract instead of strengthening it. The author makes a crucial point: "Investment in the other party is sometimes purely to strengthen the bonds of the relationship, rather than for short-term outcomes that benefit only one side." Jackson: That feels like the core of it all. Are we building a relationship or just executing a transaction?

Olivia: I think that’s the thread that ties everything together. It starts with the $57,000 mistake—a purely transactional view of an employee as a costly problem to be solved. Jackson: Which leads companies to build these shiny, marketable 'employer brands' to attract people more efficiently, which is still a transactional approach. Olivia: But what they often miss is the most important part: the human relationship, the psychological contract. They forget that employees aren't just assets on a spreadsheet; they are people who show up every day with a set of beliefs, hopes, and unwritten expectations. Jackson: And when you violate that contract, you don't just lose an employee. You create a cynic. You break trust. The real cost isn't just the fifty-seven thousand dollars to replace them; it's the damage to the people who stay. Olivia: That's the ultimate misplaced talent. It's not just hiring the wrong person. It's taking the right person and placing them in a system that breaks its promises, however small, and slowly erodes their motivation and trust. Jackson: It really makes you rethink your own career. Are you in the right place, or are you a 'misplaced talent' yourself? Are you in a transactional relationship with your job, or a relational one? Olivia: That's a powerful question for everyone to reflect on. What is the psychological contract you have with your work? And is it being honored? We'd actually love to hear from our listeners on this. Jackson: Yeah, that's a great idea. What's one unwritten rule at your job that matters more than anything in the official employee handbook? The thing that, if it were broken, would make you start looking for the exit. Olivia: Find us on our socials and share your story. We're fascinated by these unwritten rules that truly govern our work lives. Jackson: It’s a reminder that the most important parts of any job are never in the job description. Olivia: This is Aibrary, signing off.