Most CEOs I talk to grade themselves on three numbers: growth, profit, and retention.

The growth number gets a strategy. The profit number gets a plan. The retention number gets a wish.

That mismatch is the whole problem.

For two decades, my friend and former McKinsey colleague Rohit Bassi has been operating businesses and reshaping management teams, more than a hundred of them, across roughly 160 P&Ls. He has a name for what most companies are missing. He calls it PQ. The People Quotient.

In our recent conversation, we got into why almost every CEO already has the pieces, and almost none of them are running it as a system.

Companies Have IQ. Companies Have EQ. They Also Have PQ.

Companies Have IQ. Companies Have EQ. They Also Have PQ

Rohit’s framing landed for me the moment he said it.

Individuals have EQ and IQ. I say companies have PQ. And the difference is that EQ and IQ are innate abilities, whereas PQ is something you can invest in.”

In his data, pulled from hundreds of P&Ls he has analyzed financially, operationally, and on employee outcomes, the companies that pulled away from the pack didn’t have a magic culture deck. They had three things working together: a leadership team that could lead, an organization that was designed for the work, and a talent operation that could feed humans into both.

Every company has an element of PQ because they’ve got leadership, they’ve got some design, and they’ve got a process with which they attract people. PQ as a concept might be new, but the elements are already there.

The unlock isn’t adding a fourth pillar. It’s connecting the three you have.

Pillar One: Leadership That Can Execute, Build, and Retain

Rohit’s three-trait test for leaders is the simplest, hardest screen I’ve heard in a while.

  • Can they execute? Can they actually drive the strategy through the organization?
  • Can they build? Can they form competent, committed teams under them?
  • Can they retain? Customers, yes, but also the humans inside the business.

He told the story of a small landscape business in Northeast Pennsylvania that the company had acquired years before he arrived. It was losing money. He walked in expecting a Lean Six Sigma problem and found a leadership problem instead. He coached the incumbent GM for six to eight months and eventually accepted the truth most operators wait too long to accept.

You can’t coach everyone. There is a plateau.”

What happened next is the part operators need to sit with. He brought in a new leader from outside the country. Same hundred people. Same routes. Same trucks. Different leader.

The game completely shifted. People started to get really energized. Individuals started to step up — and it was the same people, different leader.

That sentence is the cost of holding on too long. The good people leave first. The average performers stay because weak leadership feels safer to them.

When asking Rohit to break “execute” further down, he gave three sub-traits worth circling: the ability to drive change, the ability to empower the team to do the change, and the velocity to move while the market is still moving with you. Slow leaders don’t just lose market, they lose commitment.

Pillar Two: Organizational Design: The CAST Model

When Rohit talks about org design, he is not talking about an org chart. He is talking about four variables.

  • Clarity – of roles, of titles, of strategy, of what each person is being asked to do
  • Accountability – single nose to touch, not distributed mush
  • Structure – reporting lines and incentives that actually point in the same direction
  • Trust – the variable that makes the other three productive

He is unequivocal on which one matters most.

A team that is not the best team you can get, but they all implicitly trust each other, will fire on all cylinders in a way that can beat a team full of rock stars that don’t trust each other.”

This converges with what I’ve been writing about in our Sunflower Model of human flourishing that psychological safety and belonging are not soft variables; they are operating multipliers. Trust is what lets a team work through conflict instead of around it. The moment you hear “that’s fine, I don’t care, it doesn’t matter” in a meeting, that’s not agreement. That’s the start of a slow demise.

In addition to Rohit’s CAST framework, most organizations are designed for silo behavior and then surprised when collaboration doesn’t happen. If you design for clarity, accountability, structure, and trust at once, you are designing for collaboration as a byproduct. You don’t have to bolt it on later.

Pillar Three: Talent Operations: Hire Like a PE Deal

Rohit wrote his book, People Priority, because he saw the same three failures repeated everywhere on the hiring side: lack of consistency, lack of methodology, and lack of discipline.

You can’t call it a process if you change it every time.”

His reframe is the one most small and mid-sized businesses need to hear. He calls it the M&A mindset for hiring.

Spend less time with more people and more time with less people.

In private equity, no one looks at 700 deals with equal energy. You filter ruthlessly to ten, then to five, then to two. Hiring should work the same way, the rigor should increase as the funnel narrows, not stay flat. Most hiring processes do the opposite: equal energy at the top, dwindling rigor by the time the offer goes out.

If your talent operations are inconsistent, your leadership pipeline is inconsistent. If your leadership pipeline is inconsistent, your retention is inconsistent. And if your retention is inconsistent, you are paying the highest hidden tax in your business.

Why Chasing 100% Retention Is Costing You

Retention is not always good.

That may sound strange in a world where leaders celebrate lower attrition as a universal win. But as Rohit pointed out in our conversation, the healthiest companies are not necessarily the ones trying to retain everyone. They are the ones clear enough to know who is worth retaining.

Why Chasing 100% Retention Is Costing You

85 to 90% is a good range. Beyond 95%, just be mindful, are you holding onto all the people for just hitting a retention number, or should some people actually move on?”

That distinction matters. There is good retention: keeping the people who are committed, capable, growing, and helping the business deliver for customers. Additionally, there is bad retention: holding onto people who lower the bar, drain energy, resist accountability, or quietly signal to everyone else that mediocrity is acceptable.

The cost of bad retention rarely shows up cleanly on a dashboard. But people feel it. Your strongest performers notice when low ownership is tolerated. Your average performers notice when the bar is negotiable. Your customer-facing teams notice when leaders avoid the hard people decisions.

Eventually, your customers notice too.

This is why retention is not simply an HR metric. It is a leadership trait.

As Rohit said, he has not seen a company scale without retaining its good PQ, its good people quotient. The companies that grow consistently are not just better at strategy. They are better at keeping the people who create value, build trust, serve customers, and raise the standard for everyone around them.

This connects directly to the work of MIT professor Zeynep Ton and her Good Jobs research. If you want to win with customers, you first have to win with employees. A stable, skilled, motivated workforce creates a better customer experience. Better customer experience drives loyalty. Loyalty drives growth and profitability.

But you do not need a research study to test this. Look at your last quarter. Who left? Were they your top-quartile people or your bottom-quartile people? Who stayed? Are they raising the standard or quietly lowering it?

The question is not, “How do we get to 100% retention?” The better question is: “Are we retaining the people who help us become the company we are trying to build?”

What to Do This Week

If Rohit’s framework lands for you, here are four things worth doing while it is fresh.

  • Run your top team against Execute, Build, Retain. Not who is nice. Who actually does these three.
  • Score your design on CAST. Clarity, Accountability, Structure, Trust. Pick the one with the lowest score and invest there first.
  • Audit your hiring process the way you’d audit a deal pipeline. Is rigor increasing as the funnel narrows, or flat?
  • Stop celebrating 100% retention. Celebrate the right 87%.

Listen to the full conversation

PQ is not a slogan or another leadership acronym. It is a way to look honestly at whether your leadership, organization design, and talent systems are helping your people, and your business, perform at their best.

If you want to go deeper, listen to our full conversation on the Flourishing Edge podcast.

Learn more about Rohit Bassi on LinkedIn.

Listen to the podcast with Ashish and Rohit Bassi above, You can also listen on Apple Podcasts.

Access and subscribe to all of the episodes of the Flourishing Edge Podcast here.

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