"The cost of losing a particular employee at a particular point in time can be far greater than the individual contribution they will ever make. That cost is t

"The cost of losing a particular employee at a particular point in time can be far greater than the individual contribution they will ever make. That cost is transient because it depends on the state of a particular project." I think what you're trying to say here is that if a competitive company can time it right they can derail a project by scooping away talent at the right time (say, right before a product launch) which will cause greater harm at the moment than what the employee is "normally" worth (by "normal" I mean an average of their normal value output). I agree with this, but it is a failure of the company's compensation structure if this is the case. For instance, project base bonuses (upon completion of the project) should relieve some of this pressure because they would only get paid out upon completion of the project. Regarding "better products" do you mean in my analogy, or our real world case of companies competing for talent? In the analogy, the competition causes both company A and B to beat each others' products in order dominate the market (either by lowering price and improving the product). In the case of companies competing for talent, the "product" is really the overall compensation package. Some combination of salary, options, benefits, etc will attempt to be found that will keep the employee where they are.