Making People Your Competitive Advantage—Just Lip Service for Most Companies?
Edward Lawler starts out his new book, Talent, discussing how sick he is of hearing executives give lip service to their employees with nothing to show for it.
“Time after time I have heard senior managers say, ‘People are my organization’s most important asset’ or ‘Employees are number one in my organization.’ Sounds good, but in many organizations, there’s an enormous gap between the rhetoric and the reality,” Lawler writes.
So Lawler, who is the director of the Center for Effective Organizations at the University of Southern California, spends the next 242 pages describing what processes and procedures companies need to put in place to create what he calls a “human capital centric organization.”
There is a lot in Talent that you may have heard before: how to make sure you have the right HR people in place (business partners versus administrative staff); how to implement an effective performance management system (that evaluates and motivates); and how to develop your managers so that they are leaders and managers.
This is all important stuff. However, there was one chapter in Talent that I found to be really new and interesting. That was the chapter about corporate boards and talent management.
Often when we think about boards of directors we think about a room of former CEOs and finance guys who go over numbers and compliance issues. That’s pretty much what Lawler has found in his research as well.
But if a company wants to really use its people as its competitive advantage, then these boards of directors have to be informed on the talent management issues within the company. Not only that, but at least some of these board members should have some HR expertise—which, according to Lawler’s research, is a pretty rare occurrence.
Most of the time, former CEOs are the go-to person on the board about talent issues.
“There is no doubt that many CEOs have some understanding of the human capital issues that corporations face, but they rarely have the kind of in-depth expertise that a professional in HR could bring to a board,” Lawler writes.
If boards rely on finance experts for financial matters, why wouldn’t they have HR experts for human capital issues? he asks.
To address this issue, boards should not just seek out HR experts to join them as members, but they should also participate in training sessions on talent management issues, Lawler says.
While boards often undergo training on compliance and finance issues, they don’t do anything with regard to talent management. This is really a problem considering it’s the board’s job to make sure companies have proper succession planning processes intact. How can they oversee this if they don’t fully understand it?
Lawler suggests that boards assess their companies’ talent by acting as “mystery shoppers,” either by dropping by companies and chatting with employees or watching focus groups.
Lawler proposed that boards set up “human capital committees” to delve into these issues.
But probably the most controversial suggestion that Lawler makes when it comes to boards is to have board members go through performance reviews in the same formal way that executives should be evaluated.
He notes that more than 80 percent of board members say they do an effective job. But most of these individuals are evaluated informally.
Lawler described how he once asked a board chair about this, and the chair suggested it would be insulting to establish a formal evaluation for board members considering the amount of time they are giving to be on the boards. But, as Lawler points out, aren’t these individuals being paid hundreds of thousands of dollars to be on these boards?
I think Lawler is right in saying that a company that really focuses on talent management should have a board of directors that does the same.
I don’t think that his vision will become the norm anytime soon, however. Particularly in the wake of Sarbanes-Oxley and SEC rules on executive compensation, boards are busy enough with financial matters to take the time to focus on talent management.
Maybe I’m just a skeptic. What do you think?
April 14th, 2008
I am usually skeptical of books that promote a specific company or corporate mission. So when I began reading Finding Keepers: The Monster Guide to Hiring and Holding the World’s Best Employees, I was a bit distrustful. And as someone who covers HR, I very much doubted that this book would tell me anything that I hadn’t already heard before.
But I have to say that I was pleasantly surprised. The 214-page book is packed with good information and tips for HR executives and recruiters on how to identify and keep the best talent.
Nothing in the book is particularly groundbreaking. But the authors—Steve Pogorzelski, executive vice president of global sales and customer development at Monster; Jesse Harriott, vice president of Global Monster Insights; and Doug Hardy, who runs Monster’s publishing program—do make a strong case for why companies need to approach recruiting as they do marketing.
True to the title, the authors do promote Monster, but not in a way that is offensive to readers. There is a range of perspectives from executives at various companies, including Deloitte, Nationwide Financial and Valero Energy.
In thinking about recruiting the best employees, the authors note that 80 percent of potential candidates are employed, but are “much less attached to their current employer than workers historically have been.”
Not all of these employees are out there looking for new jobs, but they are still willing to go if the right opportunity presents itself. HR executives need to be aware of these employees not just for recruiting purposes, but because many of these “poised employees” are their own workers, the authors note.
The problem with recruiting today is that too often companies approach recruiting as a weeklong transaction. Finding Keepers argues that employers instead should view the employee engagement cycle in three phases: attract, acquire and advance.
The authors say that companies usually peter out after the acquisition phase, and thus good talent doesn’t stay around for very long. The conversation about finding the best talent, therefore, can’t just be a discussion about how to improve hiring practices. Companies need to figure out how to keep these people after they have been hired.
But the first step is to attract the right candidates, and Finding Keepers provides solid ways that recruiters can go about doing this. The book provides very practical advice about how to word a job advertisement and how to make sure the interview experience is positive for candidates. Again, not rocket science, but these are things that—at least in my experience—many employers brush aside.
“The dynamics between employer and candidate during the acquire phase set the tone for the relationship that follows,” the authors say.
This means that companies might want to consider keeping in touch with their second-best candidates in case they need them in the future. For example, the authors suggest reaching out to these “silver medal candidates” and finding out what they thought of the interview process and what they would change. This is just an easy way to keep these candidates engaged and increase your chances of being able to hire them down the line.
Another practical, yet innovative, suggestion from the authors is for employers to understand why employees leave. Too often in exit interviews, the HR executive asks, “Why are you leaving for this other company?” The authors say the question should be “Why were you looking for a new job?” Again this isn’t rocket science, but I bet it would greatly help companies understand why their employees leave.
As I was reading this book, I couldn’t help thinking about all of the bad interview experiences I have had in my career. It felt like dating—waiting for them to call and often never hearing back. Once, it took a year for someone who interviewed me to call back. A year! Our initial interview went well, but he never called to tell me that the company gave the position to an internal candidate. A year later, however, this person called me out of the blue for a different job—he still had all of my news clips and résumé. Clearly, I had made an impression on him, but his failure to reach out to me resulted in my feeling less than excited about going to work for him.
Are companies really sincere about rethinking the way they find and acquire talent? Or do they just assume that once the market goes sour, good talent will come banging on the door? Let me know what you think will happen.
February 28th, 2008
In his new book, Talent on Demand, Peter Cappelli attempts to address an issue that I would hope all companies are thinking about today: how to manage the unpredictable demand for talent.
Unlike other books on talent management, this book uses terms and examples that CEOs and CFOs can understand. Instead of just talking about turnover, productivity and other HR metrics, Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School, talks in terms of making money: “And making money requires that you understand the costs as well as the benefits associated with your talent management choices,” he says.
The gist of Cappelli’s book is that most companies are relying on outdated and ineffective strategies to develop their internal talent, while being way too dependent on outside hiring.
For example, many companies still use a development model for employees that assumes they will be with them for their entire careers. Under what Cappelli calls the “Organization Man” model, companies train employees to learn the skills that are specific to their business needs, with the understanding that those employees will grow with the company.
But the reality today is that companies can’t predict what their talent needs are going to be 10 years from now, and even if they could, it’s not likely that their employees will stay with them for that long.
Most employers have realized that and thus have become overly dependent on outside hiring, which has its own set of challenges.
Cappelli argues that employers should instead adopt “on-demand talent management,” which means developing employees according to competencies that could be valuable no matter where the business is in 10 years.
He advocates on-the-job training, but cautions companies against rotational assignments, because too often good talent ends up waiting on the sidelines for their rotation to come up, and nothing is more frustrating to an employee than waiting. Other ways that companies can get the most bang from their buck in on-demand training are:
- Peer training, where employees can volunteer to mentor others.
- Outside training, where organizations lend employees to outside charities or even to clients (as consulting company Mercer does) to learn from those experiences.
- Cost-shared training, where employees are asked to foot some of the bill for their outside training. One way to do this is through training wages, where employers pay employees less while they are in a training program. Another way is through tuition assistance programs, or having them go through training before they take on a job.
All of Cappelli’s points are pretty interesting, and companies should take many of them seriously.
But the real problem today with companies is that they too often give lip service to employee development, but fail to follow through. I can’t count how many times a week I hear companies say how much they value their people, that they’re the No. 1 asset, etc. But when the going gets tough, those same people are the first to get the boot.
Since we seem to be heading into a recession, I wonder whether companies will embrace Cappelli’s ideas on developing talent, or will just resort to the old ways of mass layoffs, with the hope that they will be able to find the talent again when the market picks up. What do you think?