Talent Management for Strategy Execution

## Assessing a company culture

The most important factor about human resources policies is how do they fit together? As a system, HR policies sometimes work together and sometimes clashes. They are embedded in the broader organization of the company including its processes, its stakeholders and society as a whole. The "fit" of the policies can, therefore, be regarded internally and also in the broader context of what the company is doing.

Because HR practices are supposed to fit together, imitating other companies' policies is not a guaranteed success. You can easily copy perks that are not aligned with your internal system and create misalignment. The important factor is to understand how the system works together and what could work in your organization. Derived from Porter's five forces, HR uses the five factors framework to asses a company's HR system : (1) the strategy, (2) the workforce, (3) the environment, (4) the organization culture, and (5) the technology.

SeeFive-factors framework for more information.

### The strategy

See Strategy for more information.

The strategy part of the framework is supposed to help you understand what are the key competencies of an organization. What can it do better than its competitors? Are they focused on customer services, innovations, quality? How do you plan to sustain this advantage? You need to know where the company is growing and how it wants to get there to understand how your HR system should adapt to it.

### The environment (external forces)

The environment part is about the social, political, legal and economic aspects of a business. In terms of social aspects, what in the expected role of the organization? what sorts of behaviors are encouraged or frowned upon?

WorkForce

Legal environment

Culture

Culture influence strategy and strategy influence culture. Marissa Mayer, when she arrived at Yahoo!, killed the "work from hom" to change the individualistic culture. She stated that people are more productive when they are alone but more creative and productive when they are together.

Work Organization

The trend now is "Agile teams". For it to work, you need people to be together. They cannot work from home.

## Worldwide organization challenges

### Why would you use international teams?

Being international give you access to a larger talent pool, 24/7 customer service and lower your labor cost (lower local salaries).

### Distributed team problems

* Low cohesion
* Low trust

### The challenges

* Have clear procedures, who is responsible for what

* Compensation: You will have compensation and advantages issues, related to different local regulations. Complete secrecy tends not to work and nor does full transparency. A good trade-off may be having a set of clear ground rules, even localized, and then leave some room for negotiation. Explain the rules clearly so everyone is aware of the why.

* Communication

* Time difference

* Differences in culture (work from home from example)

* Different hiring policies depending on the country leading to different group/individual dynamics

* Some teams may be closer to the decision-maker (culturally and geographically). This may be perceived as an unfair advantage.

### Possible solutions

* Clear procedures, clear tasks: what do you have to do, who is responsible
* Team building: how often? during the event, nobody is working so usually during the weekend but it can be a bother.
* Job rotation: how long? How often? If too short, no accountability, like a discovery internship. If too long, harder to manage.
* Video conferences
* Create mix groups
* Use smaller groups and use division of labor
* Local team leader
* The manager should meet all team members and move from offices to offices
* One on one meeting with the manager to discuss individual and team issues
* Top-down to bottom-up
* Meeting with the on-the-ground employee

How do you organize a meeting

## SAS

Sas gives a lot of nonmonetary incentive and few monetary incentives (not even commissions for sale person).

How can the company be so successful?

### Culture

the culture of this organization is Flat, team-oriented, Family, customer-oriented.

* Principle of reciprocity: I treat you well you put the effort.

* Intrinsic motivation: Feedback, skill variety, job with a purpose, flat organization, result-oriented, autonomy

* Efficient salary (competitive) yet if you leave the company you lose everything.

* Reduce absenteeism and presenteeism by providing everything you need. Good work-life integration not necessarily balance. It is not only being ok with work-life integration but value that.

* Social pressure.

### Hiring

Tech skills and "fit"

No star, no promotion.

They hire from research universities and people with a family culture.

Usage of referral to predict likely fit.

### Problems

A lot of fix costs and extremely low flexibility. No possibility go back once benefits are given

Collision toward mediocrity

Leadership and succession

Attracting talent

Growth

## Pixar

Open communication system, give people a voice

Feedback seeking behavior (dailies)

Creativity is about a group not one

Training, conference, networks

free of dept barrier

Accountability/ownership of the idea

Post mortem: Learning from positive and negative
What block Pro-activity
Hierarchy, incentive scheme, confirmation bias, internal politic

## M&A: Cisco

Should you keep the culture separate or merge into a new culture.

### Scale-driven deals

Companies that use a proactive approach to culture integration outperform their relevant sector by 5.1%. The ones that ignore cultural integration underperformed by 7.9%

### Scope-driven deal

Proactive approach to cultural issues outperformed by 6.4%. Ignoring it, make the company underperformed by 0.5%.
Human factors are usualy what make M&A go bad to worst. M&A is a stressful event for every employee, the mid. managers should be the ones paying close attention to their team and find ways to solve day-to-day problems.

### What are the common issues in M&A?

* There is a lot of rumors and uncertainty that could increase stress. What about my salary, my incomes, my job, my hours, ...
* People tends to quit. Executive turn over can increase from 10% to 30% in the merged companies compare to the non-merged company. This trend pics for the first 2 years but stays relevant even 10 years after the merger, 18% compare to the 10% industry standard.
* Employe are frozen due to moral loss.
* Active resistance to change.
* Explaining the "why" we need to do M&A. Create the case for it.
* The change in context changes the performance, even 3 years after the change. It is hard to just copy-paste results.

### How to do it better: Cisco

Why is Cisco doing so much M&A?  The changes in the market is really fast, product lifetime is 18 months. Players like Cisco had no time to adapt so they bought start-ups to move faster. However, in this field, the value comes from the people not the technology in itself.

### What is the culture of Cisco

The high-performance company, customer-oriented, collaborative, frugal, flat and fragmented.

### Cisco's best practice

#### Target company

Light on managers. Short term and long term growth potential.

#### Before the merger

Geographic proximity to keep the culture of the place. Close people tend to think alike.

They are looking at the similarity in culture, risk-taking, decision making.

Ready to deliver products or just launch a product.

#### After the merger

A clear process with steps.
lot of feedbacks.

Use of a buddy system with people that have already been through the M&A phase. People with a positive mindset about it.

Great resources (training, autonomy, etc.)

Retention incentives, stock options.

### How to switch from Buy to make

First create a database of people in the companies with their skills, certification, programming skills, experience, what they are good at, what they want to do etc. Create an inventory of everyone.

Create an intermal labor market to help people switch from one position to an other.

Build an university to develop the skills. Experence, exposure and

Change performance evaluation system. (from 12 to 2 pages, promoted manager-employee dialogue, performance feedback from others.

Introduced development processes.

Give coaches to executive

## Tactics

### Pay by piece: pay is based on the number of outcomes and their quality.

Advantages

* Reduce agency cost, align incentive (people are putting more and smarter efforts)
* Transform fix cost to variable cost
* Flexible
* Less supervision

Inconvenient

* Quality control
* More risk to workers and the attraction of workers
* 0 sum game, no cooperation incentive

Caveat

* You have to be able to fix the proper KPI
* Based on the fact that people always want more money
* Consequences of external factor that could impeach work to happen

## Restructuring and employment contract: ABB

Why do companies engage in restructuring? Lower cost, automatization of the work/increase in efficiency, repurposing/ change in strategy/focus, M&A

How does the market react to downsizing? Generally, the market is more favorable to asset downsizing rather than employee downsizing.

Why did they keep the information secret? to reduce rumors/increase productivity/increase retention, to get additional time to think, manage stakeholders, less uncertainty, avoid retaliation (less time to act against the company).

The downside is the lost of trust from the survivors, the risk of leaking information not including employee and manager cut you from key information.

Even survivors will leave you: Lost of structure/Friends, feeling of being next, break of the psychological contract (tacit engagement between employer and employee) Layoff of 1% of employees is followed by a 31% increase in turnover.

On top of that, you also lose creativity, higher is the R&D in the company the bigger the loss in %.

How do you keep people working:

Insure golden parachute, recreate the bound with the employee, try to rebuild trust. open conversation even do one on one. Train the managers to deal with the situation (phycologist, coaches, etc.)

How to mitigate the cost:

Fire the bad performer fist and lay off after. Separate the employee that are fired because they are bad and the other because they are not needed. Use objective criteria

## The transition from small to large organization

### Culture

* Your culture will move from unformal to way more formalization.
* Hierarchy tends to evolve either more structure (vertical) or less structure (horizontal)

### Strategy

* Your strategy can evolve, less creative to more creative

### Environment

* Stock options are used as "Golden Handcuff". They give incentives to stay and align incentives. Lower growth reduces the effect.$
* Pay scheme can change, from variable to fix or opposite

### Workforce

* With time, your younger employee becomes older. Their needs evolve and what you were offering before may not work anymore.
* Promotion conditions could change. It will take more time as growth slows. The previous need to fill positions may have put the wrong people at the wrong job out of necessity.

## Holacracy & Morning Star

Holocracy is about giving employees back the autonomy and accountability. By removing middle manager, you saved on cost, you hope to gain speed to market, you hope to increase accountability.

In businesses, there is always a trade-off between reliability and adaptability. the more you try to be consistent, the more rules you create and the less adaptable you became.

Managers are supposed to organize, guide, control, etc. In a company with no managers, why would people bother to work? They are getting autonomy,

Hiring policy must align with the culture, you must look for self-driven people that fit this kind of culture, that enjoy flexibility (adaptable in term of job), team players

Performance review should fit this culture, employe fix their own goals and are responsible for them

For compensation, you build a case and your colleagues need to approve it, can this generate envy?

Conflict resolution,

It not that everything is improvised, there is an autonomy guide for everybody.

Who is the leader/manager in this organization? A lot of it is self-control but you have peer control, a clan mentality. Clan mentality is not about competition but guilty of being bad. You have the fear of being ostracized

Pros and cons:

Higher motivation, more meaningful work however, too much fragmentation, hard to compensate, hard to hire

If you work on too many team, you may increase knowledge but you lose efficiency, you choose your battle. Same happen in a matrix organization where you have several managers. Too much fragmentation is a hard trade-off and hard to evaluate in a review, especially when you have to review yourself.

When you put a lot of flexibility in you job definition, a lot of self definition, how do you value and hire for this? You may need someone able to do 7 roles that are completely different.

Other pro and con, you have faster decision making (made more informed decision, more intrinsic motivation) but there are cost in delegating decision making (you have stronger informal hierrachies, how do you unlearn behaviors, if everything has to be settle with a meetings, how many meetings is too many meetings.)

The culture and the nature of the job matters, size of the organization, complexity of the organization

## Leading change in a organization

The pitfalls:

No sense of urgency, no powerfull enough coalition, lacking vision, under communicating the vision by a factor of ten,

How to you implement such a change without middle level management ?

## Non-standard employees

Three options for getting talent, the less risk you take the bigger the premium.

* Build -> internal development, taking a risk
* Buy -> Hire from outside, paying a premium to reduce the risk
* Borrow -> Temps, contractors, staffing firms, Truly just-in-time: even less uncertainty, even bigger premium

How do you choose, based on regulation, uncertainty of your market, your business strategy, your culture. How long you gonna need the talent, can you even keep your employee, can we even train them ?

Labor market used to be more stable, more long term. If we look at CEO, in 70 years, the average tenure time dropped from 10 to less than 3 years. This is driven by more and more CEO being ired for poor performance.

### Why use non standard workers

Not the same budget, specific skills for a specific time, easier to terminate a contract, reduce cost in the short term.(dont have to pay for benefits for example)

### The consequences of Temporary work

Up to 30% temporary work, profit and productivity increase, past 30% you actualy incure loses. Why? Too much temporary workers break the routine of business, you need a base of people who actualy know what to do. If your coversion from temporary to permmanent is low, then you can expect people to do the minimum needed to stay. Your permanent workers can provide the peer pressure needed to make them work, past certain point it is becoming less and less efficient.
Perms tend to show worse attitude and behaviors. (increase intention to quit, increase tension
How to mitigate cost
Provide incentives to perms to train temps, find the best providers and track their performance. Treat Temps as perms (same rules, same consequences), manage you perms expectation.
Create social interaction to mitigate the second class citizen problems, Evaluate direct and indirect cost and use DATA.

### The case of Motorola

Demand is cycling, to avoid hiring and firing, they focused on contingency workers to absorbs variation and reduce costs.

#### What were the problems

Decentralization decision, manager were making the decision individualy losing bargaining power with the providers of temporary work. Low bargaining power means lower quality and higher costs. This situation created inequality with the standard workers and gave them incentive to leave the company and become temp themself.

They also had problem with day to day management. Who is actually responsible for the temps worker, Motorola or the service provider ? theoriticaly they are both responsible.

You are not building the skils in-house, do you need them ?

## How to measure employee satisfaction

HR are not prepared to measure employee satisfaction. Usually, they are not versed in the art of using DATA, stats, etc. They moved from low-quality measurements to full IA. But do we really know what we measure? How biased in the AI? What is the quality of the DATA set used for calibration?

The classic measurement is a survey but you have to be careful about the value and relevance of the question you ask. Measuring employee evolution of global satisfaction or trust in their manager may be worth but how well does your manager know you personally, may not be as useful.

What are useful DATA to look for, for example, retention rate, time to hire, who are the good managers and why, who make the good decisions during interviews and why?

Trade-off:

Implementation, get the buy-in from middle management.

Books to read: Dying for a Paycheck, Why we work, Leadership BS.