Talentism

Who Are You Going to Blame When Your Straight "A" Student Doesn't Do Well?

The Corporate Executive Board is one of the most respected business think tanks in the world. The Corporate Leadership Council is the arm of the CEB that deals with HR issues. In 2005 the CLC conducted a study called "Realizing the Full Potential of Rising Talent: A Quantitative Analysis of the Identification and Development of High-Potential Employees". While the study is only available to CLC members, it should be required reading for every educator, academic and business person.

The study is long and contains much interesting information. For instance, the survey behind the study found that 78% of CFO’s were focusing on revenue growth over cost control. At the same time, the study found that 74% of respondents to the survey indicated that “skill / leadership gaps have a negative impact on product innovation.” A Chief Human Resources Officer in the study is quoted as saying that the skills gap is troubling because:

“These are the people we will call upon to lead us to stronger business performance over the years to come. They will launch new businesses, they will find new ways to strip out costs, they will build better customer relationships, and they will drive innovation. Really, the future of the organization is in their hands.”

The study went on to say that “Employee potential grows when employees are pushed outside their comfort zones in news, personal (and at times painful) ways.” The study examined which of these "growing experiences" had the most beneficial impact on the employee’s ability to grow. 22 factors were sited. Of those, only 4 were factors that are learned or reinforced in education institutions:

• Using specialized skills for daily tasks
• Engaging in business forecasting or planning
• Understanding markets, competitors or customers
• Designing new products (which I would argue is actually a creative exercise)

Only one of those factors ("Using specialized skills for daily tasks") makes into the top five (number 5, actually).

And the top three experiences that have the highest impact on employee growth?

• Modifying work to adapt to changing circumstances
• Creatively solve problems
• Persuading senior managers to take different actions

All three of these capabilities are actively and purposefully destroyed in K-12 education. Students are penalized for changing assignments with diminished grades (as my previous example about my son’s homework shows), penalized for solving problems in new ways (try telling a math teacher that you got the right answer by solving the problem in a different way and see what reaction you get), and teachers almost always discourage students from engaging with them openly about things that could be done differently in the classroom.

So let me frame this for you directly:

The Corporate Leadership Council asks it’s members (which include most of the Fortune 500) "What is important to your business?"

The members overwhelmingly say “Growth.”

The CLC then asks its members “What’s stopping you from growing?"

The members overwhelmingly reply “Lack of people who can innovate.”

The CLC then asks “What experiences would help the people who you most rely on (your high potential employees) to grow so that they could help you innovate?"

The members reply “Unlearning what they learn in school.”

Most kids show up to school creative, curious and brave. Most kids leave school programmed and afraid. As a parent you might be able to rationalize this destruction if it helped your kid live a healthier, happier and more productive life. But as this shows, it doesn't. It actually does just the opposite: if your kid is getting straight A's there’s a good chance they won't be a high potential in a world that demands innovative approaches and innovative thinking.

Think about that the next time you tell your kid the only thing that is important is getting good grades. Who are you going to blame when they eventually get bad reviews at work?

Why Nobody Describes the Elephant in the Room

(I would like to thank John Sumser for putting this back on my radar… I have wanted to write this piece for a while.)

The parable of the six blind men and the elephant has been recounted in many forums. While the original parable first originated in India and was passed as oral tradition through Hindu mystics, the English version of the parable was popularized by a early 19th century poet named John Godfrey Saxe. The full text of his poem is included at the end of this post.

The parable (and its representative poem) should be required reading for anybody who makes their living in the business world, regardless of whether you are an artist, engineer or accountant. In my 23+ years in business I have yet to see a critical business meeting that didn’t fail (to some degree) at this most fundamental level of understanding: we are each telling different stories about the same thing, each of us passionately committed to our version of the truth even though we don't have that much on which to base our opinion.

The last verse of the poem says it beautifully:

So oft in theologic wars,
The disputants, I ween,
Rail on in utter ignorance
Of what each other mean,
And prate about an Elephant
Not one of them has seen.

How many of us have seen this played out in meetings? More importantly, how much competitive advantage would a company create if it had someone at the meeting who could take the various impressions of the blind men and coordinate them into a description of the truth that everyone could “see”?

Who is that person? The coordinator of information must be someone who is willing to take the risk of reflecting back to everyone what they are saying. Sometimes that will be a person with a fancy title, but more often than not it will be someone who just raises their hand and says "Here is what I am hearing, and here is how I think it all fits".

But regardless of who the leader is, it is painfully clear that the “wise men” must be all of us. Each of us must be prepared to bring our version of the elephant to the table, as well as listen to everyone else's version of "the truth". And even more importantly, each of must be willing to ask that we have access to all the original stories of every other person at the table. We must demand transparency, and then show the wisdom and emotional intelligence to demonstrate that we are worthy of the trust and honor that transparency demands. For when a person who is perceived to have power starts the conversation, things often go painfully wrong. This lesson is best expressed by another parable based on elephants and wise people:

Six blind elephants were discussing what wise men were like (never having seen one).  Failing to agree, they decided to find one and determine what it was like by direct experience. The first blind elephant felt the wise man, and declared, “Wise men are flat.” After feeling the wise man, the other blind elephants agreed.

This parable shows the danger of having the powerful describe reality: they can literally flatten the data before it ever gets investigated by anyone else. I can think of many situations where this has happened in public policy (the Mexican American war, the Spanish American War, Vietnam… to name just a few). But it is every bit as common in business. Enron happened because Jeffrey Skilling flattened the original data such that everyone else in the company had to react to his version of the truth. Since the first person or group dealing with the data has the (either unintentional or intentional) ability to change the data by their reading of it, every participant thereafter must react to the changed data rather than original information. This is how groups so often go wrong: they are all reacting to the same story, and that story is just plain wrong.

So we not only need someone at the table to coordinate the stories of all the wise people, none of whom has ever seen the elephant but all of which have a strong opinion given their personal experience about just what the elephant is. We also need someone who is making sure that there is no one person who is defining the initial reality, who is getting to the data first and therefore changing it so that all the opinions that come thereafter are simply an affirmation of the first person’s ability to change the information by their force.

Most companies ignore these structural issues altogether. They assume that leadership, by its definition, is the role of describing reality to the followers. The ability to change data so that others have to respond to that world-view is often an assessed capability of what is considered leadership potential. But in a world where everything changes quickly and where the issues being confronted are so enormous that the best any single person can do is to feel some small part of a gargantuan beast, leadership now must be something much different. Leadership must be ensuring that we are all sharing our part of the story, and that no single story becomes dominant before the rest of the stories are in. Then, rather than telling us which story is right (since the leader is often as blind as everyone else who is feeling the situation), the leader must explain how the stories coordinate into something like a reality that all of us can embrace and react to.

It may seem trite or overly simplistic, but just getting your story straight may be the single greatest competitive advantage you can create.

The full poem follows. Enjoy...

Coach Luke or Embrace Darth?

“Darth Vader or Luke Skywalker: who would qualify for a career coach?” That was the interesting question posed at a meeting I attended the other day. After some quick conversation, most of the participants agreed that Luke was the better candidate for a career / personal development coach. The reasoning was straight forward: Luke has trouble controlling his emotions and is a bit of a loaner. He’s a lot of potential but mostly gets mixed individual results. Darth, on the other hand, has already had a bad coaching experience (the emperor), doesn’t adhere to the stated values of most companies and is evil incarnate. Pretty easy decision, right?

Wrong. Like most business discussions, the need to get to the “results phase” of the conversation completed obviated and eclipsed the two basic philosophical questions that would make-or-break any possible response: “What problem are you trying to solve with the coaching?” and “What is acceptable behavior to achieve business results?”

Just for fun, I thought about other ways to start the conversation. What if you asked everyone at the table “If you had a choice between being Luke Skywalker or Darth Vader, who would you chose?” Any doubt as to the outcome of that poll? I would then have asked “OK, let’s say Luke fails in the end and Darth succeeds. Who would change their vote?” Again, I am guessing that most people would stick with being the fair-haired fighter for truth and justice rather than the plasticized epitome of evil.

Then I would take a different tack. I would ask “Who has more integrity… Darth Vader or Luke Skywalker?” Everyone would laugh knowingly and say “Why Luke, of course.” And they would be wrong. There are several times where Luke withholds the truth from people who need to know it (as when he fails to tell Leia that they are siblings), while Darth always tells the truth. As a matter of fact, I am pretty sure that you can go down any business-book definition of success and find that Darth is a better “business person” than Luke. Luke consistently fails to achieve milestones. In fact, if he didn’t achieve the one big objective he is after (become a Jedi, blow up the death star, redeem his father, save the galaxy for freedom and justice) Luke would be widely considered a bad employee. He has lots of character defects, whereas Darth is strong, confident and obedient.

Let’s face it, Darth Vader is the perfect employee and Luke is a bit of a knuckle-head who is a loose cannon. Darth follows the company line; Luke is a rebel. Darth is a commanding leader; Luke is a rural hick who doesn’t really fit it. Darth can mobilize resources quickly to achieve his objectives and is feared inside of his own organization; Luke is a bit of a wimp who always seems to need everyone other people’s assistance to achieve his objectives.

And yet, here we are, all keeping our hands raised in a vote for being Luke. What gives? And, even more fundamentally, why the hell would you try to change Luke from being the youngster flibbertigibbet he so often seems to be when he is the one guy who consistently saves the universe from evil and destruction? Why would you get the coach for Luke?

I think if you went through this exercise at any company across America (and perhaps Western Europe too) you would find the same fundamental disconnect: everyone wants to be Luke and everyone thinks Luke is the one that needs coaching. I have a theory about why this happens: we all see ourselves as the potential hero from a young age, but we have been programmed to believe that a corporate environment can’t accept the risky behaviors of heroes. So we quietly dream about who we want to be and then squelch that dream when we put on the suit and walk through the lobby door. Once the corporate armor is on we willingly (and evenly eagerly) accept that our individualistic tendencies towards intrepidness and fearlessness need to be “coached” out of us so that we can plug into the larger paternalistic / militaristic structure that corporations purposefully create to avoid surprising shareholders and getting executives fired.

I am not here to make moral arguments about whether crushing human beings into conformity is a good thing or a bad thing. You can be he judge of that. I will propose that today’s organization is best served by heroes, and that the nature of a hero is that she makes a lot of short-term mistakes on the way to a glorious end. You might want to consider that before you try to take your Lukes and turn them into Darths.

Recruiting in the Creative Age over at SimplyHired

As I announced here :

Talentism will be getting less content, and the content that it does get will be more around business strategy, global HR best practice and cutting-edge technology...  SimplyHired is about to do something really cool with it’s blog and you can read my thoughts about recruiting and the job seeker experience over there.

It appears that I am true to my word, as during the last month I have put up only 3 posts on Talentism but 10 posts over on the SimplyHired blog.

My original intent on the SH blog was to put up two paragraph hit pieces that would generate conversation. But I don't think in two paragraph chunks and so have found myself putting up the typical long-winded explorations of conventional wisdom that I have typically left for Talentism.

The present series around explaining and exploring "New Rules for Recruiting in the Creative Age" (originally posted here) might be worth your time if you are given to more philosophical flights of fancy. But even if you aren't it is worth noting that the role of the HR and recruiting department, and the practitioners therein, will be changing pretty radically. I may be long-winded and didactic, but I feel confident that the points contained within these posts will come to bear within the next three years. In fact, I believe many are already in progress and impacting the recruiting profession.

Rules for Recruiting in the Creative Age
Porfolios
Marketing & Sales
Be a Business
Run as a P&L
Real Artists Ship

As always, thoughts and comments welcome (especially over at SimplyHired!)

U.S. Education: "My Incompetence Fragged your Business"

Mr. Sumser talks today  about a subject near-and-dear to my heart – the massive gap between what the U.S. education system provides and what the companies of tomorrow will need.

Implementing an ATS is a lot like trying to change the United States education system. You start  at your new implementation customer and find out within a couple of weeks that their processes, systems and objectives are almost completely unchanged since the late 50’s (around the time that the U.S. educational system got scared by the notion of pink satellites raining bombs from space). You, being the clever consultant, realize that it is going to take almost a year to get through requirements gathering, specifications development, process design, systems selection, installation, training and process improvements. So (and here I am about to make a real stretch, because ATS consultants rarely if ever do this), realizing that the customer’s business may be radically different in a year than it is today, you start asking questions like “Where is your business going? Who will be your customers a year from now? What kinds of products will you deliver to them? What kinds of skills do you need to deliver those products? And (most importantly for your job) what kinds of tasks will recruiters undertake to find those newly skilled people?” And, still quite the clever if almost completely mystical consultant, you develop your specification against that future need.

You take this spec to the employment manager, who has a vested interest in bringing in cool new technology but who wouldn’t recognize a “web 2.0” if he got caught in it by a giant man-eating spider, and they (the employment manager) laugh and says, not too kindly, “This doesn’t address any of the problems I had last week!” To which you reply, fully prepared (remember, I said this consultant was mythical, so I can endow him or her with powers that consultants rarely display) “Sure, but you won’t have the same problems in a year that you have now.” And the employment manager thinks “Hey, sport, my boss isn’t any rocket scientist, and if I go to them and tell them some story about how the world is going to change when they are confronted with all these problems today I am going to get fired” and instead says “You know, people would be more likely to use the system if they felt it addressed their needs today rather than the possibility of their needs tomorrow, so let’s just focus on what’s wrong today.”

And thus the ATS is implemented and, almost universally, the chorus echoes from the cubicle walls “This doesn’t address the problems I am facing today! It is worthless!” But by that time the notoriously transitory employment manager is on to their next job, a big “Implemented ATS” on their resume.

I take you through this adventure down the modern business rabbit hole as a way of exemplifying why the modern public education system has such a wide gap between what companies will need when their young charges graduate, and what they will produce anyway.

If you were a consultant coming into the education system to help them reform, you would quickly realize that their processes, systems and objectives are almost completely unchanged since the 50’s (sound familiar). Whole language learning has come and gone, as has new math and other erstwhile “fuzzy” programs that were purported to help students learn new and exciting ways to read, write and compute, but each of which failed miserably. You would do a little research and find a recent New York Times Magazine article called What it Takes to Make a Student which shows that, even with the “No Child Left with a Chance” law voted into law (and then ignored by everyone except the people who withhold money from local schools because test scores aren’t going up):

(D)espite the glowing reports from the White House and the Education Department, the most recent iteration of the National Assessment of Educational Progress, the test of fourth- and eighth-grade students commonly referred to as the nation’s report card, is not reassuring. In 2002, when No Child Left Behind went into effect, 13 percent of the nation’s black eighth-grade students were “proficient” in reading, the assessment’s standard measure of grade-level competence. By 2005 (the latest data), that number had dropped to 12 percent. (Reading proficiency among white eighth-grade students dropped to 39 percent, from 41 percent.) The gap between economic classes isn’t disappearing, either: in 2002, 17 percent of poor eighth-grade students (measured by eligibility for free or reduced-price school lunches) were proficient in reading; in 2005, that number fell to 15 percent.

The most promising indications in the national test could be found in the fourth-grade math results, in which the percentage of poor students at the proficient level jumped to 19 percent in 2005, from 8 percent in 2000; for black students, the number jumped to 13 percent, from 5 percent. This was a significant increase, but it was still far short of the proficiency figure for white students, which rose to 47 percent in 2005, and it was a long way from 100 percent.

So, being the clever consultant, you seek to discover what exactly will make for a “good employee of the future.” What skills and abilities will someone need 20 years from now? You quickly that:

• Information gathering will increasingly be mechanized and automated, but this will make interpreting the meaning and value of that information increasingly difficult.
• Most work will be done by distributed groups of individuals who will need to be able to communicate in short hands that are richly descriptive to the respective reader but almost meaningless to people outside the group.
• Information retrieval and number calculation will be nominal problems, highly commoditized across any one of a number of systems.
• Individuals at an early age will expect to be able to form clear objectives, select the team that will achieve those objectives, assess their team by their own standards, share disproportionately in the benefit of the gain if they succeed and be fired quickly if they don’t.
• Teachers will no longer be considered “the font of all knowledge” since it will be virtually impossible to keep up with the volume, diversity and velocity of information needed to bring our kids into the 21st century. Instead of tacit knowledge, teachers will be evaluated on their ability to inspire, innovate, challenge and integrate people and knowledge being applied towards reinforcing the social, intellectual and creative capacities that almost all humans beings natively posses.
• Since society will still, inevitably, require person-to-person (f-2-f in the common lexicon) interactions, and since students will decreasingly have early childhood exposure to the physical presence of other children as they spend more time in virtual play and communication, a special emphasis will have to be spent on teaching emotional intelligence, group dynamics, systems perspective and economic theory (none of which is widely covered today).

(By the way, you will notice that the modern MMORPG video game includes many of these elements, and that John’s assessment that the “My Gamer Fragged Your Honor Student” is a harbinger of bad things to come is exactly right.)

So you go to the school board and provide a spec that recognizes these changes and calls for sweeping overhauls in processes, systems and educational objectives that, since they will take about 20 years to fully implement, should be just about right by the time they are completley integrated into the education system. You present these findings to the district superintendent and… well, you read the rest of the story above. The superintendent says “That’s nice, but the school board isn’t going to get this, the education bureaucracy isn’t going to fund it, the teacher’s union is going to fight it and the parents are just going to want to know how their kids can get ‘A’s’ in this stuff.” And they will be right - especially about the parents, who may be amongst their kids worst enemies in helping their kids prepare for the future.

And where is business in all this? The ultimate consumer of the services and products of the educational system is sitting on the sidelines warming it’s thumb and hoping that the next quarter’s results won’t be too bad. Trying to invest in the K-12 education infrastructure to dig us out of this hole, focusing some time and energy convincing shareholders than investing in education is better than having a corporate jet, investing in their own training systems to address the gap left by the educational system (university level included) and otherwise trying to play a leadership role in solving this huge problem – well, all of that just doesn’t make the strategic radar of the average large business.

Every executive suite should be required to read John's post and the New York Times Magazine article and think of the following: those kids that can’t read and can’t add are coming your way. Millions of them. Your corporate future (and the democracy which made it possible) are hanging in the balance.

Talent and Spiritual Identity

I had the opportunity recently to talk to some people about their jobs. They came from different countries, different backgrounds and represented diverse genders and ethnicities. I started by asking the following question: “Picture that you have decided to retire. You feel content that your time at work has been well spent. Tell me about what you have accomplished with your professional career.”

The responses were highly individual and unique. But all answers shared one common attribute: everyone wanted to know that their work had contributed to making the world a better place. Some people defined “the world” as their workplace, where many others focused on much broader social, economic and political contexts. Not one person answered from an economic perspective. Nobody said “Well, I’d like to be as rich as possible.” Not one.

This was not a scientific study. There is no statistical validity to the results, But the exercise reinforced for me that people hunger for meaning in their life, and since work has become an increasing part of their identity, there is an ever growing desire for individuals to be able to equate the value of their daily work with impact beyond their pocketbook.

From an HR perspective, I believe this will be the greatest challenge that medium to large-scale companies will face in the coming 20 years. How do you balance the need to squeeze every last ounce of waste and inefficiency out of your processes, every last penny of value from your resources while creating systems that summon the human spirit? Or, to put a capitalist (talentist?) spin on the question “Which for-profit organizations will define spiritual fulfillment as their competitive advantage.”

There is a real danger that companies will look for easy answers to this question, much as nations have over the last 2000 years. Why spend the time to define a treacherous path that innovates spirit-summoning systems, that finds the good and the profit in connectedness, compassion and truth when you can coopt a religious theme and let the holy men do the heavy lifting? It may seem laughable now that large corporations would shift from secular worship of mammon to managerial religious zealotry, but in a world where talent is scarce and management is confused, benchmarking successful spiritual organizations will seem like a logical business decision.

But the spiritual problem that companies face is not a belief in a higher power. People have seen 1,400 CEO’s be fired or walked out the door this year alone. The higher power of the working class is spending too much time in minimum security to be worthy of idolatry. The spiritual problem confronting today’s organization is a belief in their own creative capacity and the inherent risks that come with that ability. The hierarchical control structures of work are designed to limit the unpredictable variations of the human being. When muscles or mind are the key component of the human cog then you must homogenize the diversity of the human spirit in order to maximize the utility of the human body. And therefore it was accepted (and rarely contradicted) as the appropriate and conventional wisdom that seeking a profitable path between the needs of fickle buyers and the opportunity of the unpredictable heart was a fool’s errand. The epithets “soft” and “wishy-washy” were issued with snickers and sneers. When work was solely about the accumulation and preservation of capital, and when the acquisition of that capital was dependent on the ability to run machines or maximize the value of information, tapping into the infinite creative capacity of the human sprit was seen as sure path to disaster.

The human body, enraptured by the human mind for the purpose of rendering products from natural resources, was the unquestioned domain of the capitalist. The human spirit, unleashed for the purpose of creatively solving many of the problems of our own creation, will be the privilege of the talentist. As companies increasingly compete on their ability to summon that spirit of creativity in the form of continuous innovation it will be job of HR to mine the natural resource of the human heart. But unlike the human body and the human mind, access will be denied to those who seek to profit through control, obfuscation, manipulation or opacity. Only time will tell if corporations are willing to take the risk to becomes temples that summon the spirit more often than the bankers.

Is Transparency Worth it?

There are a lot of conversations happening around the concept of transparency. It is a great conversation, especially for people working inside large organizations, where the fear of being too "corporate" in a creative age is a justifiable concern, as this sobriquet often is equated with "not being creative" and "bureaucratic."

Transparency is easy to say and hard to do. It seems easy to calculate the risks of transparency (including loss of faith in the disclosing individual when they admit mistakes, loss of market value, loss of competitive advantage, and, most of all, loss of the illusion of control), and so few calculable rewards, that most organizations and individuals spend a lot of time and money to reduce transparency rather than increase it.

And yet one gets the sense that there is this growing hum of conversation, this background noise of dissatisfaction that won’t seem to die no matter how many forces are aligned against it. Perhaps it is part of the human condition, or maybe these fires are stocked by the immedicacy of the technologies that allow us to become transparent at the click of a button. Maybe it's a realization that the present economic and social model of information asymmetry isn't sustainable, and that the only way to attract the talent that will fuel increasing growth (organizationally and nationally) is to build relationships of trust built on authenticity. Perhaps there is just something in each one of us that cries out to be a part of something bigger AND better than our individual lives. Whatever the reason, the conversation won't die. Thank goodness for that.

Jonathan Schwartz is the CEO of Sun Microsystems. He has been a regular, albeit inconsistent, blogger since before he got the top spot. Jonathan had a post on August 12 that is a worth a read (in fact he has many good reads about transparency, which, given his position, are especially cogent). I'll reprint it here in it's entirety:

Doesn't This Drive Your Lawyers Nuts?

As you know, I'm a big believer in the transparency blogging drives for me and Sun. Driving information to the marketplace - all employees at Sun can speak their minds and clarify our strategies and perspectives, rather than having a pundit or competitor talk over us. And in reverse, driving information in to Sun - if there are problems to be found in our business, I'd just as soon they were in the open, rather than hidden away. We (and true, the rest of the world) can see and fix problems first, rather than letting those uninterested in fixing the problems take advantage of their existence (whether competitors or litigants). Sunlight's a great disinfectant.

As a CEO who blogs, the most frequent question I get is, "doesn't this drive your lawyers nuts?" And as I've said, no. Our legal team understands, guides, drives - and protects - our business. All without sneaking into phone booths to change costume. And with technology, regulation and our products all colliding in the marketplace (is it legal to scream "SOX!" in a theater filled with CEO's?), I sleep better at night knowing they're actively engaged.

If you want evidence that navigating today's business environment requires careful thinking, consider one particularly ironic issue: posting material information about Sun on my blog, including information about our business results, runs the risk of violating something called Regulation Full Disclosure, or Reg FD. The regulation's goal is to ensure broad, non-exclusionary distribution of material information to the investing public. And somehow, my blog isn't deemed to be such a non-exclusionary distribution vehicle (but a press release, or the Wall Street Journal is). Reg FD is something we're going to be discussing with Commissioner Cox at the SEC (whose views seem to parallel ours - the more transparency the better).

Are our lawyers in the way? The opposite, they're driving the change. Want proof?

Very quietly, this week, our General Counsel - the senior most lawyer in all of Sun - started a blog. It's here. He, too, is now the only member of his tribe, the only GC in all the Fortune 500 to have a blog.

Now the real question should be (especially if you know Mike), am I worried about what he's going to say?

(Joke, Mike, take a joke.)

Johnthan's main point is that the risk of not blogging is greater than the risk of blogging. Or, put another way, the risk of being transparent is less than the cost of being corporate. Of course that may be easier for him to say than others, since Sun has been on a downward path since 2001 and doesn’t seem to have many options at it’s disposal. Perhaps Johnathan just has less to lose than others?

My experience has been that most companies are hyper sensitive to transparency and the risks it brings. I am still searching for an example of being “too transparent” costing someone a company, where there are many examples of lack of transparency (or “being caught in a lie”) doing a lot of damage. I would venture that at the very least your level of transparency, including the demonstrated willingness to engage in the difficult conversations that are the hallmark of the principle, will be increasingly correlated to your ability to land and keep the talent you want.

Each company has to examine whether it needs to engage in the pain of transparency. It requires a careful look at the company’s strategies, the assets (including talent) needed to win with that strategy and the culture that will attract, keep and maximize the value of those assets. But one thing is for sure: most companies are investing in the wrong thing. Bad news is the new good news.

Administrative Helper Therapy Victims

or: How I Still Keep Worrying and Can’t Seem to Love Cognitive Dissonance

HR is all about “cognitive dissonance”. Cognitive dissonance is the massive headache you get when you are trying to hold two mutually exclusive thoughts at once. For me, cognitive dissonance is represented by my beliefs that “the HR function is strategic” and my experience that “the HR system creates Administrative Helper Therapy Victims.”

Administrative Helper Therapy Victims: it’s my new term to describe the mind-numbing system of HR that most of us get to experience regularly and which we all hate. Like all bad systems, HR takes good people and turns them into bumfuzzled dolts.

Most people ascribe bad behaviors (i.e. behaviors that we don’t like) to some evil intent on the part of the person who is bothering you. Spend any amount of time with that same person outside the conflict context, however, and you will usually find that the other person is likable and reasonable. I have run into a lot of people who bug me, but very few who I think are genuinely bad (as in “Stalin, Hitler, Pol Pot, Amin” bad). Likewise, it is trite and irresponsible to run around saying that HR is filled with social workers. It’s just as likely that they could be great capitalists in another system, but HR has a way of turning them into a cross between Karl Marx and Sigmund Freud.

It’s an important point to bring up, because I have seen many HR people leave HR and become successful in some other field or endeavor. I once reported to a gentleman who ran a very typical HR shop (e.g. Administrative Helper Therapy Victims). He then went on to be the GM of a large manufacturing division of the same company and did quite well. What was different about this fine fellow? HR as a system is a soul-sucking exercise in CYA futility, and running a P&L business really let him shine. That’s the difference.

We can sit around and blame the CEO and blame the client and blame… well, just about everybody, but we are the system, and the system is making us into Administrative Helper Therapy Victims:

The Battle We (I) Have Been Waiting For

Originally this piece was published on Recruiting.com. I thought it was a wee-bit controversial so I asked Jason to publish anonymously. He agreed (you can his great intro here). But after my post yesterday about the battle between HR and the CFO I thought it worthwhile resurrecting it and taking ownership. So here is the deathmatch we all (or at least I) have been waiting for...

==================================================================

Hi, I’m Bob Anweave, and I’m here with you tonight as the World Work Federation brings you an exciting cage bout. Money meets people in a head-on-head collision to see who will rule the capitalist ring. We are coming to you live from Wall Street, New York City, with an exclusive look at two powers, one mighty, one not, but both with lots of history to claim the right of “Capitalist Master.” In the far corner we have the People team, composed of the frail HRdini and the mighty Talentismo. And in front of us, wearing green silks and eye shades is team money: the diabolical CFOinster and his malevolent henchman, the Dark Lord of Treasury.

What do you think will happen here tonight Dave?

Dave: It’s not even a contest Bob. CFOinister and the Dark Lord of Treasury have been clubbing every corporate function team then have come up against. They left team IT reeling with their famous thoughtless over the shoulder “cost cutter” maneuver. The only team that looks like they can beat these demons is legal, and they are demanding that the World Work Foundation let them join team money. I would have to say this contest is money’s to lose Bob!

Corporations: Up a Tree

Ever used a really big software package? You know, an SAP or Peoplesoft? If you are a software junkie then you end-up continually frustrated. The code is bloated and convoluted and just plain overly complex. The software junkie compares the 1K lines of code they developed to solve the same problem that the big, bad software does with 1M and start to wonder “How can anybody buy this junk?"

Think about it long and hard enough and you will probably come to the decision that people are just dumb. Dumb management hires dumb people to make dumb products that dumb users break and call dumb customer service reps to ask dumb questions and get dumb answers. It is a field day for the cynic.

Problem is, your conclusion will be wrong. There just aren’t enough dumb people in the world to explain all the dumb things that go on inside of organizations. Even if you buy into a dystopian vision of greedy idiots scaling the corporate ladder to inflict pain and suffering on millions of employees and customers, you have to wonder why so many employees and customers stick around with so many options at their fingertips. Easy (you say): they don’t know they have options or they are scared.

Want to Reduce Turnover? Turn your Employees into Brand Talent!

It is increasingly difficult to separate the act of finding great talent from the act of keeping great talent. In many ways it is a math problem: there aren’t enough people out there to replace the people you are losing. Reducing voluntary turnover is turning out to not only be the most cost-effective recruiting program you have, but maybe the only option left to you.

As recruiting managers come to this “ah-ha!” moment, they inevitably turn to the option of employee loyalty programs. The idea is simple: if you give the right rewards and say the right things then employees will stay around. It’s just like selling detergent: make it cheaper and sexier and people will overlook that your clothes don’t get clean. Fortunately people value their work experience more than they value their cleaning products, so the average consumer marketing cons aren’t going to work.

Loyalty programs will have decreasing effectiveness because the days of blind commitment to a company are done. In the past a company was an embodiment of a principle: security. Employment was rewarded independent of the value someone contributed, so you could be loyal to a company because they would be loyal to you. No longer. Too many employers view talent as a cog in the economic wheel: less valuable than the money and machinery, more valuable than the lobby décor. Many employees see an employer as an abstraction consisting of institutional shareholders wagging the dog that is management. Whether these perceptions are warranted or not is besides the point: it is the reality of our world. The days of executives taking a hit from Wall Street because they want to keep their employees around is a rare event indeed.

Employee loyalty programs have been a small but key contribution to this tsunami of cynicism. Management credibility is paid in the coin of authenticity, and nothing feels more contrived than an “attaboy!” followed by increased work hours, lousy bosses and decreased wages. Piecemeal changes to the relationship with employees won’t turn this situation around. It really does take a radical new approach.

Should Recruiting Report to HR?

Check out Dave Lefkow's article over on ERE today. As always, it is well reasoned and argued.

I agree with Dave's analysis but not his conclusion. Most parts of HR can provide strategic and comparative advantage if done correctly. If compensation was viewed with an eye towards innovation we could get out of the stupid market-based analysis and into rewarding value creation, which would clearly be a core competitive driver if aligned well with business purpose and mission. And it's clear that organizational development could be used to improve competitiveness.

Other than retirement, employee relations and some legal functions, I think most of HR could be every bit as much a competitive advantage as finding and hiring the best people.

But Dave is right to surmise that the vision of truly strategic HR is farther away in most companies than the vision of strategic recruiting. If, like Valero, you have brought in a business person to run your recruiting function then it makes no sense to report to HR unless there is a like-minded business person running that function too. "Business people" can never report into corporate functions and survive long. Bureaucracy always kills innovation, and you can’t be a business person in today’s world unless you are constantly seeking competitive advantage and directly linking your efforts to why people buy your company’s product (and don’t buy your competitor’s).

The Human Capitalist - "This is the New HR Leader"

Jason Corsello over at The Human Capitalist has a nice post around "Why CEO's are not Plug-and-Play." Jason says:

The new breed of (HR) executive leaders require new, multi-faceted capabilities including domain knowledge, technology understanding, vendor management skills, change management expertise, and regulatory and compliance knowledge.

I agree with Jason, but would add that more important than all of those things is a sound business sense and credibility with line management. Jason's specification is definitely a step-up from the "know compensation and benefits and be friendly" spec that you usually see. But HR will never have credibility in the board room until it can talk business from a talent perspective. Then your executive suite will be complete:

• CMO (business seen through the lens of the market)
• CSO (business seen through the lens of the customer)
• CFO (business seen through the lens of the bankers / capital markets)
• COO (business seen through the lens of the product)
• CTO (business seen through the lens of technology)
• CIO (business seen through the lens of information)
• CPO (business seen through the lens of the talent)

(And of course business seen through the lens of the machine tools and manufacturing process if that is your business.)

Each of these individuals is seeking to build competitive advantage for the company, but focuses on that problem through their individual lens. Business (and NOT finance) is the lingua-franca of the conversation between these parties, with each dissecting the business problem at hand from their organizational lens. In this model, strategy is the responsibility of all "C"s, and the strategy developed must be responsive to each of the realities (environmental and internal) perceived through their lens.

The CPO (Chief People Officer, only because CTO means Chief Technology Officer and therefore can't mean Chief Talent Officer) is responsible for finding, attracting, enlisting, aligning and educating the talent that the organization needs to have competitive advantage. But they can't do a good job at this if they don't understand the basics of business first: advantage, buyers, profits, etc. And since the CPO people encompasses all the other "C"s (since they are all people, regardless of how they act), the CPO has a special duty to be the person that facilitates the alignment and education of the senior management team, just as each of the other "C"s has a responsibility to align the other "C"s with the view they get through their lens.

Finally, in order to run the "people business" inside a company a leader needs all the capabilities that Jason discusses. But an HR leader can be good at all those competencies and still not able to make a compelling case to the other "C"s about why the talent lens is so critical to the rest of their businesses. That's why "understanding business" is every "C"s first responsibility.

Jazy Thinking - Part 3

Today we will examine the last and final statement from Jazy regarding "Three Measures of your Company's Health": Cash Flow.

Jazy likes cash flow instead of basic P&L metrics because “all your other profit-and-loss numbers, like net income, have some art to them.. they’ve been messaged through the accounting process, which is filled with assumptions.”

It's certainly refreshing to see a top executive admit that most of today's modern accounting techniques are turning up to be ever more useless. As I said here:

'P&L' is an accounting concept, not an economic model. Many accounting tricks can be played to arrive at a predetermined profit target. Profit is therefore a temporary lagging indicator of an organization’s ability to manage its finances in such a way as to record the highest possible number for the quarter. Many organizations record profits but don’t return value above their cost of capital.

So cash flow is better than standard P&L metrics, but is it the best financial measure a company's health?

A company exists to return value to its investors. When a company has been in business a long time and is in a relatively static industry then cash flow is a good short-hand for the value they are creating. But fewer and fewer companies are in the enviable position of being valued for how much money they mint. Instead, companies are increasingly measured by whether they have some new concept or widget which will make a lot of cash in the future, but is doing nothing but costing money right now. Innovation is a process of taking something that is valuable today (time, money, natural resources, attention) and turning it into something that will be much more valuable tomorrow (products and services that can be replicated easily and sold at a profit to what it really cost to create them).

In those cases, cash flow is a lousy measure of your company's health. For instance, would you rather be a Microsoft shareholder today (a company that has great cash flow) or a Google shareholder six years ago (a company that, at that time, had almost no cash flow). A share of stock in Google six years ago is much more valuable than a share in Microsoft today, even though one company generates a lot of cash and the other didn't.

More and more companies (and analysts) are coming to realize that the P&L and cash flow statement suffer from the same basic problem: they don't tell you how much the company is really worth. Cash flow can tell you how healthy the company is right now, but that health can go away fast. A company with a really strong balance sheet, on the other hand, probably has a stronger position for the future.

Some Jazy Thinking - Part 2

Yesterday we examined why Jack and Suzy Welch's (or, as I call them, "Jazy") admonition to survey your employees to determine their engagement wasn't the best possible way to establish just how committed your employees are. (The column I referred to yesterday is premium content, so I can't provide a link.)

Jazy says that the second important measure of your company's health is Customer Satisfaction. They explain that you have to meet customers in order to know how they feel about your products / services / people. Good advice. Then Jazy say’s “And don’t leave without finding out if each customer would recommend your products or services.” Even better advice. But the best advice of all would be “Get evidence that your customers like you, as all the meetings and glad-handing is meaningless in absence of evidence about how your customers really feel."

How do you do that? Glad you asked. You look for heat. You want hot customers, not cold ones, and you want customers that show you the love. Here is a method I have used before to determine both the health of an individual customer relationship and, even more importantly, the overall health of all of your customer relationships.

Some Jazy Thinking - Part 1

Jack and Suzy Welch (whom I shall henceforth refer to as simply “Jazy”) have a column in BusinessWeek titled “Ideas the Welch Way.” In the colum Jazy sets out to identify the three most meaningful measures of a company’s health.

The three measure they propose are:

1. Employee engagement
2. Customer satisfaction
3. Cash flow

Let’s take the next three days and examine these a little more closely. Jazy's responses provide a great platform for exploring some ideas that are near-and-dear to my heart and that I have not as of yet explored fully (except cash flow - more on that in two days).

Today… Employee Engagement

The 8th Habit: Why HR is Important

You are a smart person. You got good grades in a good school and you had your choice of careers. Some people thought you should be a doctor, and some people thought you should be a lawyer. A few said “Investment banking.” The world is your oyster.

And then you pick a career in Human Resources, and everyone from your college career counselor to your parents scratch their heads and wonder why you are throwing your life away. You could be so big and important in those other jobs. Why HR?

Here’s why:

What is Talentism?

CH finally did it. He goaded me into explaining what I mean by “Talentism.” (BTW – Love the new blog!) I have been struggling with getting a more detailed explanation down for a while so I might as well take a crack at it now.

First, someone told me recently that I often write like I am trying to make other people feel stupid. That is really not my intention. This is how I think about these things. Really smart people can take a difficult subject like this and make it easy to understand in one-sentence soundbytes. I am not nearly that smart.

Talentism means that talent is more valuable than money, which is more valuable than need. It’s better than capitalism, which values the holding and exchange of real capital (money), and it’s way better than consumerism (our present system of economics) in that it focuses on the production of value, not the fulfillment of need. It focuses people on how they can make the world a better place and it focuses companies on how they can help people achieve their best.

It's All About the Smarts?

The other day I explored the whole “talent = star” concept. The problem with the star-system approach to talent aquisition and management is that a single individual can rarely achieve the value creation level of a team of well aligned individuals. Banking on a star's next big hit is not the same thing as predicting future success by past outcomes. "Big hits" are not the same thing as "ongoing success." Thinking that Marc Andreessen is going to create another Netscape is just pure folly. There are too many elements of a big hit that are outside of the individual producer's control to believe that lightning will strike the same place twice.

Strategic Step 4 – Become System Architects

Ray Morgan is a remarkable person. The teams he has lead have created amazing examples of engineering excellence and creativity, including the solar plane which holds the altitude record to this day. I once asked him how he did it. He replied simply “I made my company a massively parallel computer.”

It took me a while, but I finally got his point.

It's All About the Stars?

Yesterday I explored why “Its all about the talent” is sometimes wrong. From our discussion yesterday, it should be “Its all about the recruiter’s talent” (as in “It’s all about the recruiter’s ability to figure out what kinds of talent will work within a particular corporate system.”)

It's All About Talent? Maybe Not...

“It’s all about the talent” is a favorite phrase of a lot of business people. I can understand that. It’s direct and sexy in politically-correct kind of way. I have used it more than a few times. But this morning, as I was reading some great posts over at Recruiting.com, it just struck me that the general popularity of the phrase demands a little contrarian investigation.

Strategic Response - Steve Levy

I have heard people talk about Steven Levy for years. Reading his blog (The Recruiting Edge) is a must for both information, insight and great “fiction.” Whether it was the outrageous costumes or the piercing insights, Steve is a the recruiting industry’s answer to Tom Peters. So I was surprised and pleased when he started commenting on the Strategic HR posts. His comments are fantastic, but I was especially intrigued with this one:

Strategic Response - Nancy Gray-Starkebaum

Today’s strategic response finds me totally off in left field. I have to apologize to my readers for this exploration, but it is not often that I get to talk about the second law of thermodynamics, military strategy and Burt's ex in the same post. So I decided to just go into the proverbial void and see where it leads.

Strategic Step 3 - Draw the Lines

Go to a white board or take a blank piece of paper. Draw a line vertically from top to bottom. Put arrow tips at each end of the line. On the left-had side of that line, at the top, write three words: “Maximum Sustainable Advantage.” On the bottom of the vertical line (board / page), write the words “No Requirement, No Advantage”. In between those two phrases write the words: “Required, No Advantage.”

On a separate board or piece of paper, write down all the things that your department does. Payroll, OD, T&D, etc. Get as detailed as you can given the time you have. Include everything that others do for you (other departments, HROs, vendors, etc.) Your list should include everything that your department is responsible for or oversees, and it should be as complete as possible.

Strategic Response - Andrew Marritt

Third in my series of an ongoing attempt to respond to the wonderful comments that are being offered on the “Strategic HR” series.

Andrew Marritt is a bright light in the chaos of the blogosphere. His biography describes him as an economist by training, which is a rare starting point for a career in the qualitative world of HR. I started reading his blog (Resourcing Strategies) before I started writing my own, and often have felt that the clarity of his thinking and force of his arguments would be a high standard to meet indeed. Andrew works for a big company (another situation where I could tell you more, but then he would have to kill you and me both). He works in the recruigting department there, and therefore has an inside scoop on the realities of trying to make HR a strategic corporate asset.

Andrew and I have always had a cordial correspondence, but in his comments to my post It's Not About the Plan Andrew really let me have it. I can’t tell you how excited I was to get his comment. Andrew is absolutely spot-on to question whether I know what the hell I am talking about. I tried to clarify some of what I am trying to accomplish here , but his detailed comments deserve specific treatment.

Strategic Response - Regina Miller

Second in my series of an ongoing attempt to respond to the wonderful comments that are being offered on the “Strategic HR” series.

Regina Miller is the CEO of The Seventh Suite, a strategic HR consultancy. I found Regina’s blog by following the links from the Recruiting.com blogroll. I have since grown into a fan of Regina’s insights and wisdom. Reading her bio reminds me that there are business people out there that get into HR because they believe it is the best place to get strategic leverage in and for an organization.

Regina wrote:

My take is that the best way for HR to be strategic is to get focused on how to deploy the company strategy so everyone understands it and has what is necessary to get it done.

I love this perspective Regina. I think it is a winner. There are some organizations (like Royal Dutch Shell) that have more formalized strategy communication processes, but most organizations have no way to communicate what the corporate strategy means to a department and individual contributor. I think that HR frequently believes that the line manager will handle this task. I think line managers believe executives will handle this task. And I think executives believe that strategy should be obvious, since they have been working on it directly. But at the macro level, there is a generally a huge chasm between the strategy and the translation of that strategy into tactics that achieve results that achieve the strategy.

HR must never assume that line managers have that translation ability. Since this translation capability is a critical competency in all organizations, HR should either help hire line management who have that capability, or (more likely) be the translators themselves. This is a role that most HR generalists are not equipped to undertake. It might have to come out of the University or Learning side of the HR house.

Thanks for the comment Regina. And keep up the great work on your blog!

An Actual Conversation with "Bob"

It is 1999, the heart of the Internet bubble. I am CEO of a software and services company. We make advanced technologies to create killer HR apps. We are growing rapidly and just got a big chunk of funding. Our business is changing fast and we need to react. Both the threats and the opportunities are people-centric, so I hire a new director of HR. Bob (obviously not his real name) comes highly recommended and had many other offers. I feel lucky to get him. I give him a couple of months to settle in. Then we have “The Conversation.”

Strategic Response - Colin Kingsbury

Colin Kingsbury over at HRM Direct left the following comment at the post Strategic Step 1 – 3 Questions. It was such a good one that I decided to publish it in its entirety (as I will be on many of the other comments). You can read more of Colin’s writing on his blog. Colin works at HRM Direct. I can’t claim to know a lot about them, but I am very much looking forward to learning more. Colin is giving to the network before he expects anything in return, a concept I wholeheartedly endorse.

Strategic Response (Dubs)

Wow! What a great response to the Strategic HR discussion. I started writing these responses a couple of days ago, and for every response I wrote four more good comments came through. I am going to try to get to all of them, but it may be sporadic and take some time. It won’t be in any particular order.

I believe this is one of the most important discussions that we can be having. It doesn’t matter whether you worry about the human, business or social cost of bad business practices… HR’s failure to be a strategic asset to an organization is costing all of us a lot. But there are so many intelligent and thoughtful people commenting on my site that I thought I was just in the dark. Maybe HR is really in great shape and I just don’t know about it. I have been working with HR organizations for a long time, but maybe I just missed it.

The Prophet (Not Profit) Guys

I spent a fascinating couple of hours yesterday with two innovators in the Talentism space (they may not describe the space that way, but I would): John and Steve Chaisson. They are the founders of Prophet Group, an organization that has the opportunity and the talent to really impact our industry and help HR along the strategic path.

Strategic Step 2 – Map the Inside

One might suppose that the first step to getting strategic is to be a hard-nosed friend of finance. One might be inclined to identify how one is going to get rid of all the tactical baloney that leads everyone to believe that HR is a cost-center run amok. But one would be wrong. Don’t start on the road to getting strategic by addressing ways to reduce cost. This will only reinforce that HR is a cost center, not a profit center. Think of it like a battle. Go to where your enemy (corporate perception) isn’t.

Some Clarification Please

I am always honored by the time people take to leave comments on this site (except that one guy – no, I don’t want to regrow lost hair thank you very much). The posts of strategy have gotten some of the best comments yet. Heather, Nancy, Sean, Steven and Andrew are putting up some really great replies / thoughts. And they are worthy of response, which I will do soon.

It’s Not about the Plan (Right Now)

“Getting strategic” is considered a pretty weighty topic. If you were to go looking for HR strategy consultants who could give you definitive answer about what this all means you would find people who wear suits and look serious. They wouldn’t accept an engagement for less than a bazillion dollars. Their report would be long and contain background data, survey data, long diatribes about how they arrived at their conclusions and a really cool section on how the results are special just for you. Of course most of the results aren’t: it’s canned stuff from previous engagements. But it sure looks impressive and makes you feel good. And you get to put that big report on your shelf, which is kind of a pain when you leave for the next gig, but looks impressive until that time.

Strategic Step 1 - The Three Questions

Many people seem to take it for granted that HR should “be strategic.” So let’s start the series with the big three questions:

1 – What is “strategic”?

2 – How do you know if you’re strategic?

3 – Should HR really be strategic?

Strategic HR?

I am going to use my proverbial 15 minutes to discuss a roadmap for HR to “get strategic.” It’s a huge subject, with lots of territory to discover.

2005 at Talentism was spent discussing the big and small topics around talent. More specifically, I wanted to develop a foundation for the idea that in business today, talent is more valuable than capital. In 2006, I want to spend more time at Talentism talking about the broader HR function and how it can be better used to make an organization more competitive. The theme is still the same: Talentism. Capitalism is the primacy of capital. Talentism is the primacy of talent. I hope that enough groundwork has been laid to start to broaden the tactical scope of the engagement. And it starts today.