Human Resource

Change Initiatives in HR Leadership and Talent Development

Split HR into Administrative and Strategic Functions

It’s time for HR to make the same leap that the financial function has made in recent decades and

become a true partner to the CEO…

In addition to spelling out clearly what is expected is expected in the way of making market predictions,

diagnosing problems, and prescribing beneficial actions, the CHRO’s new contract should define what

she is not supposed to do. This helps provide focus and free time so she can engage at a higher level.

For example, the transactional and administrative work of HR, including managing benefits, could be

cordoned off and reassigned, as some companies have begun to do. One option is to give those

responsibilities to the CFO…Another model we see emerging is to create a shared services function that

combines the back-office activities of HR, finance and IT. This function may or may not report to the

CFO.

People Before Strategy, HBR

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Reduce HR Policies and Administrative Oversight

The Netflix culture wasn’t built by developing an elaborate new system for managing people; we did the

opposite. We kept stripping away policies and procedures. We realized that the prevailing approach to

building teams and managing people is as outdated as productive innovation was before the quickening

pace of disruption demanded the development of agile, lean, and customer-centric methods. It’s not that

companies aren’t trying all kinds of things to manage better; but most of what they’re doing is either

beside the point or counterproductive.

Most companies are clinging to the established command-and-control system of top-down decision

making, but trying to jazz it up by fostering “employee engagement’ and by “empowering” people.

Compelling but misguided ideas about “best practices” prevail: bonuses and pay tied to annual

performance reviews; big HR initiatives like the recent craze for lifelong learning programs; celebrations to

build camaraderie and make sure people have some fun; and for employees who are struggling,

performance improvement plans. These foster empowerment, and with that comes engagement, which

leads to job satisfaction and employee happiness, and that leads to high performance, or so the thinking

goes.

I used to believe this too…But over time I saw that all those policies and systems were enormously costly,

time-consuming, and unproductive. Even more important, I saw that they were premised on false

assumptions about human beings: that most people must be incentivized in order to really throw

themselves into their work, and that they need to be told what to do. The “best practices” that have been

developed on the basis of these premises are, ironically, disincentivizing and disempowering.”

Powerful, pp. xv-xvi

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Focus More on Developing Leaders and Less on Developing Managers

Many of the same kinds of organizational attributes required to develop leadership are also needed to

empower employees. Those facilitating factors would include flatter hierarchies, less bureaucracy, and a

greater willingness to take risks. In addition, constant empowerment for a constantly changing world

works best in organizations in which senior managers focus on leadership and in which they delegate

most managerial responsibility to lower levels.

Even today, the best-performing firms I know that operate in highly competitive industries have executives

who spend most of their time leading, not managing, and employees who are empowered with the

authority to manage their work groups. I can’t conceive how the trend in this direction won’t continue over

the next few decades, despite some resistance from managers and workers who are attached to the old

model.

For readers who have difficulty imagining this degree of empowerment actually emerging in the

workplace, I suggest you look at organizations that operate today in a sea of shifting conditions: high-tech

companies generally and professional service firms that thrive in intensely competitive environments.

What you will find are unusually flat hierarchies, little bureaucracy, a propensity for risk taking, workforces

that largely manage themselves, and senior-level people who focus on providing leadership for client

projects, technological development, or customer service. The model has already been tested. With

proper leadership at the top, it works extremely well.

Leading Change, pp. 175-176

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Reduce the Authority of (and Dependence on) Managers

Employees are dependent on their managers and want to please them. A focus on pleasing your

manager, however, means it can be perilous to have a frank discussion with her. And if you don’t please

her, you can become fearful or resentful. At the same time, she’s accountable for you delivering certain

results. Nobody produces their best work entangled in this Gordian knot of spoken and unspoken

agendas and emotions.

Google’s approach is to cleave the knot. We deliberately take power and authority over employees away

from managers. Here is a sample of the decisions managers at Google cannot make unilaterally:

 Whom to hire

 Whom to fire

 How someone’s performance is rated

 How much of a salary increase, bonus, or stock grant to give someone

 Who is selected to win an award for great management

 Whom to promote

 When code is of sufficient quality to be incorporated into our software code base

 The final design of a product and when to launch it

Each of these decisions is instead made either by a group of peers, a committee, or a dedicated,

independent team. Many newly hired managers hate this! Even once they get their heads around the way

hiring works, promotion time comes around and they are dumbfounded that they can’t unilaterally

promote those whom they believe to be their best people. The problem is that you or I might define our

“best people” differently. Or it might be possible that your worst person is better than my best person, in

which case you should promote everyone and I should promote no one. If you’re solving for what is most

fair across the entire organization, which in turn helps employees have greater trust in the company and

makes rewards more meaningful, managers must give up this power and allow outcomes to be calibrated

across groups.

Work Rules That Will Transform How You Live and Lead, pp. 12-13

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Stop Using Retention as a Metric for HR Success

The most competitive companies are able to stay limber, always innovating and growing, largely because

they are always proactively brining in the new talent they need. The best employees are always looking

for challenging new opportunities, and though they are usually intensely loyal, many of them will

eventually see those opportunities elsewhere. You can never know when they might decide to make a

move, and often there is nothing you’ll be able to do to stop them…

This is why I say that retention is not a good metric by which to evaluate your team-building success or

whether you’ve created a great culture. The measure should be not simply how many great people you

have with the skills and experience you need. How many of them you are keeping? How many new

people with the skills and experience you need are you hiring? You also want to closely monitor how

rigorously you are evaluating whom you need to replace and how efficiently you are acting on that

determination…

The single best way in which companies can ensure that people who leave are able to find great

opportunities elsewhere is to make the company one that is known to be intensely driven to hire top

talent.

Powerful, pp. 91-93

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Help HR Leaders Develop More Business Expertise (and Vice Versa)

[C]reate new career paths for HR leaders to cultivate business smarts and for business leaders to

cultivate people smarts. Every entry-level leader, whether in HR or some other job, should get rigorous

training in judging, recruiting, and coaching people. And those who begin their careers in HR leadership

should go through rigorous training in business analysis, along the lines of what McKinsey requires of all

its new recruits. There should be no straight-line leadership promotions up the functional HR silo.

Aspiring CHROs should have line jobs along the way, where they have to manage people and budgets.

All leaders headed for top jobs should alternate between positions in HR and in the rest of the business.

Make it a requirement for people in the top three layers of the company to have successfully worked as

an HR leader, and the function will soon become a talent magnet. Be sure that it isn’t just ticket

punching. Those who no feel for the people side are unlikely to succeed for long in high-level jobs.

People Before Strategy, HBR

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Hire Non-HR People to Run HR

It infuriates me when I hear hiring managers dismiss the value of good HR people. Usually when I would

ask managers why they weren’t engaging with recruiters more, they’d say, “Well, you know, they’re not

that smart and they don’t really understand what’s going on in my business or how the technology works.”

My response was “Well, then start expecting – and demanding – that they do!” And hire people who are

smart. If you hire smart people and you insist that they be businesspeople, and you include them in

running the business, then they’ll act like businesspeople.

I even occasionally advise companies to hire a businessperson to run HR, not an HR specialist. That

person should be able to understand the details of your business and how you earn your revenue and

who your customers are and your strategy for the future, just like any other department or division head.

One of the reasons that I’m no fan of the annual performance review process is that not only does it take

up a lot of your HR department’s time, but it is so often removed from any true connection to business

results and serving customers.

Powerful, pp. 106-107

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Connect Performance Reviews to Strategy Development

The problem at many companies is that the reviews tend to stand alone – strategy reviews are linked only

to the next strategy review, talent reviews only to the next talent review. They aren’t linked with one

another, and thus don’t integrate and reinforce the knowledge gained in each.

What we advocate is what GE does: using the output from one process as input to another. Whenever

leaders at GE conduct, say a strategy review, the issues they bring to the surface or conclusions they

reach are reflected in reviews of talent, and vice versa. The information and insights are kept top of mind

through ongoing dialog in which leaders continually, and after a while, instinctively, link business with

people…

This linkage is the reason GE holds Session C before the strategy session. Most companies do it the

other way around, on the theory that strategy must come first since it determines structure. GE knows

otherwise. Strategy comes from the minds and cognitive makeup of people – their abilities to differentiate

what matters, their understanding of trends in the external environment, their risk appetite, and their skill

in modifying a strategy in the face of change. A strategy can only succeed when the right people

conceive and execute it.

The Talent Masters, pp. 43-44; p. 50

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Increase Employee Benefits

Our employees, who have named themselves Googlers, are everything. Google is organized around the

ability to attract and leverage the talent of exceptional technologists and business people. We have been

lucky to recruit many creative, principled and hard working stars. We hope to recruit many more in the

future. We will reward and treat them well.

We provide many unusual benefits for our employees, including meals free of charge, doctors and

washing machines. We are careful to consider the long-term advantages to the company of these

benefits. Expect us to add benefits rather than pare them down over time. We believe it is easy to be

penny wise and pound foolish with respect to benefits that can save employees considerable time and

improve their health and productivity.

The significant employee ownership of Google has made us what we are today. Because of our

employee talent, Google is doing exciting work in nearly every area of computer science. We are in a very

competitive industry where the quality of our product is paramount. Talented people are attracted to

Google because we empower them to change the world; Google has large computational resources and

distribution that enables individuals to make a difference. Our main benefit is a workplace with important

projects, where employees can contribute and grow. We are focused on providing an environment where

talented, hard working people are rewarded for their contributions to Google and for making the world a

better place.

Work Rules That Will Transform How You Live and Lead, p. 22

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Remove Layers of Management

If you want to manage people effectively, help them by making sure the org chart leaves as little as

possible to the imagination. It should paint a crystal-clear picture of reporting relationships and make it

patently obvious who is responsible for what results.

Just as important, it should be flat.

Look, every layer in an organization puts spin on a new initiative or organizational event. It’s like that

children’s whispering game, telephone. Every time a piece of information travels through another person,

it changes. Layers do that too, adding interpretation and buzz as information travels up and down the

ladder. The trick, then, is to have fewer rungs.

Layers have other vices. They have add cost and complexity to everything. They slow things down

because they increase the number of approvals and meetings required for anything to move forward.

They have an odious way of burying new businesses, or small units in big companies, in honeycombs of

bureaucracy. They tend to make little generals out of perfectly normal people who find themselves in

hierarchies that only respond to rank.

The awfulness of layers is nothing new to anyone. And yet companies gravitate toward them. For some,

layers feel like the only way to respond to growth. More sales – quick, add more district managers in the

field. More employees – quick, add more staff at headquarters.

For others, the reasoning is even worse. Layers are a way to give people the feeling of growth when

there is none. Layers allow you to give employees promotions instead of raises. That’s better than doing

nothing, right? Wrong!

The inexorable pull toward layers is why I suggest you make your company 50 percent flatter than you’d

normally feel comfortable with. Managers should have ten direct reports at the minimum and 30 to 50

percent more if they are experienced.

Winning, pp. 115-116