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building teams and managing people is as outdated as productive innovation was before the quickening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