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Preparing for the new normal
ADAPTIVE MANAGEMENT: LEADING YOUR
RECRUITING DEPARTMENT IN A V.U.C.A.
ENVIRONMENT
ERE.Net , April 16, 2013
© Dr John Sullivan
1www.drjohnsullivan.com 67
2
My goal for today…
To get you to rethink your recruiting
approach and strategy… so that it
better fits a VUCA world
I’m from the silicon valley… so I’ll move fast today
3
When you started your career…
was this considered normal?
What is normal these days?
Part I
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Was this normal 10 years ago?
Would a hoodie wearing dropout… ever become a successful CEO that is worth billions?
5
Was this normal 10 years ago?
Would 2 guys get $1 billion for Instagram... even though their firm never made a dime of profit?
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Is this normal even today?
Would a 17 year old HS student get… $30 million?
Didn’t compliance use to be a primary goal?
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Have you experienced turmoil in recruiting?
Budget – increases, freezes and do more with less
Hiring volume – switching between booms & freezes
Quality – shifting between cost… and quality
Applicants – flood of applications… to a war for talent
Applicant expectations – changes with generations
Obsolete tools – newspapers, app forms, remote work?
New tools – social media, mobile, video interviews
Global – from a slogan… to a necessity
Rules – anti-poaching agreements okay… to illegal
WP – from essential… to nearly impossible (VUCA)
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Is this normal at your firm even today?
Can we all agree that there is a new definition of
“normal”
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The next key question is…
What is this crazy new business
environment called?
Part II
A name for the last decade?
What one phrase would best describe what we’ve
been going through over the last decade?
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Perpetual crisis
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A more “scientific” name is…
A Whack-A-Mole world… full of surprises
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The military calls this environment V.U.C.A. (SNAFU)
V for Volatility – major change will be frequent and sudden
U for Uncertainty – there will be many surprises.
Change and it’s causes will be hard to predict… and they will not follow a predictable pattern
C for Complexity – problems & opportunities will be complex… with many different elements
A for Ambiguity – it will be confusing / chaotic
because there will be contradictory information, data and advice… making mis-reads likely
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BCG calls it a… turbulent environment
Firms that effectively respond to this turbulent environment are called… “Adaptive Firms”
An Adaptive Firm is defined as…
A firm that… learns and adjusts better, faster,
and more economically… than it’s rivals
to give the firm an “adaptive advantage”
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Let’s shift to some
empirical data that quantifies
the levels of volatility
Data from BCG’s…The Most Adaptive Companies 2012 - Winning in an Age of Turbulence, by Martin Reeves, Claire Love, and Nishant Mathurhttps://www.bcgperspectives.com/content/articles/corporate_strategy_portfolio_management_future_of_strategy_most_adaptive_companies_2012
Part III
Let’s start with 3 BCG data points about our turbulent environment
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1) Turbulence now strikes more oftenMore than ½ of the most turbulent quarters over the past 30 years… have been in the past decade2) Turbulence has increased in intensityVolatility in revenue growth, in revenue ranking, and in operating margins have all… more than doubled since the 1960’s3) Turbulence today persists much longerThe average duration of periods of high turbulence... has quadrupled over the past 3 decades
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Let’s look at 4 quick visual charts
to show the increased level of
volatility in:
1. Revenue growth
2. Profitability
3. Market cap
4. Industry position
BCG data demonstrates the amount of turbulence in revenue growth
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Volatility in the 5 year average revenue growth %
%
The flat growth line
%
BCG demonstrates volatility in profit
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Volatility in profitability 5 year average EBIT margin volatility %%
%
BCG demonstrates volatility in market cap growth
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Volatility in market cap growth5 year average%
%
BCG demonstrates volatility in industry rank
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Volatility in industry position %
%
BCG demonstrates volatility in industry rank
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Volatility in industry position %
%
How long does firm dominance last?• No firm• Friendster 2002
• MySpace• Facebook
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1. Technology and analytics 2. Digitization3. Connectivity4. Trade liberalization5. Global competition6. Rapid copying7. Entrepreneurship8. Business model innovation9. The power of top talent10.The success of innovative firms
10 drivers of turbulence
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Another key question
Is it worth the effort…
to become an adaptive firm?
Over 6 years there was a $3 trillion market cap difference
Non-adaptive firms
Highly adaptive firms
$3 trillion
Market cap differences?
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Who are the most adaptive
firms that thrive in chaos?
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BCG’s list of highly adaptive benchmark firms
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3 key takeaways / learnings
1. The “new normal” is… VUCA and a world full of constant surprises
2. Large firms no longer dominate the smaller ones… instead fast adapting firms now dominate the slow changing ones
3. In a VUCA world, if the overall rate of change inside your firm… is slower than the rate of change occurring outside of it… your demise is on the horizon!
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How do adaptive firms
need to act?
There are 10 key business
capabilities of an adaptive firm
Part IV
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The 10 key capabilities of “Adaptive Firms”
1.They target extreme rates of innovationIllustration – At Google a goal of “10 %
improvement means that you are… guaranteed not to succeed wildly”
Instead… “create products and services that are 10 times better than the competition”
Because a “1000% improvement requires… rethinking problems entirely, exploring the edges of what’s technically possible, and having a lot more fun in the process”
Larry Page
Question - Do the firms with the most innovation dominate in results?
Which firms on this list do you find have the highest focus on innovation?
IBM
HP
Microsoft
Apple
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Do the firms with the most innovationdominate in results?
A comparison of employee output (rev. per employee)
Average $208,000IBM $241,600 (22% above the average)
HP $362,700 Microsoft $775,900 Google $931,600 (4.5 times the average)
Facebook $1,310,000 (6 times the average)
Apple $2,262,000 (11 times the average)
Key learning - It takes 10 X more employees at IBM… to produce the same revenue as Apple (Calculated using 2013 data from http:// www.wolframalpha.com/input/?i=apple+revenue+per+employee )
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Does extreme innovation increase profit?
Dollars of profit per employee (Profit per labor $ spent is a better measure)
HP -38,125IBM $37,523Facebook $82,227Microsoft $164,457Google $199,346Apple $573,448
Key learning - it takes nearly 15X more employees at IBM…to produce the same profit as Apple (Calculated using 2013data from www.wolframalpha.com ) 33
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10 capabilities of “Adaptive Firms”
2.They set a broader target – rather than setting a single target number as a goal… instead, they estimate and prepare for a broader target covering a range of change… for each of the factors that impact them
3.They identify precursors / signals – they have a process for identifying “the signals” that occur right before a problem or opportunity
4. They respond rapidly – they monitor environmental / business factors and act just as they shift
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10 capabilities of Adaptive Firms
5. They experiment and take risks – they try pilot tests and experiments and use a high failure rate to learn and to find out what works L Page - “I’d rather make the mistake in moving too fast than make no mistakes and move too slow.” Mark Z - “In a world that’s changing so quickly… you’re guaranteed to fail if you don’t take any risks. The riskiest thing is to take no risks”
6. They include a scalable capability – they require all processes and programs to be scalable…meaning that everything can easily increase or decrease it’s capacity and cost structure
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10 capabilities of Adaptive Firms
7. They increase the speed of adaptation
“It's not the strongest of the species that survive, nor the most intelligent,
But the one most responsive to change."
Darwin
Facebook’s CEO tells employees to be responsive
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“Move fast and break things” – “The idea is that if you never break anything, you’re probably not moving fast enough”
Facebook says move fast
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10 capabilities of Adaptive Firms
8. They increase learning speed
“The” critical corporate competency – the only
future competency may be… rapid self-directed
learning and the ability to adapt after learning!
Organization learning speed – must be measured
and improved
Sharing learning – what is learned (problems and
solutions) must be shared rapidly
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Parallel benchmarking… learn from everyone
Learn from other functions (Supply chain, finance & social media)
Learn from parallel industries (Speed & quality)
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10 capabilities of Adaptive Firms
9. Churn, they move simultaneously in 2 directions – their programs and processes have the capability of moving in multi-directions at the same time (Volume, innovation, speed, costs, quality)
They also have the capability of quickly reversing direction by as much as 180 degrees when e-factors shift
10.They rely on their partners - they work closely with strategic partners, customers, vendors and others outside the firm to learn and leverage their resources
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The 12 key capabilities of an
“adaptive recruiting function”
Part V
Grouped into 3 categories1. Strategic changes2. An external focus3. The required capabilities
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Recruiting actions
Strategic actions that are required
in order to create an “adaptable recruiting function”
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Action #1 - An adaptive recruiting strategy Most recruiting strategies are fixed for 1-2 years You must have a written adaptive strategic
recruiting plan that is tied into the business plan You must have a best & worst case scenario and
if - then plans for each of the 4 growth modes
Retrenchment and cost-cutting mode
Slow / no growth mode
Growth to rapid growth mode
Innovation and “startup” mode into new areas
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Set your yearly % rate of improvement target for HR… so that it matches or exceeds the rate of
improvement of our products (Dell)
What should the rate of change in recruiting be?
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Action #2 – You must prioritize jobs
Prioritizing maximizes business impact Identify the impact of each job family – work
with the CFO to calculate the dollar impact of each job family… and then report it to managers (Ex. Zynga)
Focus your recruiting resources – develop a process to handle priority jobs first, to assign the most resources and the best recruiters to them
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Action #3 – Build a recruiting business case
Continually build a compelling business case for your CFO and hiring managers
You must demonstrate to cynical executives and hiring managers the impact that recruiting has on profit and other corporate goals >
Which HR function has the highest business impact?
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Mid and lower impact HR functions
49Source: BCG/WFPMA - From Capability to Profitability: Realizing the Value of People Management, 2012
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A business case (Continued)
BTW - Because of the extra cost and effort required… executives won’t fund your focus on recruiting top performers and innovators
Unless you have calculated their performance
differential over hiring “average candidates” >
What is the performance differential?
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"The secret of my success is that we have gone to exceptional lengths to hire the best people in the world… boy, does it pay off."
Steve Jobs“The difference between the average programmer and a great one”… it's at least 25
What is the performance differential?
One top-notch engineer is worth “300 times or
more… than the average”
…
“we would rather lose an entire incoming class of engineering graduates than one exceptional
technologist.”52
Alan EustaceSenior Vice President, Engineering and Research
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Action #4 – You must learn rapidly
Continuous learning is needed because recruiting tools, best practices and knowledge quickly become obsolete Learning plans – each team and recruiter must
have a self-directed continuous rapid learning plan… to ensure that they stay on the leading edge of recruiting (Google alerts on top firms/evolving practices)
Continually identify new recruiting tools – identify and track new recruiting tools and approaches… and their results
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Action #4 – You must learn rapidly
Continuous learning is needed (Continued)
“Forgetting” must be emphasized – in a fast-changing world, leaders must actively encourage all to act like everything in recruiting becomes obsolete… and to continually seek out new and better solutions
Realize that learning is difficult in recruiting innovation areas… because there is little information available and leading firms refuse to share
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Recruiting actions
An external focus is needed
in order to create an adaptable recruiting function
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Action #5 – You must track environment changes
Develop a process to track recruiting related environmental factors including:Unemployment rates in your regionTurnover rates in your region (Use LinkedIn)
Employer brand strength in the industry (Glassdoor)
% of unfilled jobs or open days for your regionWhen top talent enters the market (others may leave)
AlsoIdentify own firm’s projected revenue growth rate
and the growth rate of key business units
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Action #6 – Monitor your talent competitors
Conduct a yearly competitive analysis to ensure that your rec. practices are producing superior results
Also track competitor actions & their precursorsWhen they adopt new hiring tools Changes in their recruiting staff / strategyWhen new jobs open up Revised job descriptions with brand new skillsFreezes or ramping up hiring Major product / project cancellations or other
major problems (layoffs, a merger, CEO left)When “talent competitor” turnover rates go up
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Action #7 – Use metrics and analytics
Use data supported decision-making in recruiting Be suspicious of past recruiting practices – in a
fast-changing world… “the old way” and your experience may actually be harmful
Real-time & predictive analytics can warn about• Internal positions that are likely to open up• When and where most openings will occur• Upcoming time to fill rates• Upcoming shortages /surpluses in key jobs• Source, tool and Q of H deterioration
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Google the world’s only data driven HR function
“All people decisions at Google are based on data and analytics”
We want to… “bring the same level of rigor to people-decisions that we do to engineering decisions,“
People analytics head Prasad Setty
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Recruiting actions
Recruiting capabilities that are required
in order to create an adaptable recruiting function
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Action #8 – Adaptability in processes /programs
Recruiting processes/programs are adaptable Toolkits are required – rather than a single corp.
solution, users should be given a toolkit… so that managers, recruiters and employees can choose the methods or tools that best fit their situation
Built-in obsolescence – every TA program, answer and tool must continually obsolete itself
Fluid job descriptions – continually update job descriptions… so each job is constantly adapting
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Action #9 – Target high-impact hires
Target new hires in these areasLook for adaptiveness – add adaptive
capabilities and experience to your job postings, hiring criteria and assessment processes
Target innovators – because of their high impact on profitability, redesign hiring processes… so that they successfully capture innovators
Be careful of using "fit“ in hiring – because in a changing world… what fit’s today may be inappropriate in the future
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Action #10 – Rapid hiring capabilities
Be able to rapidly ramp up your hiring
Talent pools and talent communities – to pre-
attract and pre-screen talent
Contingent hiring – contingent hires can allow
you to quickly ramp up capabilities… or reduce
labor costs (40%)
1 day hire capability - when top talent is available
Utilize RPO’s – for overflow & low impact hiring
Referrals use OPT – they should reach 50%
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Action #11 – Conduct market research
Use market research to scientifically identify:What to talk about - you must use market
research to compile a list of the factors that top passive and active candidates demand in a firm… and in a job (i.e. a great manager)
Where to place your messages - you must use market research to help you understand where top passive and active prospects would see / read your recruiting and branding messages
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Action #12 – Supplements to hiring
Supplement your hiring efforts with:Retention – so that you don’t need to recruit
replacementsAn “overflow” capability – cross-train and
redeploy talent for short-term seasonal, fill in or overflow needs (JetBlue)
Consider technology as a substitute for labor – Before hiring, look at technology as an alternative
Proactive internal movement – move individuals and teams to where they will produce a higher ROI and better retention >
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Example - Facilitated internal movement improves adaptiveness
Use a “career mobility team” – use your recruiters to proactively speed up internal movement and to more accurately place your top talent
