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Pivotal Talent: The Game-Changers You Need to Build Your Business

  • What jobs are companies upgrading?
  • What jobs should I consider upgrading?”

These are the two most common questions people have been asking me following my last blog post “Behind the Layoff Numbers, Companies are Upgrading Their Talent.”

The answer in both cases: jobs that require “pivotal talent.” “Pivotal” is not synonymous with “important.” Pivotal talents are those game-changing employees whose performance can make or break the bottom line.

Two of the best thinkers on this subject are John Boudreau and Pete Ramstad, whose book, Beyond HR: The New Science of Human Capital, has helped shape my thinking on how to connect business strategy to human capital strategy.

In a workshop I once attended, John and Pete offered a fictitious case study involving FedEx and pivotal talent. The board of FedEx pronounces Asia as their #1 growth market and key to the company’s future. Many companies make such pronouncements, and then fail to put in the people they need to succeed there. FedEx next analyzes their Asia growth processes, identifying the most important bottlenecks to that growth. (You may recall from business school that a “bottleneck” is a key constraint which, if removed, causes the entire process to work better.) A major bottleneck is the periodic assigning of landing rights at key airports in the region. By securing those landing rights, FedEx could grow in Asia; without those landing rights, growth of the entire enterprise would be compromised.

FedEx realizes that the people who secure those landing rights are pivotal to the future growth not only at those airports, but of the enterprise as a whole. Those community liaisons are pivotal talents.

How much compensation should FedEx pay to recruit and lock up the few individuals in each market with the knowledge, skills and connections to secure those landing rights? Further, what if they could poach those individuals from DHL or UPS and not only secure their competitive advantage for years to come, but also neutralize their competition?

This chart demonstrates the talent pool of pilots versus community liaisons:

Fedex

Pilots are unquestionably important to the business of FedEx. Assuming the pilots have a basic level of competence, though, improving pilot quality yields little additional value. But at key airports where landing rights are at stake, the difference in value to FedEx between the worst and best community liaisons is huge.

Who are the FedEx community liaisons at your company?

Before reflexively deploying traditional strategies like across-the-board layoffs and pay cuts, evaluate your approach to “pivotal talent,” those game-changing employees whose performance can make or break the bottom line. As market conditions evolve and business objectives quickly change, you’ll need the right blend of critical skills to succeed. Focusing on your pivotal talent can provide you a major competitive advantage over the next 18-24 months.

Consider:

  • What processes does your company need to win in your marketplace? Which are potentially pivotal? What are the key bottlenecks?
  • At those pivot points, which are the jobs where performance quality will determine success?
  • Do you have the people you need in those pivotal jobs?

If not, now is the time to upgrade. The job market, while brutal for job-seekers, has never been better for employers. You can access talent now that will set up your company for years. If you’d like to discuss whether Chen Partners can help ensure that you get the right talent in those pivotal roles, shoot me an email.

If you do have the right pivotal talent, invest in them now. Wrap your arms around them. Lock them up with incentives. Focus on their development. Otherwise, the next call they take could be mine.

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How Bullies Thrive in a Recession, and Why You Shouldn’t Let Them

Bullies. We know they exist. We know we should fire them. But can we afford to? And what happens if we don’t?

A friend from a major law firm in town recently told me about a senior litigation partner of hers who was famous for being rude. No secretary wanted to work for him. It was always f- this and f- that, and f- this person and all that. Not only did this guy cuss, but he was a mean cuss. recession bully

His partners sat him down and told him to shape up.  His response? As a litigator, he needed the f-word to do his job.

You know the type.

What did the firm do?  Decided he brought in too much revenue to reprimand too harshly.

He’s a classic “Destructive Achiever.” That’s a great term coined by retired management professor Chuck Kelly in his 1988 book of the same name.

Chances are you’ve met a Destructive Achiever. The typical American worker has a 50 percent chance of working for a bully in his or her lifetime, and one in five Americans works for a bully right now.

Bullies thrive during a recession, and have thrived in this one, because in bad times companies especially focus on their achievements while forgiving their bad behavior.

But new research shows that in fact, bullies cut a swath of destruction far worse than anyone imagined. Management professors Christine Pearson and Christine Porvath conducted a study of 4,000 employees at the receiving end of bullying behavior and found:

48%  decreased their work effort,
47%  decreased their time at work,
38%  decreased their work quality,
66%  said their performance declined,
80%  lost work time worrying about the incident,
63%  lost time avoiding the offender, and
78%  said their commitment to the organization declined.

Turns out that it’s during a recession that companies should beware the collateral damage caused by bullies.

My primary message regarding that megalomaniacal jerk in your ranks is: Cut Him (or Her) Loose.  That said, I understand that, like the law firm above, you may conclude that your bully brings too much benefit to cut loose, at least in the short term. It’s a recession, and revenue is revenue.

It’s a deal with the devil.  But if you have to make it, you don’t have to lose your soul – or leave your colleagues in harm’s way. Focus on gaining the benefits of the ‘achiever’ – such as his ability to bring in new business or solve technically demanding problems.  Meanwhile, remove his management responsibilities.  Reassign his direct reports and otherwise isolate him to minimize his destructiveness to the rest of the organization.  You’ll be doing your people, and yourself, a favor.

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For more on this subject, read:

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How the Science of Happiness Can Boost Your Business

A growing body of research on happiness in the workplace finds that optimism and cheerfulness have a measurable effect on the bottom line.

The chart below is from Wharton finance professor Alex Edmans, who has found that companies with happy employees perform better than other companies.happiest companies

Makes sense that happy workers are motivated, and that efficiency ensues.  The good news is that happiness is a muscle you can strengthen.

The happiest employees are those who believe they get to do what they do best every day. Only one-third of working people feel that way.

Ensuring that people’s jobs are well-aligned to their strengths is an ongoing process. As your employees grow and broaden their skills, seek to evolve their work to ensure a continued fit with their skills. To achieve “flow” — complete absorption in a task — their workloads should be challenging but not too tough for them.

For those among you who are recruiting amidst this recession, hire for people’s strengths, and not just for their resumes. I will address how to do this in future blog posts, but in the meantime, you can see an overview on our website here.

Robert Aliota, founder of parts-maker Carolina Seal, says happiness science has led him to make lasting changes at his company. He regularly analyzes his own moments of triumph, “times when I was truly in the zone, utilizing my natural strengths and having fun,” as a sort of happiness fuel.

That’s the sort of fuel that can power the success of your company.

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Want to Change Your Company Culture?

Companies everywhere are trying to reinvent themselves for a future they could not have imagined a year ago. Problem is, their human capital practices are not keeping up with their shifts in strategy.

I was out drinking with a senior partner at a well-known global consulting firm. He was leading a campus-recruiting project to hire students from China as they graduated from American universities. After all, it’s the era of the global consumer, and 53% of executives say that China and India will be vital to their success in the next five years. This project sounded like a good way for his firm to stay ahead of their clients’ needs.

He and his team had just been to UCLA. I asked how things went. Not well, he replied. Now I happen to know that UCLA is commonly called the “University of Caucasians Living Among Asians,” so I wondered why all those Chinese students didn’t fit the bill.

He said that they were uniformly smart and ambitious, but lacked “cultural fit.” In fact, he complained, one student came into the interview in a pastel suit, his hair in a pompadour. Elvis on top, Miami Vice below.

Research shows that, as a matter of human nature, when we meet someone, we size him up within five minutes, and then that initial impression colors not only our entire meeting, but also our recollection of that meeting. In recruiting, we call it the “Halos and Horns Effect.”

cultural-fit-bbmodel1A Brooks Brothers model would have had a better chance getting past those crucial first minutes with my friend’s firm.

But this begs the question: What culture is this firm is recruiting to?

The Chinese students at UCLA now are China’s brightest, richest, most connected, best English-speaking, young people. For a firm that has tied its future to winning and executing China business, these candidates could be exceptionally well-equipped to helping the firm execute on those strategies.

It’s in the boardroom that companies announce new strategies and organizational structures, but it’s on the frontlines of people-management that the rubber meets the road.  Companies should routinely review their human capital practices to ensure they’re aligned with their strategies.

Otherwise, that Elvis lookalike who gets away could be the one who walks across the street to help your competitor eat your shorts.

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Behind the Layoff Numbers: Companies are Upgrading their Talent

Former Los Angeles Mayor Dick Riordan used to say, “You don’t have to get serious about business until you turn 40.”

Well this weekend, I turn 40, so watch out.  If this week is any indication, this recession will continue to power continued growth at Chen Partners. This week, we completed a VP Sales search at a portfolio company of a private-equity client who bought the company intending to create value by upgrading its sales function. And, at another company, the CEO signed us up to find a strategic new VP Human Resources to replace an administrative type.

That our firm is growing in this recession comes as a surprise to many. That’s because of all the news headlines blaring these half-truths:

1. It’s a brutal job market out there.
2. The recruiting industry is getting decimated.

Certainly, the recession is radically reshaping how companies are hiring. But here’s the whole truth:

1. It’s a brutal job market out there IF you’re a job-seeker. But for employers, the market has never been better.

Hidden in all the layoff reports is the fact that companies have been taking advantage of the chance to dismiss the low-performers and cherry-picking from the many good people out there. But the expanded talent pool means that there’s more work involved to find the best.

If you’re hiring, take care to avoid these seven common hiring pitfalls. In the future, I’ll blog more on how to recruit the best. Meanwhile if you like, click on “recruitment process” in the tag cloud at right.

2.  The retained-search recruiting firms are in trouble. That’s because the total recruiting pie has shrunk, and with their remaining recruiting dollars, companies are reevaluating longterm vendor relationships in search of results and efficiency.

It is indeed true that the retained search industry has shriveled in this recession. My old firm, global executive search firm Heidrick & Struggles, was trading at $52 in July 07, and is now at $18, a 65% decline versus a 33% decline in the Dow in the same period. The other publicly-traded retained search firm, Korn/Ferry, has similarly shrunk. But the decline in the industry has a lot to do with the retained search business model. Retained-search firms collect their fee up front, regardless of whether or not they ultimately deliver a viable candidate. The industry’s average completion rate is only 60%, and search firms do not return fees for uncompleted searches.

The retained-fee structure creates a conflict of interest between clients and shareholders, since revenues come from selling new searches, but the resources to work on those searches are booked as costs. That these firms are publicly-traded creates inexorable pressure to continually increase revenue by selling more searches, while at the same time reduce expenses by cutting the resources needed to complete those searches.

The retained-search business model has remained unchanged since the search industry was created in the 1950s. And, as the shareholder value destruction in this industry attests, the model is increasingly out of step with the increased transparency and value demanded by companies in this recession.

Two years ago, we established our firm with the intent to align our success with the building of our clients’ businesses. We accept only those assignments we feel confident we can complete. Then we dedicate the resources to complete each one.  We strive for excellence in all our work. And we back up our pledge with a pay-for-performance fee structure.

This recession has brought wrenching change for all businesses, but surviving companies will see lasting benefits. First, having cut to the bone and backfilled some of those cuts with better talent, they are leaner and more focused. Second, having reevaluated all their expenses, they are driving for greater efficiency and effectiveness in their recruiting value chain. Both these trends will continue to fuel the expansion of our work.

I’ll honor Mayor Riordan’s advice about turning 40 with a renewed commitment to helping our clients take advantage of this recession by priming their companies for renewed growth.

To all our clients, thank you for your trust and partnership. It’s by helping you build your businesses that we grow ours.

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