In his new book, Talent on Demand, Peter Cappelli attempts to address an issue that I would hope all companies are thinking about today: how to manage the unpredictable demand for talent.
Unlike other books on talent management, this book uses terms and examples that CEOs and CFOs can understand. Instead of just talking about turnover, productivity and other HR metrics, Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School, talks in terms of making money: “And making money requires that you understand the costs as well as the benefits associated with your talent management choices,” he says.
The gist of Cappelli’s book is that most companies are relying on outdated and ineffective strategies to develop their internal talent, while being way too dependent on outside hiring.
For example, many companies still use a development model for employees that assumes they will be with them for their entire careers. Under what Cappelli calls the “Organization Man” model, companies train employees to learn the skills that are specific to their business needs, with the understanding that those employees will grow with the company.
But the reality today is that companies can’t predict what their talent needs are going to be 10 years from now, and even if they could, it’s not likely that their employees will stay with them for that long.
Most employers have realized that and thus have become overly dependent on outside hiring, which has its own set of challenges.
Cappelli argues that employers should instead adopt “on-demand talent management,” which means developing employees according to competencies that could be valuable no matter where the business is in 10 years.
He advocates on-the-job training, but cautions companies against rotational assignments, because too often good talent ends up waiting on the sidelines for their rotation to come up, and nothing is more frustrating to an employee than waiting. Other ways that companies can get the most bang from their buck in on-demand training are:
Peer training, where employees can volunteer to mentor others.
Outside training, where organizations lend employees to outside charities or even to clients (as consulting company Mercer does) to learn from those experiences.
Cost-shared training, where employees are asked to foot some of the bill for their outside training. One way to do this is through training wages, where employers pay employees less while they are in a training program. Another way is through tuition assistance programs, or having them go through training before they take on a job.
All of Cappelli’s points are pretty interesting, and companies should take many of them seriously.
But the real problem today with companies is that they too often give lip service to employee development, but fail to follow through. I can’t count how many times a week I hear companies say how much they value their people, that they’re the No. 1 asset, etc. But when the going gets tough, those same people are the first to get the boot.
Since we seem to be heading into a recession, I wonder whether companies will embrace Cappelli’s ideas on developing talent, or will just resort to the old ways of mass layoffs, with the hope that they will be able to find the talent again when the market picks up. What do you think?
“And Mr. Chairman, you have less restraints on the exercise of power than any of the leaders of countries today,” he said at the 2003 meeting. “The scope of your power, Mr. Chairman, is truly imperial. You are an emperor.”
But Monks doesn’t stop there. On top of criticizing the executive power and pay of many Fortune 500 CEOs, he attacks compensation committees and consultants as being pawns to the CEOs they serve. He accuses the Business Roundtable, the coalition of CEOs of large corporations, as being a self-serving entity that is only out to protect the interests and pocketbooks of its members.
While another book about the excessive power and pay of today’s executives might not seem too exciting, Corpocracy is an important read for HR executives at public companies—if for no other reason than that it gives them a good playbook of what to expect next time they are put in a room with their companies’ shareholders.
Monks is the founder of Institutional Shareholder Services (now called RiskMetrics Group), which advises institutional investors on how to vote on shareholder proposals at the companies in which they invest. His stance, while extreme, sheds light on the growing discontent among shareholders about how public companies are run today—particularly with regard to executive compensation. [Click here to listen to an interview with Robert Monks. Link opens a new browser window.]
Shareholders want to know not only why companies are paying their CEOs so much, but what goes into the decision-making behind these pay levels. To foster smoother relations with shareholders, many companies are bringing in their heads of HR to talk to shareholders before proxy season to explain how they came up with theirnumbers. If you are one of these HR executives, Corpocracy is a must for you.
Each year, there are more and more shareholder proposals about executive compensation. Monks points out that in 1970, the average CEO earned less than 30 times the average wage of all production workers. Today, the average CEO makes 300 times the average worker’s pay.
“Between 1990-2005, the 10 highest paid U.S. CEOs brought home an aggregate of $11.7 billion in total compensation,” Monks says.
Monks believes, as many shareholders probably do, that CEOs pretty much set their own pay regardless of what the companies claim. What about the compensation committees? Monks thinks they are a ruse.
“Compensation committees are peopled by and large—and quite intentionally—with those directors most inclined to have a supportive view of CEO compensation,” he says.
This would probably include the HR executives on these committees, who more often than not report to the CEO. So if you are one of these HR executives, you had better be prepared to explain to shareholders why you are fit to be on the committee.
And if your justification for being involved with executive compensation is that you are actually just aiding a compensation consultant, which the company hired to assure independence and objectivity, that doesn’t quite cut it in Monks’ view. On this topic, he quotes Charles T. Munger, the former Berkshire Hathaway vice chairman and CEO of Wesco Financial, who once said of compensation consultants, “Some of the worst sinners are compensation consultants. I have always said that prostitution would be a step up for these people.”
Monks paints a dim picture of companies’ corporate governance practices overall. The only realistic way to address the situation, in his opinion, is for shareholders to rise up and demand more say in how executives are being paid.
To some extent that’s already happening. Last year a handful of companies, including Verizon Communications and Blockbuster, passed proposals that allow shareholders to give a nonbinding vote on executive pay packages.
And as regulators and shareholders become more vocal in their criticisms of how companies are paying their top executives, it’s only a matter of time before employees start asking questions. Particularly with all of the talk of recession, many workers already are asking why their CEOs are making so much when profits are down and layoffs
seem to be around the corner.
And that’s why even those HR managers who have nothing to do with executive compensation might want to read this book. Because when the whispering at the water cooler begins, HR had better be ready with a pretty good explanation.
Whether you like her or not (and plenty of people don’t), Hillary Clinton’s showing on Super Tuesday says something about how far women have come in being taken seriously as leaders. Clinton has noted that when her 88-year-old mother was born, women couldn’t even vote.
But it would be going too far to say that Clinton is proof that women are now judged solely on the strength of their leadership and that gender doesn’t matter. The pummeling that Carly Fiorina took during her tenure at HP is proof of that. Further evidence can be found in book published this fall, Through the Labyrinth: The Truth About How Women Become Leaders.
Some business books toss off anecdotes and pretend that’s research. Not so here. The authors, Alice H. Eagly and Linda L. Carli, both college professors, pack the book with studies and data to support their answers to the provocative questions serve as chapter titles:
Is there still a glass ceiling? No. Instead, women have to negotiate a labyrinth of conflicting demands, expectations and barriers to advance.
Are men natural leaders? Men score higher in some traits associated with leadership. And women do better in others.
Do family responsibilities hold women back? Is discrimination still a problem? Yes and yes.
I think it’s interesting that the authors settled on the labyrinth as their metaphor. Without going too much into the mythic realm, as a recent post did, I’ll just mention that in Greek mythology, it was a woman, Ariadne, who knew her way around the labyrinth that her father had ordered built to hold a monster, the Minotaur. And it was Ariadne who gave her lover, Theseus, the thread he used to find his way out of the maze after killing the creature. So what did Ariadne get for her trouble? Theseus abandoned her on the island of Naxos. I told you that office romances never work out.
Through the Labyrinth is fascinating and depressing in almost equal measures, depending on the page and the finding. For example:
Unlike women who have bumped into the glass ceiling because they’re not perceived as leadership material in a male-dominated world, men working in female-dominated careers often ride the “glass escalator,” ascending faster than women. Their token status works for them.
The double bind is alive and well: Acting like a man—assertive and aggressive—is often seen as the wrong way to proceed. Acting like a woman—being soft-spoken, or just plain soft—is just as likely to block professional progress. The authors quote Kim Campbell, who served as Canadian prime minister briefly in 1993: “I don’t have a traditionally female way of speaking. I don’t end my sentences with a question mark. I’m quite assertive. If I didn’t speak the way I do, I wouldn’t have been seen as a leader. But my way of speaking may have grated on people who were not used to hearing it from a woman. It was the right way for a leader to speak, but it wasn’t the right way for a woman to speak. It goes against type.”
Women endure some astounding suggestions from their bosses and colleagues on how they should behave to get ahead in the workplace. The authors quote Patricia Woertz, CEO of Archer Daniels Midland, who recalled that one of her first bosses “assured her that children would ruin her career: ‘Get yourself fixed,’ he said, ‘and put it on your expense report.’ ” Woertz didn’t take the advice. She had three children, and an “extraordinarily successful business career,” the authors say.
If you can hang in until Chapter 10, you’ll find some sort-of-good news—a discussion of the techniques that women use to successfully thread their way through the labyrinth. As you might guess, it’s all about juggling, balancing and, sometimes, overachieving. “It isn’t fair, but women often need to be exceptionally good to be credited with the abilities of less-competent men,” Eagly and Carli write.
And as if they could hear the screams of their readers, they add a few pages later: “Some readers may object to some of our advice, because it implies that women must accommodate themselves to existing cultural and organizational norms rather than the other way around. Our point is that women should not wait to seek leadership until organizational and cultural changes have created a level playing field. Women who initially break into male-dominated roles face special challenges, but when they are successful, they can foster progressive organizational change that creates greater fairness for the women who follow in their footsteps.”
It takes guts, that’s for sure. Here’s a thank you to Clinton, Fiorina, Woertz and all the other women who are leading the way through the labyrinth. Keep an eye out for the Minotaur.
A young man is unhappy and in turmoil over his life. He encounters a wise but mysterious old man who seems to command knowledge that could make all his dreams come true, but for the youth to achieve his goals, the old man demands that he pass the tests and challenges he will put before him.
And it’s also The Go-Giver, a new book that modestly (and accurately) describes itself as “A little story about a powerful business idea.”
It’s pretty high in Amazon’s rankings for business and motivational books, and I would guess that its positive message and its mytho-heroic story are the reasons why.
So, just as Joseph Campbell set forth in The Hero with a Thousand Faces, the book that George Lucas used as a thematic blueprint for Star Wars, The Go-Giver begins with a youth who stumbles into a secret world. In this case, it’s it’s Joe, a 25-year-old company go-getter who is struggling to succeed in his sales business. He’s lost the big contract he was after, and so goes in search of the mysterious “Chairman,” who, he thinks, he can use as leverage to win back the big account.
The Chairman lives regally in a “beautiful stone mansion.” (Campbell notes that the first stage of the mythological journey is the “call to adventure,” signifying the destiny that has summoned the hero “and transferred his spiritual center of gravity from within the pale of the society to a zone unknown.” Campbell says the zone can be represented as a distant land, a forest, a kingdom underground, but it’s always a “place of strangely fluid and polymorphous beings.” So too in The Go-Giver.)
The Chairman leads Joe through his journey of initiation, introducing him to transformative characters—the chef, the real estate genius, the teacher-turned-CEO, the coffee goddess, and the ultra-mysterious “Connector.” He imparts to Joe the “Five Laws of Stratospheric Success,” and while that doesn’t have the same ring as the Sword in the Stone, the Force or the Nine Rings of Power, I guess stratospheric success will have to do in here in the world of the business quest. By the end of the book, Joe has learned and lived the laws, become the benevolent and successful “go-giver,” and secured the love and freedom of the fair maiden. At then the Ewoks dance with joy. Sorry—I got my quests mixed up. No Ewoks here.
As I said, a lot of people are buying this 132-page book, at $20 a pop, even though its message can be stated, verbatim, in less than 100 words. The writing is pedestrian, and all in all, I’d rather watch Star Wars. But clearly, thousands of Amazon readers are getting something that I’m missing. What is it? Let me know.
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No one could accuse Robert Monks of not having chutzpah. In the first chapter of his recent book, 
Whether you like her or not (and plenty of people don’t), Hillary Clinton’s showing on Super Tuesday says something about how far women have come in being taken seriously as leaders. Clinton has noted that when her 88-year-old mother was born, women couldn’t even vote.
A young man is unhappy and in turmoil over his life. He encounters a wise but mysterious old man who seems to command knowledge that could make all his dreams come true, but for the youth to achieve his goals, the old man demands that he pass the tests and challenges he will put before him.
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