Five Questions for Richard Cavanagh

As a partner at McKinsey & Co. during the 1980s, Richard Cavanagh advised CEOs to leave after a decade so that the business could try new things. On March 8, soon after Cavanagh reached the 10-year mark as president and CEO of the Conference Board, he took his own advice and announced he would step down by year’s end. Cavanagh’s management skills have taken him from the private sector to the White House Office of Management and Budget during the Carter administration and to Harvard’s Kennedy School of Government, where he was executive dean. Cavanagh, 59, recently spoke to Workforce Management staff writer Jeremy Smerd.

    Workforce Management: How do you motivate people at places where getting a job is the hardest part?

    Richard Cavanagh: At both Harvard and McKinsey you had high turnover rates that were induced by the organizations. At McKinsey, you’d get these incredibly bright people coming in as consultants, and one out of 10 would become partners. So you were always culling. It’s a controversial view: Should you have forced attrition and should you be cutting the bottom X percent out?

    WM: What qualities should managers possess?

    Cavanagh: Highly talented people don’t need to be supervised, they need to be provided with opportunities; they need to be provided with, maybe, some guidance. The second thing is that people realize talent is really precious. You want to treat it well and you want to develop it and you want to keep it as long as you can. It’s not a throwaway. There’s not a constant replenishment. It’s not like energy from the sun.

    WM: How is outsourcing changing HR?

    Cavanagh: What it’s done is say there’s a new skill, which is how to manage contractors. Some people have been very happy outsourcing software development to somebody in Bangalore, and others have been very disappointed. And all that has to do with how well they’ve figured out how to manage contractors. Contractors have to be managed just as workforces do, except they have to be managed differently.

    WM: In The Winning Performance you wrote that companies succeed because of their willingness to take risks. Should HR managers take risks?

    Cavanagh: Yes. When JetBlue decided they could have people working in their homes with computers selling airline seats there was a risk to that: not having all these people in one big room. Southwest Airlines—and I’ve now named the only two successful airlines in the United States—took a risk by saying work can be fun, and we can actually get pilots to help turn the planes around faster and we can get our ticket agents to go and clean. That was a risk, and yet it worked because people like being a part of Southwest Airlines.

    WM: What’s next?

    Cavanagh: I still have to get out of this job. I think leaving a job is as difficult as taking a job. At the end of your watch it’s too easy to let things slip. So you have to redouble your efforts at the end. I’m too old for hard labor and too young for shuffleboard.

Workforce Management, April 24, 2006, p. 8 — Subscribe Now!