2016 was a very special year in so many aspects. Trump, Brexit, Terror, Wars & Refugee’s, the resurgence of authoritarian leaders, Zero Interest Economics, the beginning of the post-factual age etc. All these effects and causes contribute to high levels of uncertainty. Despite most economic and social indicators, pointing upwards with record low or reduced unemployment in many countries, the feeling of uncertainty prevails – in an almost post-factual manner. The media seems to be the message, finally.
How would HR look like if bright engineers where to design it from scratch? Google scrutinized every conventional business wisdom and came up with a data driven, tested and continuously improved new way to hire.
Hiring is the most important management skill – by far
Hiring is the key skill of a manager. There is consent on that in management literature – from academics like Peter Drucker to practitioners like Steve Jobs or Eric Schmidt. Yet conventional hiring processes do not reflect this urgency.
Conventional hiring seeks to get someone “good enough” for a job, balancing the needs of the position and the funds available. In contrast, Googles approach is to look for persons that “will grow”: A candidate does not need to be sufficiently qualified – just yet. But he certainly needs to show the potential to grow even beyond the job that is currently on offer.
In order to achieve this, the whole hiring process has been dissected and revamped:
Do not trust a manager – use a committee
Googles approach is derived from the academic outlook of their founders. In Universities, recruitment is not done by the “superior”, but by a committee. Universities need to commit to their faculty members for a long time, as results of academic work are really visible only in the long term. So extra care is taken in the selection process. Goggle has brought this “extra care” to the business world by putting committees instead of individuals in the drivers seat of the hiring decision.
A decision for a co-worker should be influenced by the persons a candidates will work with. Most day to day interactions will be done inside the team – not with the manager that the candidate will work for. Committees are a way to…
a. eliminate personal biases of the manager
b. of any other individual in the committee, i.e. co-workers, HR representative and peers
b. to enforce rigor into the process, the discipline to stick to high standards.
But committees are not enough. Watch this scene from Moneyball, a 2011 film based on the real, overwhelming success of the Oakland Athletics Baseball Team in 2002/2003, where a committee tries to pick new players for the season.
Committees are prone to conventional biases, as individuals are. They need data and a process to deliver optimal value.
Use Data to eliminate biases
In order to eliminate biases data about the candidate data needs to be gathered:
- Tests are used wherever possible: Work sample tests, Cognitive (IQ) tests, Conscientiousness Tests. Test have a higher correlation to a successful future of the candidate than any other predictors, including the CV
- Past performance of other, former candidates are scrutinized for correlations with educational background, upbringing, activities etc.
- KPI’s are defined and graphically presented in order to compare average and median values for the actual and past candidate population as well as the google employee population (by organizational unit or function)
- Interviewers performance itself is measured on input factors (how many interviews performed, on-time start of interviews, number of re-schedulings) and output factors (candidate performance rankings after 6 and 12 month). This allows continual optimization of the hiring process itself
For every candidate decision data is made available to all committee members in the form of briefing packages. This briefing material is not unlike executive briefing packs in detail, accuracy and cleanliness.
Takes this cue from “Moneyball”: It takes a lot of data gathering, a lot of number crunching and a lot of pre-reading from everyone involved in the process.
Is this efficient?
Hiring to high standards is extremely frustrating: Just filling a position is much more simple than trying to recruit a person that “will grow” even beyond the position. It is time consuming, there is a high churn rate of rejected candidates. The result of the most of the careful work of a 4 to 5 person committee is to say “no” to a candidate at the end. What a waste!
Each employee needs to spend 1,5 (e.g. a member of a committee without interview duties) to 10 hours (an interviewer in high demand because of her interviewing skills) per week on hiring. That is 3% to an extreme 20% of overall working time. Is this efficient?
Lazlo Bock (see sources) makes the point that all the time spend in hiring is rewarded by the future contribution of the employee. And for those that this lofty statement is not enough he comes up with this: Google is spending much less on external training than other companies. Internal training by employees for employees is highly encouraged.
The final balance is not clear, as individual contributions are subject to so many influencing factors. As Google is mostly hiring extremely bright engineers who train other bright engineers, the probability is that this process is effective as well as efficient.
Amazon’s hiring processes show similarities with Googles Processes in many aspects. Amazon employs a group of senior interviewers that have the final word in every hiring discussion. This group is called “Bar Raisers” and consists of valued employees who hold this role in addition to their other obligations.
For other, more conventional companies, the verdict might be different and involve more of a judgement call of how important people actually are to the companies type of business. In every industry managers declare “people” as being key to success. But having excellent people is worth nothing, if they do not have the autonomy to do anything else than their daily toil.
Good people matter – if the organization provides a framework of space and time for them to blossom.
Google’s management framework is geared towards providing this freedom – see last post.
What to do in conventional companies?
Beside Google and the odd Baseball team, who else is emphasizing hiring so much?
- The whole professional sports world has been the subject to data revolution since “Moneyball”, e.g. NBA, NFL and the various European Soccer Leagues
- Most of Silicon Valley’s companies have a very special take on the hiring process. Most share elements with Google, e.g. Amazon or Apple
- Traditional companies, such as the Grocer Wegmans, are cited by Lazlo Bock as traditional companies having a strong focus on the hiring process and delivering excellent results- even in low margin businesses
A final word be said by a leader of a much less elitist organization than Google:
“You need to have a collaborative hiring process.”
Is management important to a organisations success? How much hierarchical power is helpful? Where is the tipping point where too much power becomes detrimental to an organisations success? Let’s take a look what Google Inc. has found out.
Larry Page and Sergey Brin took a look at management theory and were not impressed: Too much hearsay, too little data. There’s got to be a better way to manage companies. So google made their own rules.
Now, with 548 Billion$ market capitalization, 18 years since its founding, most people still think of Google as bold, entrepreneurial, unconventional and smart. It seems that there is something to learn from Google about management.
The bullet is coming. It is coming straight at your company. Everyone can see it. Meetings are set-up and action plans are conceived to prevent the bullet from hitting. There are endless presentations about the bullets velocity, force and trajectory. Till the last minute everyone stands and stares at the approaching bullet. People are even bored by talking about the bullet. Then it hits.
Is your company seeing the bullet and is still not acting, just talking? Digital technology will disrupt your business, too, eventually. Lets explore some real case studies and explore this phenomenon.
Most companies do not have a strategy. There is consensus in management literature about this fact. Why do most executives fail their companies in the realm of strategy?
Let’s see what leading economists, managers and social scientists found out and what to do about it: Does a company really need a strategy?
No politics! Politics is perceived to be a shady, back-room dealing, mischievous activity which should have no place in an organization. Everyone should speak honest and truthfully and promote the best interests of an organization: “We do not need politics here!”
This is silly. At least, its way to simple. Politics is “The process of making uniform decisions applying to all members of a group” – this could be a definition for management, too. But it is the official definition of the term “politics”. All organizations are political – by definition.
An “exponential organization” as defined by Salim Ismael is a business model that is poised to take advantage from the digital revolution. It leverages the abundant nature of information goods to transform business models of any sector, even physical, manufacturing or brick & mortar based sectors.
Even traditional companies can harness the power of the digital revolution, change their direction and tweak their organizational structures in order to propel their business forward – instead of viewing the digital revolution as a threat, a head wind.
They can use it by changing their organization, their course and flexible exploring where customer value is – they can harness the power of the digital storm and sail.
Here is how.
If management is a craft that can be learned and perfected over time – are you actively pursuing excellence in management or are you taking on things as they come along? Moreover: Is your company actively pursuing excellence or does it appear to be just drifting in time? What is your, what is your companies level of ignorance?
There is much here-say in management theory. For the most part, it resembles more folk-lore than science. What we call “best practice” is mostly just a mere belief. It might be a good or even a wise guess, but is it the truth? Is it, as Frederick W. Taylor would have framed it, the one best way to do things?