By Brenan German, Founder and President of Bright Talent
HR Leaders, in this Harvard Business Review article by Josh Bersin, he highlights the great success of Netflix as a company that continuously evolves and outperforms most industry standards while continually hiring and retaining top talent.
Netflix is the focus of business case studies, as they challenge traditional talent management models. This is key, as Bersin states in the article, because these traditional models “can promote acceptance of some built-in mediocrity.” And if your CEO is reading this article, they’ll probably be in your office January 2nd with a whole new vision for talent management.
Of course, that new vision will be “how do we become the Netflix of our industry” BUT with the same modest HR budget as last year. It’s the last part of the sentence that stings the most because you know how to improve performance but can’t get the CEO/CFO to align on your funding. So, they revert to looking at last year’s budget and approve the same amount.
This is where we need to learn to break the cycle. What if we can leverage the “Netflix” example to build our business case? What if we can demonstrate that an investment in HR practices will indeed improve financial numbers year over year? What if we lower turnover and improve engagement, which directly correlates to improved profit per employee?
I like this article because Bersin addresses this with his discussion of talent density. Although the culture of Netflix is focused on performance and innovation, in my interpretation a modern take on GE’s stacked ranking and Gore’s matrixed operating model, it is not for every company. Just as forced ranking or matrixed practices are not for everyone either. Because the truth is that it’s possible to ruin an organization by trying to become something it isn’t. However, it does offer the opportunity to learn and adopt characteristics of these models to help shape your own cultures for the better.
Bersin outlines three ideas of how an HR leader might influence change in culture to improve business performance:
Rethink the recruiting function
Move people into jobs that leverage their strengths
Pay people at market rates or above.
The recommendations are good, and I thought to expand on them to offer ways to integrate these concepts into companies not like Netflix.
Regarding the rethinking of the recruiting function, I love the idea of the recruiting function owning both internal mobility and external talent acquisition. It gives the function a broader view of talent, both internal and external, to determine the right strategy to fill openings. This will improve career pathing, employee development and employment value proposition. It will lift engagement and talent density as well as improve employment branding and attraction of top talent. But it all starts with the employee experience. This will require talent acquisition to take a leadership role, getting more involved in performance management and implementing regular talent review cycles to allow leaders to become educated on internal talent availability and gaps to be filled externally. It also should include the creation of professional rotational programs to promote and encourage employees to look for opportunities to use their skills elsewhere in the company.
Regarding the assignment of people into jobs that leverage their strengths, this is an employee development strategy built upon behavioral competencies. This is the foundation of Gallup’s science and practices – a well-documented prescription for business success. But if your organization does not have this embedded into their culture, then it’s a philosophical shift as well. This is a key area where HR leaders can influence their CEOs to make a bet on developing their employees. The hard dollar savings related to reduced turnover are real and supported by increased productivity through improved engagement (revenue and profit) when companies invest in employee development. Philosophy and strategy align when programs are developed to understand employee strengths and to develop those strengths through training and job assignments. When an employee is empowered through self-awareness and utilization of their strengths, the growth of that individual can be exponential. Along with a congruent talent review cycle mentioned above, the success will be self-perpetuating.
Regarding paying people at market rates or above – this is kind of an obvious idea in theory but, as Bersin notes, it’s not executed well by many organizations. And paying above market rate for top performers is equally obvious in theory but not always practiced. This idea is especially impactful when attracting and retaining the best talent. But it requires a CEO-level mandate to execute this strategy, being sensitive to potential inequity issues. Tough decisions will need to be made if an organization truly implements this plan. This is another key area for HR leaders to influence the strategy and philosophy of the organization to improve performance. If the CEO is committed to growing through improved compensation practices, then we must admit that not all employees are performing equally – some perform better than others. Those who outperform others need to be rewarded and recognized regardless of tenure or strict pay grades. Therefore, the HR Leader will need to perform a risk/reward analysis and develop a plan around each possible outcome as the practice is adopted. Like any change management project, it will be painful but worth it in the long run as the right talent is retained and attracted.
Bersin selected these three areas because they are key elements to organizational transformation regardless of your company culture or industry. Netflix, GE, and Gore are all leading organizations because they found the right combination of levers to pull to create their unique cultures that thrive against industry standards. The key word is unique, because you’ll never be one of those organizations, however you can find the best version of your culture.
It takes courage, creativity and grit to influence leadership toward exploring new ideas. Perhaps 2025 is the time to leverage your expertise as a business leader running HR to show how improved people practices impact revenue and profit. Maybe not like Netflix but inspired by Netflix.
If you need a refresher on the language of finance to help correlate financial performance to people metrics, I recently led a webinar on this very topic under our rapid change management webinar series: The Language of Finance - Essentials for HR Pros