The employer-employee relationship is broken, and managers face a seemingly impossible dilemma when dealing with talent. The old model of guaranteed long-term employment no longer works in a business environment defined by continuous change, but neither does a system in which every employee acts as a free agent.
Reid Hoffman gets to the point quickly on how to manage talent in the networked age. The solution, he says, is to stop thinking of employees as either family or as free agents. Think of them instead as allies.
It’s time to rebuild the employer-employee relationship
If we can’t go back to the age of lifetime employment, and the status quo is untenable, the business world needs a new employment framework that facilitates mutual trust, mutual investment, and mutual benefit. An ideal framework encourages employees to develop their personal networks and act entrepreneurially without becoming mercenary job-hoppers. It allows companies to be dynamic and demanding but discourages them from treating employees like disposable assets.”
The psychological contract
Unlike many traditional theories of management and behaviour, the Psychological Contract and its surrounding ideas are still quite fluid; they are yet to be fully defined and understood and are far from widely recognised and used in organisations. The perceptions of both parties to the employment relationship, organisation and individual, of the reciprocal promises and obligations implied in that relationship is the textbook definition of a psychological contract, a concept developed in contemporary research by organisational scholar Denise Rousseau in 1989.
Both company and employee should add value to each other
As Hoffman described it; think of employment as an alliance: a mutually beneficial deal, with explicit terms, between independent players. In an alliance, employer and employee develop a relationship based on how they can add value to each other. Companies need to tell their employees; “help make our company more valuable and we’ll make you more valuable” Employees need to tell their companies; “help me transform my career, and I’ll transform the company’s trajectory.”
Someone is doing something right
This is precisely why you can learn from Silicon Valley. This is one of the fastest-moving, most competitive economies on the planet. It’s immensely difficult to retain quality employees, so the companies and managers that convince their people to stay must be doing something right. The talent management techniques—such as tours of duty—that work in this brutal environment are battle-tested. If they work here, they can work anywhere. Build trust and loyalty with honest conversations takes a leaf from Susan Scott’s book, “Fierce Conversations”.
“Maximizing employee security is a prime company goal,” Earl Willis, General Electric’s manager of employee benefits, wrote in 1962 That is a completely different language from what workers are used to hearing now as companies start “Rightsizing”—or as we used to call it, firing people.
Everyone should be on a tour of duty
A tour of duty represents a commitment by employer and employee to a specific, mutually-beneficial mission over a realistic period of time. Of course, there are different types of employees and different roles.
- Rotational tours are programmatic “on-ramps,” such as a 2-year analyst program. Tours for new grads joining.
- Transformational tours are highly personalised missions that promise career transformation for employees, and company transformation for the company.
- Foundational tours are for employees who cannot envision working anywhere else; who have become part of the emotional fabric of the company, and vice versa. Foundational tours shouldn’t be restricted to senior management. People on Foundational tours, wherever they are on the org chart, provide a company with continuity and institutional memory. These stewards of the company way are the intellectual and emotional foundation of the organisation. For example, they take greater pride and care when it comes to product quality because they develop a sense of (nonfinancial) ownership. As the expression goes, no one ever washes a rental car. A Foundational employee would never allow the company to cut corners to meet short-term financial goals.
When recruiting top talent, offering a clear tour of duty with specific benefits and success outcomes beats vague promises like “you’ll get valuable experience.” Defining an attractive tour of duty lets you point to concrete ways that it will enhance the employee’s personal brand.
Institutionalise network intelligence
Hoffman clearly demonstrates why Employee networks are extremely valuable to companies as a source of information. As Bill Gates wrote more than a decade ago; “the most meaningful way to differentiate your company from your competition, the best way to put distance between you and the crowd, is to do an outstanding job with information. How you gather, manage, and use information will determine whether you win or lose.” If you’re not actively taking what employees learn from their networks and bringing that knowledge back into the company to you are missing a huge trick. Lifetime employment may be over, but a lifetime relationship can endure. Hoffman described the creation of the LinkedIn Alumni Network and how the company aspires to invest in a lifelong relationship with its former employees.
Corporate alumni networks. Look at PayPal
Tesla. YouTube. Yelp. Yammer. SpaceX. What do all these companies have in common? They’re not just examples of innovation and massive financial success. All of them were founded by the alumni of a single company: PayPal. You should want your employees to be discoverable by the outside world in a professional context.
Two stories, two different outcomes on how to manage talent
- In 2003, website engineering manager Benjamin Black wrote a short paper describing a vision for Amazon’s infrastructure and suggested selling virtual servers as a service. When Amazon’s board questioned whether the company should tackle something so unrelated to online retail, Bezos defended the idea and pushed it through. Launched in 2006, AWS contributed an estimated $3.8 billion to Amazon’s revenues in 2013.
- John Lasseter of Pixar fame began his career at Disney as a young animation designer in the days when animation was created with pen and paper, then converted into a film. Lasseter was struck by a vision—Disney should create an entire film using computer-generated animation. He was being fired. The rationale for his dismissal: he was too distracted with his crazy ideas.
Finally, Hoffman finishes with a clarion call for all businesses managing talent. “Today, entrepreneurial thinking and doing are the most important capabilities companies need from their employees. As the competitive pace increases, it becomes more and more critical.”