Wednesday, April 10, 2013

The Strategy of growing organizations around its people

The topic this week delves into the looking at a company from within especially its people. From “Capitalizing on Capabilities” by Ulrich and Smallwood and “Top Ten Reasons Why Large Companies Fail To Keep Their Best Talent” by Eric Jackson (, we see the importance of people to an organization. For any organization to be successful and remain ahead of competition, the only asset that cannot be replicated is an intangible asset – its people.

Employees are seen as Strategic Resources by organizations. From “Capitalizing on Capabilities”, the authors point out that in technical companies, core competencies are the result of individual core competencies. This would especially be true of software companies such as Google and Facebook where people create products. The tangible assets are not the revenue generators, but the people are. This begs the question, how does an organization retain these skilled, highly valuable people? How does the organization fend off competitors who are willing to pay these people more or how to these companies prevent these people from quitting their organizations and starting out on their own?

Google has lost some of its top talent including Lars Rasmussen (the creator of Google Maps and Google Wave) to Facebook. The reason Rasmussen gave for his departure was that the growing size of Google hindered the ability of employees to get things done.  Google is now making changes in an attempt to retain employees where team sizes are being reduced, the number of products developed are reducing but more focused, employee benefits are being improved (the duration of maternity leave has been increased, and a “death” policy has been introduced). In addition, Google began “Building better bosses”! Google has undertaken “Project Oxygen” in its effort to build better managers and keep its employees motivated.

For an organization to be agile and seize opportunities (in the technology space), it is important to build a strategy around retaining and attracting talented people in addition to product strategy. It is evident from all the articles that the biggest factor determining the success of organizations especially in the technology space will be determined by the quality of people in the organization.

Would investing so much in retaining and hiring top quality talent result in people gaining skills and hence lead higher mobility and attrition? Will these people “abandon ship” in times when the business does not do so well but needs them the most? How do companies build loyalty among employees?

Capitalizing on Capabilities (Ulrich and Smallwood, Harvard Business Review, 
June 2004)

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