Talent Management, Football Teams and Metaphors

Following up on the last blog on investment in human capital and social capital, and the example of football teams, I was taken with a little article in this week's edition of the Economist (August 22nd, 2009, p. 32) on the economics of Real Madrid's strategy for re-gaining their competitive position in world football by recruiting a new clutch of gallaticos - a metaphor for what many companies have done in the past and, apparently, one that finds support in the Harvard Business School study by Jose Luis Nueno of the soccer industry in emerging markets such as the USA, Japan and China.

For those people less engaged by football (soccer) than I am, Real Madrid have spent many millions this summer in re-applying a strategy first tried nearly ten years ago by their then president, Florentino Perez. He has has just been re-employed to help the club regain their former pre-eminent status in Spanish and world soccer from their arch-rivals Barcelona, who, interestingly, have followed much more of a 'grow your own', social capital approach to world domination of soccer.

The Real Madrid strategy is not just based on the ability of the new gallaticos to turn their considerable individual talents into results but to generate merchandising revenue in the way David Beckham did during the first wave of this strategy. It is also based on the ability of Perez to convince banks in Spain to supply sufficient credit to a club operating in one of the worst hit countries in Europe in terms of GDP growth and decline. Finally, much lower levels of income tax on players coming to Spain than in other European countries helps explain that the real costs to Real Madrid in paying wages is lower.

The point of the article is to contrast 'cheque book power' with Barcelona's largely 'home grown' strategy as a route to success. Metaphors, however, such as make or buy strategies are partial - they hide as much as they reveal. What the article fails to mention in Barcelona's strategy of building social capital not only through its attempts to create 'bonds' among the team by its development strategy but by its building of 'bridges' in the community it serves and the wider world through its ethical approach to promotion. So, like all, rather lazy, single factor theories of strategic success, of which sports team metaphors are among the most popular, are likely to be found wanting. Perhaps the secret lies in complementarity among different forms of capital investment. It certainly lies in developing better mid-range theories of success in industries like soccer; otherwise we will end up repeating this make or buy argument in football, which has a long history going back a century or so but has generated little light in what makes for sustainable success.

Which Counts More for Performance: Human or Social Capital?

We've been doing quite a bit of work recently (one of my PhD students, Stacey Bushfield and I) on the drivers of innovation in public sector organizations. These drivers are often described in tripartite terms - human capital (broadly individual competences), social capital (bridging and bonding capital, and trust) and organizational capital (the non-human capital left in the organization when people walk out of the door at night). And this is the basis of the model we are testing in the NHS in Scotland, which, like many industries, invests enormous sums of money on talent management.

So, it is with interest I read about the recent investments in football stars in the English Premier League and the attempts by one of Barclays subsidiaries to pay almost obscene amounts of money to recruit staff from US competitors. It seems that some organizations and industries' strategic recipes are based heavily on human capital and hiring in stars. And, where they go, others seem to follow.

However, this strategy for banks and football teams and the unreflective imitation by others seems to fly in the face of good research as Jeff Pfeffer has recently reminded us in citing a series of articles by Boris Groysberg from Harvard on the problems of hiring stars. He did so in his book with Robert Sutton on Dangerous Nonsense, but here's a recent summary of his arguments if you haven't read it. Worth reading and reflecting on because they demonstrate the importance of social capital and its interaction with human capital, which most most of us know about but some forget in committing the fundamental attributional error - attributing too much cause to individuals and not enough to the context. So why don't firms and football teams get it?

I recently watched my local football team in the Scottish Premier League draw with and beat two English Premier league clubs (actually one was recently demoted, which tells you something). My club cost less than £500,000 to assemble in total, which was less than the cost of the cheapest player on the demoted side and about a hundreth of the cost of assembling both Premier League sides. Cheap shot or a cheap lesson here for talent management?

Living the Brand at Abercrombie & Fitch

On what has turned out to be a very long journey back from Chicago to Scotland, I found myself killing time in a New Jersey mall after an unplanned ovenight stop at Newark Airport. I chanced to go into Abercrombie and Fitch's store, by far the most popular in the whole mall as far as I could tell. For those less familiar with fashion retailing, A&F is a top casual luxury American brand popular with young college students, so I'm not really sure what I was doing in there. Just a few hours later, I was amused and interested to read in the airport lounge at Newark a BBC news a story about A&F in London, which has just been found wanting in its application of its employer brand. A young, highly qualified woman, Riam Dean, had been 'forced to work in the stockroom after wearing a cardigan to cover her prosthetic arm'. The industrial tribunal which heard her case 'is satisfied the reason for the claimant's dismissal was her breach of the 'look policy' in wearing a cardigan. Throughout the hearing A & F's London flagship store management claimed they had an inclusive diverity policy.

A couple of points emerge from this case. The first is just how important decisions taken by a local management team can impact on a brand. This item was number three in the national UK news, and may result, like the charges levelled against the Gap and Nike a number of years ago, in costing this company very dearly in terms of reputational capital. The second, slightly more subtle point, is that it illustrates the problems local managers have in interpreting the different strategic logics discussed in previous posts. I can well imagine an agonised discussion/debate taking place either in the head of the manager who took the decision to put the girl in the stockroom, or maybe between a group of managers/ supervisors in the store over the logic of distinctiveness (most fashion brands feel the need to have their staff 'live the brand' in terms of their appearance) and the logic of legitimacy.

At 3.00 am this morning my colleagues who were also stuck in the airport with me (Continental Airlines certainly did not live up to its brand claim for satisfied customers) were debating the merits of sustainable management and corporate social responsibility. Our sleepy conclusions were that new standards of legitimacy will probably win in the end in spite of the edicts of Milton Friedmann on the unitary role of business, forcing firms to become more ethical in their approach to doing business. Not easy to square, but firms like A & F had better eat some humble pie to recover their reputation in the UK at least for being a 'cool brand'.

New Perspectives on Engagement

Another wonderfully illuminating session from the AOM conference, which most consultants and HR managers interested in engagement would have found very beneficial. To my mind this session represented all that is good in academic research and made up for what I've not found in any of the consulting work on the topic. It dispelled commonly held myths about the 'engagement industry', helped define what engagement was, provided robust and logical models of the how and why of engagement, and provided some great evidence from extremely tight studies of 'how to get engagement and keep people engaged'.

Here's a precis of their blurb (I've only changed the tense, changed a few pieces of academic jargon and added in a few parenthetical comments).

'Because of claims from both research and practice that engaged employees result in competitive advantages for today’s organizations, researchers have focused a great deal of their attention on identifying drivers of engagement that could suggest levers for managerial control. The symposium presented four papers that expanded our understanding of key antecedents which help employees become and remain engaged in the workplace. The first paper, by Sabine Sonnentag et al., from Germany was a longitudinal examination of how job demands combine with off-the-job psychological detachment to predict employee engagement. Results suggested that periods of psychological detachment (mentally “switching off”) during non-work hours reduced or eliminated the negative relationship between job demands and engagement.

The second paper, by Eean Crawford et al., from the University of Florida was a meta-analysis (a survey of surveys) that clarified ambiguities concerning the relationship of job demands with engagement in the job demands-resources model (this is definitely one that practitioners should get to grips with). Meta-analytic estimates revealed that job resources (autonomy, control etc) had consistently positive relationships with engagement, while job demands appraised as hindrances have negative relationships with engagement and, job demands appraised as challenges have positive relationships with engagement.

The third paper, was by Jill Waymire Paine from Columbia (was an absolute gem). It examined multi-level data from five organizations predicting employee engagement in organizational change initiatives. Arguments for change and followers’ regulatory focus (whether they were risk taking optimists, or risk averse pessimists) were most predictive of employee engagement in change initiatives. This paper had really important implications of how leaders management change and keep people engaged while doing so, rather than inducing resistance or cynicism.

The fourth paper, by Ronald Bledow et al., from the University of Geissen, examined daily fluctuations!!! in employee engagement and found that positive workplace events interact with social and personal resources to predict daily levels of employee engagement'. Again, this work brings into question the stability over time of a concept such as engagement.

Link these papers to the one by Balain and Sparrow reviewed in an earlier blog and you begin to get a far better understanding of what engagement is than anything that I've come across so far. I'm certainly going to use them in my research and consulting, and others may want to do the same.

More on Talent Management from the Academy

I'm doing a new chapter with a practitioner colleague of mine for a book on Global Talent Management edited by Hugh Scullion and Dave Collings, so it was with great interest I attended probably the best session for me so far. This was chaired by Paul Sparrow and summarised by Chris Brewster, with some top class presentations in between, all of which will feature in a special issue of the Journal of World Business later this year.

I'm not going to try to summarise the papers as some can be found on various websites, including the opening literature review by Randall Schuler from Rutgers and Ibraiz Tarique. Of the four papers presented two were of most interest for me. The first was by Hugh Scullion, Paul Sparrow and Elaine Farndale on the the role of Corporate HR departments in global talent management. They argued that what they did and how effective they were depended to a great extent on the degree of corporate control or decentralisation of the organization, or in our terms, how the organization addressed the integration-responsiveness logics, which maps onto my earlier posts on this topic on Negative Capabilities. In trying to develop a framework for helping academics and practitioners think more systematically about global talent management, I think they have come up with something of real interest which is both empirically based and shows important connections among the four roles that corporate HR departments play or should play. These four roles are:

1. Champions of Process - systems monitors, or in our terms guardians of corporate integration
2. Guardians of Culture - in our terms, ensuring integration and legitimacy through spreading the message of corporate values
3. Managers of Internal Receptivity - preparing the organization and its business units to facilitate and accept mobility among leaders, and
4. Managers of Networks of Leaders and Corporate Intelligence

They argued employer branding was the binding tie between 1 and 2, with which I readily agree. We've discussed this in earlier posts as employer branding following a logic of similarity and legitimacy through help build and disseminate shared values. However, there are a couple of problems with the framework, one of which was picked up by Paul Evans, who pointed out the corporate HQ perspective they had on global talent management, a view evidenced by the frequent mention that decentralised multinationals experienced the greatest problems in implementing global talent management. This, of course, depends on where you are standing, because the interests of business units are sometimes in conflict with the interests of the corporation as a whole. And, as Paul Evans rightly mentioned, Web 2.0 technology is facilitating a much greater bottom up approach to talent management, which is not in the gift of corporate HQ to control. I would also add that our discussion of employer branding needing to reflect authenticity and privileging the local (see earlier post) also implies a perspective that global talent management is not something that corporate HR departments should necessarily control in the way they often do - in other words, decentralisation of some decisions on talent is not always a problem, rather the reverse.

So, Paul, Hugh and Elaine, if you read this blog(I know we discussed that following the questions you may have to rethink your model a little) you may want to take into account some of these points in revisting your model. But even if you didn't it is certainly a help for HR practitioners in multinationals in giving them a useful framework to think about their jobs in relation to talent management.

A second paper from some Finnish and Swedish colleagues presented by Kristina Makela which was also very interesting examined the question of who made it into the talent pool and why. Apart from the obvious reasons connected with performance appraisal, which was a rear view mirror, 'on-line' search', they found three explanations, which were more forward looking, 'off-line' reasons - cultural and institutional distance (the less that this was between corporate HQ and individuals, the more likely they were selected), 'homophilly' (the more like the existing talent pool, the more likely to be chosen) and network centrality (were they key nodes in the organizational networks). Some worrying findings here!

Picking up on Negative Capabilities and Talent Management

I know as academics we're not supposed to look for confirmatory evidence to support our views, but it's rather difficult not to feel pleased when some ideas you have just written about seem to be supported by what is going on in the big bad world of talent management.

I've just attended another session at the Academy of Management on 'Developing Top Executive Talent; How Employers Do it' featuring three presentations by the heads of HR/ Talent management of three American multinationals - GE, Boeing and Sara Lee. Common themes of these presentations were:

1. The linking of executive development to key strategic capabilities and the distinctiveness logic, which was also expressed in the exclusive approach to talent management focusing on the top 20% of performers
2. But the need to connect and assess executive development to the expression of core, corporate values. Indeed corporateness and corporate values were core themes in all three presentations but never fully explained as to why. GEs performance-values matrix seemed to sum up the way these organizations attempt to reconcile these two dimensions, with leaders measured not only on how the perform but also on the extent to which they express core values. Indeed, they seemed to be pretty ruthless about 'removing' (their word) high performers who didn't live up to the values ('would you want these people in GE' was the question?), whereas they were willing to give second chances to low performers who expressed the core values.

When questioned on this, all three suggested that the strategies weren't forever and that they frequently amended the values to reflect changing environments. In other words, strategic direction was more learning than planning, though the planning word did feature in their presentations - implying even these giants of the corporate world 'muddled through', to some extent at least.

Two further noticeable features were:

1. the desire and reality of all three to focus on developing rather than hiring talent, especially in the engineering divisions of GE and in Boeing. Leadership development in the core businesses was based on taking talented engineers and subjecting them to intensive and extensive development opportunities - in other words seeing leadership and management as an extension of 'craft' and not as something which was separate from and above the core business of engineering and manufacturing quality products, and

2. that sustainability, the core theme of the AOM conference, was not even mentioned in the three presentations. Is this a case of the Academy leading practice, or failing to be in touch with the reality of business?

Finally, the Boeing case highlighted a potential problem in the development-oriented approach to talent management. Everything they seemed to do was aimed at creating strong internal cultures and strategic capabilities based on promotion and development from within. Yet much of the research suggests that innovation often requires the injection of fresh blood and ideas from outside. The Boeing VP for talent management didn't seem to recognise the irony of this philosophy with her need to visit GE at Crotonville and Harvard to develop herself to develop others!

Blogging for Management Academics and Practitioners

I participated in an excellent professional development workshop at the Academy of Management's Annual Conference yesterday on 'Blogging for Management Scholars' run by CV Harquail of Authentic Organizations and colleagues. This day long workshop focused on the reasons to blog, how to read blogs, how to participate and, for beginners and experienced users alike, how construct a blog using Wordpress, probably the best platform for this social medium. Though it was aimed at academics, I would say that it applied equally well to reflective management practitioners and consultants who are interested in blogging.
A blog has been created - InsightstoAction- which contains all of the information to get started and a really useful list of academic blogs created by management and organizational scholars, some of whom I met yesterday for the first time. There were some particularly useful sessions, tips and illuminating discussions on not only 'how to' blog but, just as important, why to blog and how to engage with your intended audience. I learned that my blog posts were among the longest, which is rarely a recipe for any form of communications, let alone one that is noted for brevity. In part these long blogs are written for my benefit, so there was a lesson for me in being a little more focused on who I'm writing for. So no more 2500 word posts.
One session that helped me think more reflectively about my own blog was a free writing exercise intended to help author construct the 'About Me' page, one of the most important features on all blogs since it helps convince readers that you are worth listening to and engaging with. This exercise was based on writing to a series of prompts and ran along the following lines:

1. If your blog were a room, what kind of room would it be? A lecture room, seminar room, kitchen, etc' - describe the room, the furniture, the layout, decor etc.
2. In that room, what do you want to talk about or discuss and why do you want to talk about it?
3. What role do you see yourself mainly playing in that room? Director/ expert, conceiver of new ideas, translator of ideas, coach, collaborator? Which words describe your role? And which are most appropriate for what you are trying to do with your blog?

So many thanks to CV Harquail, Jordi Comas and colleagues for an excellent session and I can thoroughly recommend InsightsToActions to anyone interested in management blogs and blogging