Management 2.0, talent and employer branding

Following up on a post on Authentic organizations by CV Harquail a few weeks ago, I've just come across an excellent article in Management Today (January 2009, pps 50-54) by Simon Caulkin. This short piece has got me thinking about a presentation I'm going to do next week on employer branding. In some previous work, I've been suggesting that the talent management agenda, which was at the heart of firms' desires to brand themselves, is still an important driver, though in a changed form - less concerned with celebrity and individualism and more concerned with building social capital and trust. Caulkin's summary of some work by Julian Birkinshaw and Gary Hamel at the LBS Management Lab and Hamel's recent book on the Future of Management puts some flesh on my arguments and will help re-orient them a little.

To summarise the article, the recent crash has been 'an astounding market failure' (Birkinshaw) and a result of management 1.0 with its focus on incentives, self interest, neglect of risk management and trust relations, all tied to the dominant shareholder value model of the 1980s onwards and the corporate financial models developed and taught in business schools which privileged financial engineering over general management (e.g. Efficient Markets and capital asset pricing). Organizations have been treated as markets for the last thirty years rather than as fulfilling important social functions in society, a business philosophy associated with buying and selling of companies at the drop of a hat, the rise of wealthy individuals and private equity as an dominant ownership model (see Peston's book on Who Runs Britain and some of the later essays in Michael Lewis's collection on 'Panic: the Story of Modern Financial Insanity'), outsourcing, downsizing and, importantly, attributing success to talented individuals, paying them exhorbitant salaries to keep them happy and granting them enormous tax breaks. Nowhere has this been more evident than in financial services, which is why Britains Chancellor of the Exchequer Alistair Darling is seeking to tackle this 'culture' problem as he defines it as a necessary prelude to getting the economy working again. Caulkin cites the growth of M & A activity and the recent but enormous impact of the financial services sector on the British economy, which accounts for around 35% of economic activity now as opposed to 10% thirty years ago, so squeezing out the so-called real economy. Until very recently, it was a case of tails wagging dogs, with managers having to respond to the demands of deal makers, powerful individuals and hedge funds.

Citing Sumantra Ghosal's 2006 article that business schools have been teaching too much self interest and not enough ethics, Hamel and Birkshaw have moved to 're-orient management from compliance to creativity, from flogging efficiencies out of existing resources to generating new ones', from zero sum management to positive sum games. In short, the call is for management 2.0 to focus on innovation and stakeholders rather than costs and shareholders (for a better insight, you might want to read Rakesh Khurana's brilliant book on the transformation of American business schools).

What management 2.0 looks like is detailed in an HBR article (cited in an earlier post) resulting from a conference held at Half Moon Bay, California, in May 2008. This brought together some of the leading managers, thinkers etc in the field. The consensus was that companies needed to articulate a purpose beyond making money (higher values), to ensure distributed leadership and strategy-making (rather than the traditional top-down model), fostering community and citizenship and building trust - none of which are new but speak to the legitimacy dimension of the corporate reputations agenda I've been banging on about for the last so many years.

So what do companies that currently embrace management 2.0 have in common. First, an emphasis on higher values rather than seeing managers as merely hired hands to serve market purposes. Second, to avoid the formulaic thinking imposed by business schools and mimetic, unreflective behaviour of firms; doing things differently and doing different things are the order of the day - the innovation agenda. Third, governance based on internal values and risk assessment needs to be internalised (which is the UK Chancellor's message, the message of prudent banking put out by prime minister Gordon Brown, and the message of our recent chapter on HR's potential contribution to governance). Fourth, the restoration of trust among key stakeholders, a return to the old style pluralistic conception of managers holding ring of competing claims made on the business? Fifth, a preference for old style instrinsic rewards rather than the appeal to greed of recent years (Deci's warning over the perils of extrinsic rewards, and Maslow and Hertzberg revisited? - the longer I'm in this game, the more I see old wine in new bottles and the consequences of yesterday's solutions causing tomorrows problems).

And what does this mean for employer branding, corporate reputations and HR? As we have argued in some recent work and presentations, the talent management agenda is still an important driver but the focus should be as much on social capital and social legitimacy as human capital. I'm also more convinced than ever that employer branding and talent management has to address the innovation agenda and the creation of intellectual capital in organizations. It also has to address the need for surfacing employee voice and challenge to ensure that powerful interests do not dominate in ways that stifle innovation and lead to excess, which is a tall order for those brought up under a management 1.0 regime. So how do we create EVPs and employer brands that achieve these laudible but sometimes competing aims to simulataneously integrate and differentiate?

Recession-proofing Employer Branding

What future for employer branding seems to be all the rage just now in the current recessionary context. The CIPD are developing a conference on this topic in May, which I've been invited to speak at (thanks Anita and Rebecca and hello from down under). As luck would have it, I was doing a presentation yesterday with two colleagues in Sydney - Paul Gollan and Kerry Grigg - for a mixed audience of practitioners and academics, where we outlined some thoughts on this issue plus a future for employer branding that we're currently working on. I'm not the best judge, but I think it went down reasonably well, so the drift of the presentation may be worth sharing with some of the readers of this blog.

The core of my argument and of a new paper we're writing is that employer branding is recession-proof in the sense that it was never only or mainly about talent wars/ talent shortages caused by bouyant economies, though recruiting talented people was and will remain an important driver. Part of the presentation yesterday was that the four drivers of employer branding and its impact on corporate reputations are still relevant in todays recessionary economic circumstances - the need for talent in knowledge economies and knowledge intensive organizations, the long terms demographic problems faced by most economies, the long term decline in employee identification with employers and decreasing levels of trust, and the rise of idiosyncratic careers built around individuals rather than organizations. What has probably changed over the past decade is that employee expectations of good employers have been slowly ratcheted up by organizations engaging in practices such as employer branding/employer of choice schemes from which they will find it difficult to disentangle. Yes, organizations may not be recruiting so much, particularly in financial services, construction, retailing and manufacturing, but the impact of how they cut costs by laying people off and how they continue to create positive internal images for existing employees (particularly those currently being blamed for the mess we're in) will continue to have a major impact on their corporate reputations.

By corporate reputations, I'm referring to some really big ticket issues - corporate branding, corporate governance and corporate social responsibility - which require deft handling to manage the inevitable tensions between the needs of organizations to be simultaneously different through corporate branding and legitimate ( or the same) through the exercise of good governance and social responsibility. In many respects, these are, or should be, the key drivers of strategy and the endgame of good people management. Having just finished reading Robert Peston's excellent book on 'Who Runs Britain', which is an insightful guide to the complex financial engineering 'rocket science and crude incentivization that has been at the heart of the current problems, I'm more convinced than ever of the need for HR and employer branding to address these issues.

However, there is another agenda that places techniques like employer branding centre stage and that is the innovation agenda. We've been writing quite a bit about this recently, but to cut a long story short, good evidence suggests that innovation relies less on investment in human capital (talented individuals) and more on social capital (creating bonding and bridges or social networks) and organizational capital (what's left when people walk out the door at night, e.g. structures, systems, processes and technology etc). If advocates of employer branding and the HR function wants to make an impact, addressing the innovation agenda (wealth creation) in knowledge economies by ensuring that such innovation is socially responsible and well governed (ie. risk managed) is the place to be. Our argument is that employer branding has much to offer in this direction - by helping create the necessary diversity of talent, social capital and social networks needed for innovation. But such branding will only do so if it is authentic and is rid of much of the brandwashing and marketing/communications spin with which it has become associated. And this is where Web 2.0 comes in - these tools have enormous potential for surfacing authentic and challenging employee voices in organizations as well as facilitating collaboration and networking beyond conventional organizations boundaries, both of which are drivers of organizational learning and innovation.

Not everyone agreed with these arguments, so it may be worth a discussion either on this blog or at the events such as the ones that the CIPD and ourselves are running with the IES.