Eric Lesser – Great talent management for a lousy economy

Steve

Hi, this is Steve Hunt with People Performance Radio. Today we did an interview with Eric Lesser from IBM Global Business Services, and Eric just finished some research looking at how companies can deal with talent management issues in the down economy, and I think what Eric’s interview and research is most interesting about is what he talks about is different, it’s not around just cutting costs, he really talks about the need to strategically invest in specific things with a strong emphasis on looking at workforce analytics, more collaborative technologies that can take some of the costs out of the hard costs like having people in large offices, and things like that, and also talks about some things that really IBM learned from their own lessons, having gone through some pretty major restructuring in the last big recession. So it’s a very interesting interview, a lot of really good insights in different ways of thinking about talent management in a troubled time, so let’s listen to Eric.

Hi, you are here with People Performance Radio, this is Steve Hunt. Today we are talking with Eric Lesser, who is an Associate Partner at IBM Global Business Services, and he focuses on the human capital management research that IBM does, and Eric is going to be talking with us today about a set of research they just did that’s looking specifically about talent management issues in the current economic situation in going forward, so Eric, welcome to People Performance Radio.

Eric Lesser

Thanks very much, I am glad to be here.

Steve

So before we jump into the research paper, you will talk very briefly about what IBM does in this area in general in terms of global business services and human capital?

Eric Lesser

Yes, IBM has a human capital management practice within its global business services group. We work across a number of human capital topics. We have over 2,500 practitioners worldwide and focus on issues around workforce and talent management, knowledge and collaboration, learning and development and HR strategy and transformation.

Steve

Wow, so with this sort of worldwide perspective in particular, how are you seeing this economic situation, crisisn whatever you want to call it playing out in organizations? How is it affecting them?

Eric Lesser

Well clearly, what we are starting to see from many organizations and anybody reading the newspapers are starting to see a significant pick up in lay-offs over the last three to six months, not only in the US, but also in the UK and Europe as well. What we are starting to see though is that there are companies that are recognizing that the current environment can also be an opportunity for them to focus more on their talent management issues, to be able to identify not necessarily where they need to downsize, but in today’s environment how can they think about building their own strategic capability, and making more well-informed decisions about what assets they need to focus on, where perhaps they can pick up assets for the outside and how they can avoid some of the mistakes that they have made in the past in terms of just pure wholesale downsizing and be much more strategic in how they think about their overall talent management picture.

Steve

So when you look and there has been a lot of talk around the economic crisis and the things you are hearing a lot of people say about companies are, to some degree, you need to be really efficient, you have to look at utilization rates in organizations, you have got to make sure people are very much on task and are focusing on the things that are really going to drive revenue for the company and minimizing costs, beyond those sort of things that anyone would probably come up with if they thought a little about talent management. What are some of the more innovative things or maybe creative things that companies are doing in this situation, to deal with the economic crisis that maybe some companies are doing and other companies just haven’t thought of?

Eric Lesser

Well, I think one major area that organizations need to think about is how they sort of preserve and protect their critical knowledge and how to really focus on understanding their social networks. One of the things that we have seen over years is that, during periods of retrenchment, organizations become particularly vulnerable to losing their institutional memory, both the formally documented knowledge they have, and also the informal insights that they pick up just through day-to-day interaction.

There are a host of problems that arise when you think about trying to manage organizational knowledge in a downturn, everything from the fact that when companies put in place voluntary attrition programs, those tend to target those that are most experienced and have the most institutional memory. During downsizings, we also see that informal social networks get damaged. People who serve as the key bridges between departments or across projects, when they leave the organization, people don’t recognize the value that they had that these people made in terms of connecting the dots throughout the organization.

In challenging economic times, organizational trust gets eroded, that people become very protective of their own knowledge assets and are much less likely to share their insights with others, and then lastly, as you have fewer people in the organization, the slack time that people need to share knowledge effectively decreases. That time that was spent either improving skills, or reviewing projects, or capturing lessons learned, all of that tends to go away, and people who are struggling to stay on top of their day-to-day routines are less likely to share what they know, to mentor junior employees, and it just slows down, if you will, the preservation of this critical knowledge which, in a downturn environment, in unwelcome times is walking out the door, without people having a real recognition of the value of that knowledge until ultimately it’s too late.

Steve

I think one of the thing that’s key that you’re talking about in all these areas I think is the context to it. It wasn’t like companies were going around being really fat and bloated to begin with. It’s not like we’ve, there was massive restructuring in the late ‘80s, and at that point I think you probably argue that some companies were fat and bloated to some degree, and were hit with a first sort of economic downturn, but the last eight years, while it may not have been a recession, it wasn’t exactly a boom time either.

Eric Lesser

I would absolutely agree with that statement. I think that, for a lot of organizations, they have already trimmed the fat and now organizations really need to think about what are the activities that are truly core and central to their mission, think creatively about the things that perhaps aren’t core but are necessary to support that mission, and then also to make sure that they look at these informal networks and to identify perhaps where the holes are gonna be created within those networks, and then also to consider what potentially is the upside in terms of, in today’s marketplace, that there may be resources and capability and talented people out there that perhaps in a growing economy wouldn’t be available or would be too expensive for an organization to grab hold of.

I think that there are ways that organizations can think about how they can identify and bring those people on and then get them up to speed rapidly, so essentially to take advantage of the situation, and to think about how they can use it to focus on key capabilities and ultimately build those.

Steve

So one of the things you keyed on was trust and time, both trust and time for people to really dialog around skills and share ideas and there is a lot of psychological research that’s shown that, the more people have anxiety, what anxiety does is it distracts you from actually getting the work done, and in a downturn economy, where people are worried about keeping their jobs, and organizations are talking about running lean, that can have a massively negative impact on people’s willingness just to sit around and actually talk about how can we actually make money.

Eric Lesser

Absolutely, and I think that’s where the role of leadership needs to come in during these difficult economic times. There was a recent statistic that was just published by Weber Shandwick, which is a global public relations firm, that found that over 50% of organizations still have not talked to their employees about the impact of these changing economic times, yet over 70% say that they really wish their management would, and so I think this is an important time for leaders to really demonstrate three important characteristics.

First is they need to be visible, they have to be keeping people in the loop, and to be very honest with them about what the potential implications are for the business, but not only do they want to be communicating one way, but they also want to be engaging, they also want to have the expertise of the people who are working with them, and to engage them in a dialog about, as you said before, what they can do to help keep the company moving forward in these difficult time, and then lastly I think that leaders need to be driven and focused on the company values. Essentially we see lots of situations where activities that leadership is undertaken, for example, letting people go by email. When leaders go against what their company’s espoused values are, about the value of individuals and the value of employees, often times that can be quite damaging to the organizational reputation, and in a world of internet bulletin boards and social networking sites, damaging that corporation’s reputation can be done in a heartbeat, and so we think it’s very important that leaders are proactive about talking to their employees about making sure that they engage their employees and keep them focused on how they can improve, and also to stick with their corporate values and to remember that those values are on top of minds of people on an ongoing basis.

Steve

It’s also understood that you really show your values in the time of crisis and difficulty, that’s when values really come through, and one of the things in terms of, in this paper that you’ve written, one of the things that you touched on also I think is a challenge for leaders, on one hand you want to keep people confident, but you don’t want to mislead them, because in reality something may happen that requires letting people go or some pretty drastic financial action by an organization, so trying to balance that, and I am curious, as a leader, you talked one thing about considering the use of more flexible work environments as an alternative way to get through some of these challenges beyond just through the more classic “Let’s fire people”, can you talk a little more about that?

Eric Lesser

Sure, and when we talk about flexible environments, we talk about a number of different things. One of the things that we saw within our own transformation within IBM, as we were going through some of our challenges back in the late ‘90s, was the move to a more virtual work environment, that not only did that enable IBM to save significant real estate costs, but also gave people flexibility to manage additional workload and perhaps to put aside, if you will, some of the normal stresses associated with commuting, and all those other activities, and so we find that moving to a more flexible work environment, whether it be flexing the time that people work, flexing the location in which they work, can make a difference, both to the employee who allows them to be more empowered in terms of how and where the work gets done, but also to the company, which can be more flexible with its real estate options and can really design work spaces for people who perhaps, if they only show up in the office once a week, do they really need a full-time dedicated space for that particular work activity? So we think that flexibility can be an important technique to incorporate in some of these more difficult economic times.

Now recognizing of course that, when you move to a more flexible work environment, there are other challenges that pop up so, for example, you need to think about how do you deliver your IT and your HR services in a more flexible environment, how do you create a performance management system that really recognizes people for their contribution, rather than just being visible in an office. So there are a number of considerations, you just don’t want to put out a bunch of blanket policies without really thinking through them, but in the end what you can find is, by giving people that flexibility, that it can be a win:win for many parts of the organization.

Steve

Now, I think that’s like thinking out of the box literally, it’s getting people out of the building, and I think that makes a lot of sense, but on the flipside though, if I am a sort of devil’s advocate, is you were talking earlier that now you also needed in this time to keep people having that social interaction and that dialog and those informal conversations where they transfer knowledge, come up with new ideas, not to mention the bonding that’s important when people are feeling isolated - how do you manage that for an organization saying, OK, we want to take some costs out by maybe having people work in a more distributed way, yet we also want to create more collaboration and a sense of trust and camaraderie, so people don’t feel like they are going through this change alone. How do you see that on balance?

Eric Lesser

Well, I think there are two ways to address that. The first one is is that having a flexible work environment doesn’t necessarily mean that people don’t ever show up to an office. I think there are ways that you can sort of manage the extent to which people will balance the working virtually versus working in a central location, and make sure that people are able to have those informal conversations as they need face to face so I think you can, in some cases, swing the pendulum too far, but you can find that balance between working in a remote location versus working in a central area, so I think that’s one.

The second is making sure that you have available collaborative tools and activities that allow other people to work together effectively, to be able to identify experts not necessarily than within your own office, but really around the globe, to be able to use more collaborative technologies, to be able to post documents, to notify others that new documents are available, to be able to work in a shared document environment, and to be able to connect to individuals who you need to work with on an ongoing basis. We use a number of tools within IBM both to identify where people are working, we have a series of applications that allow us to map our networks, so that if we want to be referred to somebody else within an organization, we can see the chain or the connection of people that can help us, and we also have a Facebook-like application which allows us to post information about who we are, what we like to do, and allow people to get to know each other on a more personal basis.

Steve

So, if I hear what you’re saying, on the one hand you could take these steps like going to a more flexible work environment, which cut costs, but you also do need to invest something in a new sort of infrastructure to support that, so when you are looking at making changes in an organization that may lead to substantial cost savings, recognize you are asking people to work in a different way, you may also need to do some investment that allows them to effectively work in this new way.

Eric Lesser

That’s correct, and I think you are hitting the issue right on the head. It’s not just about cutting costs, but it’s about rethinking the way that work gets done, and that ranges everything from the type of people who are involved in different projects, it’s the culture and the infrastructure that supports people and allows them to be more productive; one of the things that we think this new economic environment will do is serve as a catalyst for organizations not just to think about purely headcount, but to rethink how work actually gets done and how employees are productive and start to make some of those changes.

Steve

I like that, because one of the things I talk is people should not focus about trying to get rid of under-performers. That’s what you hear a lot, now we have got to get rid of under-performers, it’s like, “You should have got rid of your under-performers a long time ago”. This is really about maximizing utilization of people, and that’s different.

Eric Lesser

Yes, and I think it’s about understanding the type of work that people do, it’s understanding what makes them productive in their environment, and also, as you said before, this need for social connection, especially in difficult economic times.

Steve

So are there certain tools, technologies, processes that you think organizations should really be looking at right now? - because I know in the world of talent management, I was talking to people and I said, “Look, there are technology tools available now that were not available the last time we went through a major recession”, so there’s new things in our arsenal that we can use to help us get through that. I’m curious what your thoughts are in terms of maybe technologies, tools, processes, methods that are available now that organizations should be looking at and saying, “Hey, we didn’t have these the last time we went through a major recession, we have them now and we should take advantage of them”.

Eric Lesser

Well, I think one set of tools that is very valuable is around the area of workforce analytics. For many organizations, they don’t have a good handle on essentially what are individual skills and capabilities, what are the factors that drive productivity within organizations, what learning classes are the ones that really help people to become productive which are ones that have little or no impact. For many organizations a lot of this turns out to be guess work, and so we advocate strongly the importance of having workforce analytics to understand what your true capabilities are, and that will then help you identify perhaps areas that you can, that you may have gaps that you may want to grow, and you may want to hire people who may be more available in this new environment, but without a sense of really having a complete view of what your workforce, what’s the composition, what are the projected attrition rates in different areas without really understanding those different drivers, then it becomes very difficult to make informed educated decisions. So I think workforce analytic platforms are one.

We talked earlier about collaborative technologies that allow people to work together and also to be able to identify experts within the organization. I think those are two relevant technologies that I think can help organizations make this bridge during these difficult times, especially when you are seeing areas such as travel budgets getting cut, where people may not be able to have the face to face meetings that they need to have - how do you find ways of keeping them connected and then also in the event that people do leave the organization, how do you reseal or form the social networks that have once existed within the organization? How do you help fill some of those structural holes once people have left?

Steve

So, a couple of things that you touched on here, workforce analytics, collaborative technologies. You mentioned earlier the flexible work arrangements that fit in to those other two to really have a virtual workforce and I think one of the things that’s interesting is IBM, from my perspective, and I’ve had a chance to work with IBM, you guys excel at all of these things as an organization - do you think that’s something that you got as a result of the significant restructuring you went through during the last recession?

Eric Lesser

Well, I think these are all learnings that we have gathered along the way since the 15 years where we really sort of hit some of the bottom in terms of our own challenges, but as we have become a more globally-integrated organization, and our reach has broadened across to new and emerging markets, I think one of the things that we have found as we have become a more global organization is that we need to help people make connections, to be able to develop relationships, and to really form the common context that allows us to operate as one globally-integrated operation.

Steve

Well Eric, I want to thank you very much for the insights you’ve had, I think it’s fascinating what you’ve shared and we’ll put a link to the paper that you have up on our podcast, because a lot of these ideas have got much more detail in them. Really just to capture, I think the key takeaways, and please add if I miss anything, but you said one is, at this time, it’s not just about cutting costs, it’s about strategically investing too in certain things that allow companies to be more efficient, and some of the things companies really need to focus on is now is the time to use workforce analytics to really understand who your employees are, are they assigned effectively, are you using technology to foster collaboration among these employees and being more flexible in how you approach work, because that’s the way to take costs out, but you have to create the infrastructure to allow that flexible work arrangement to also keep creativity going on. Are there any other points you would like to leave the audience with before we sign off

Eric Lesser

Well again, I think I just want to reiterate the fact that companies need to take a look at their current capabilities, they need to understand where there may be opportunities to take advantage of competitors’ misfortunes in the marketplace, to bring in new capabilities, to bring in new people who have skills that are relevant to the organization, and then to think about ways of how you get those people plugged into their new environment and help them become productive and to think of this economic crisis just not in terms of downsizing, but in terms of potential opportunities.

Speaker

I think that’s great advice, and I think also coming from IBM that, from my perspective as a company that very much did that the last time, and really did reinvent themselves and came out of the last recession much stronger than a lot of the other companies that have fallen by the wayside since then. So Eric, thank you very much, and again we will post a copy of Eric’s paper on our podcast and you have been listening to People Performance Radio, so thank you Eric.

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