What Valuable Human Talent Lessons Can BlackBerry Teach Growing Startups?
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WHAT IS HUMAN TALENT MANAGEMENT?
Human talent plays a critical role in the success of growing startups. It involves all aspects of strategic Human Resources management – from assessing and hiring the right talent, to providing career development, having robust performance management frameworks through to effective reward and retention strategies. This blog examines some of the key elements of strategic Human Talent management in startups and SMEs.
WHAT DOES HUMAN TALENT MEAN FOR GROWING STARTUPS?
• Nearly ONE IN EVERY FOUR startups fails because of this
• Seven of the top 20 reasons why startups fail – were People and / or Company Culture related (https://bit.ly/2wPfkXa).
If the senior leadership isn’t united around a common vision, a set of agreed values, things can fall apart very quickly. Apart from a lack of cohesiveness, lack of diversity (skills and thought) amongst the leadership can also be another factor in the startup’s failure. You need people who complement each other and look out for one another’s blind spots.
IDENTIFY THE SUCCESS FACTORS
1. Organisation Structure / Governance
As an organization grows – say from 20 to 50 to 100 and beyond, it’s critical to get this right – have the right checks and balances in place and ensure that your organization is structured around sound principles. It’s also fair to say that this will be an iterative process – what’s right for an organization of 20 or 50 wouldn’t necessarily be right when you reach 500 employees.
Is your organization structure based on sound organization design principles?
2. Employee Communication / Engagement
When you’re 15-20 people, many of whom started together – there is a sense of oneness, camaraderie. You’ve been through ups and downs, worked long hours, fought the same struggles and so on. However, when there is a sudden influx of the next 20 or 30 or 50+ people, do you do enough to ensure that they feel the same sense of oneness and purpose? These are some of the statistics on (ineffective) employee on-boarding:
- Companies lose 25% of all new employees within a year (Source: Allied Workforce Mobility Survey)
- Up to 20% of employee turnover happens in the first 45 days (Source: C. Tanner)
- 32% of global executives rate the on-boarding they experienced as poor (Source: Harvard Business Review) and replacing each failed executive can cost a business up to 213% of his or her salary (Source: Center for American Progress).
Do you have a well thought through on-boarding process? Or are your new hires left to their own devices? Do your new hires fully understand your organisation’s culture?
3. Performance Management Framework
How is performance measured in your organization? Do you even have one? Does your performance management framework encourage the desired behaviours?
4. Lack of a robust Succession Plan
Do you have a back-up plan if your best people leave? How can you protect and retain your organisation’s IP?
5. Lax hiring processes
Is your hiring process robust? Do you even have a process? Or do you “hire on the fly”? How do you assess for cultural fit? Do you hire for skills, talent or experience? Why?
A BRIEF ON BLACKBERRY
I’m now going to draw your attention to a well-known case – Blackberry. Whilst Blackberry isn’t a startup, I think there’s also a lot that growing startups can learn from the spectacular rise and fall of this most iconic of brands of the past 20 or so years. Like “Band-aid” and “Xerox”, Blackberry had become a synonym for smartphones.
Some basic facts as we look into this case:
- Research In Motion (RIM) launched Blackberry in 1999
- In just 8 years, by the end of 2007, RIM had a market capitalisation of more than $60 billion, with sales hitting a high of nearly $20 billion in 2011
- In the next five years, in 2016, sales had dropped almost 90% to $2.2 billion
- In the same year, 2016, market capitalisation had also reduced by well over 90% to $4 billion
These are staggering numbers by any stretch of the imagination. There are many reasons attributed to Blackberry’s fall from grace. These typically focus on things like “blinded” by its own success, ignoring the threat from competitors like Apple and Google as well as making the wrong call on how 4G would take off. However, I’m going to focus on the Human Talent elements of this case.
WHERE DID BLACKBERRY GO WRONG ON HUMAN TALENT MANAGEMENT?
1. Organisation structure / Governance
RIM had opted for a Co-CEO structure ever since Jim Balsillie was hired in 1992 by the original founder, Mike Laziridis. Laziridis was the “techie” whilst Balsillie was the “business” guy. On the face of it, there’s nothing wrong with this, it made perfect sense and clearly worked for a period of time, in the initial stages of the company’s growth. However, given the polarised nature of their roles (Product v/s Business), the teams underneath each Co-CEO became more and more siloed as the cracks started to appear. This greatly affected decision making and there appeared to be an absence of accountability at senior levels. The resultant negative impact on employee morale and engagement was significant.
2. Performance Management
Given the above and the resulting lack of accountability, performance management was practically non-existent in the organization. In 2009, RIM reached a settlement with the SEC relating to employee stock options. Following this, a consultants’ study into RIM’s management and boardroom practices revealed no job descriptions or metrics for the Co-CEOs.
3. Hiring Processes Lacked Robustness
The above consultant study also found that there was hardly any oversight relating to senior hires from the RIM Board – clearly pointing to lax hiring processes – even for senior hires.
4. Employee Communication / Engagement
An open letter from a senior RIM employee in June 2011 (https://bit.ly/2HxF6Hw) talks about a lack of communication and engagement between teams and a demotivated workforce. It also refers to some of the issues mentioned above – lack of performance management, accountability, poor culture and the negative effect of this on decision making in the organization.
5. Succession Planning
In 2009, long time COO, Larry Conlee resigned. In 2011, RIM faced a series of senior departures. At no time did they have robust succession plans in place.
HUMAN TALENT LESSONS FOR GROWING STARTUPS
The analogy I often use is – in construction, when we’re putting up a building, we don’t just put in 50% of the foundation first, build a few floors, then come back and complete the remaining foundation and then build additional floors, do we?
In this day and age, when most organisations say that their Human Talent is their greatest asset and competitive advantage – why would we not want to engage a professional in the Human Talent Management space who can help with laying strong foundations (frameworks) that enable us to manage our talent effectively? Why would we want to “wait until we’re bigger”, to come back to this?
With Talent Management solutions from Ren Advisory, you can focus on what you do best – running your business
More interesting read
Talent management plays a critical role in the success of growing startups. This blog examines the key elements of strategic Human Talent management in startups and SMEs.