Five Ways HR Leaders in Tech Companies 10x Company Value

Companies in the tech sector think and act differently to traditional companies. With the right business model, timing and the right talent empowered in influential roles, many tech companies have enjoyed explosive growth, outperforming other organisations in different industry sectors.

While it may come as a surprise to some, HR has had a role to play in that increase. HR has been more instrumental in driving company value than it appears at first glance. Here are five ways HR Leaders in tech companies build company value despite facing uncertainty, ambiguity and complexity at every stage of growth:

1. Pareto’s Law of Talent Management

2. Outsource and Create a “Protean Corporation”

3. Hire More Intrapreneurs

4. Flexibility Is the Most Powerful Lever

5. Strategic Talent Acquisition

1. Pareto’s Law of Talent Management

If you apply Pareto’s Law to talent management, then 20% of individuals account for 80% of a company’s results.

Tech companies have the agility to focus their stars on areas where these individuals can have the biggest impact on company performance. As a result, the vast majority of business-critical roles are filled by A-quality talent. Stars are concentrated where they can make the biggest difference and the internal talent management process ensures that business-critical roles get first dibs on star talent.

You need to predict who your key talent is before your competitors do.

Disengagement is a worldwide epidemic. Despite HR teams doing their utmost to increase engagement and performance, most people don’t like their jobs and 75% of employees are considered passive job seekers.

Many tech companies are getting it right. These are consistently ranked as best places to work because they know who their top performers are, and employees are given the autonomy, development and support to make a difference. In Fortune’s Global Top Places to Work 2016 , 50% of the Top 10 were tech companies: Google, SAS, Dell EMC, NetApp and Autodesk.

2. Outsource and Create a “Protean Corporation”

In his book “The Future Arrived Yesterday: The Rise of the Protean Corporation and What It Means for You”, Michael S. Malone describes a system of increased outsourcing called the “Protean Model”.

Protean means versatile and able to change easily. In a Protean Corporation, only a small number of core competencies are maintained within the corporation while all other processes and people are managed by external entities. This enables “Protean Corporations” to be adaptable and behave like perpetual start-ups. It’s a business model that enabled HP, Cisco and Apple to boost their flexibility and enhance their survivability in the modern age. Uber and Airbnb also have a “Protean Model” because most of their workforce (drivers and accommodation owners) are not employees.

It’s Not Perfect: The Challenges of an Outsourced Workforce

– Control and Risk Management

Talent is free to make its own choices. Without an employer-employee legal relationship, control becomes nebulous, and this makes governance and risk-management a challenge.

– Reinforcing a Consistent Culture

Individual Uber drivers, freelancers and portfolio workers may work with a number of different organisations. This poses a conundrum for HR in trying to embed the desired culture and behaviours. It begs the question: can you even have a core culture when most of your workforce is contingent and virtual?

– Engagement

How does HR create strategies to engage a disparate workforce? Some believe you get higher levels of performance because people are working on their own terms and are more in control of their output. Others believe employees are less engaged, because it is more difficult to collaborate, communicate and feel like you are part of a team from a distance.

3. Hire More Intrapreneurs

It’s possible that we might see a future where the smartest and most talented people don’t want to work for corporations. Entrepreneurial types tend to stay away from the big companies so they don’t risk losing control of their destiny. The ones who do join these bigger corporations are known as “Intrapreneurs.”

HR Leaders and companies that are able to encourage and support entrepreneurial flair by offering entrepreneurs a better package of support and rewards have the edge.

Many tech companies take this entrepreneurial approach. Google, Facebook and Atlassian encourage employees to work on their own projects of interest, and Richard Branson, whilst not in the tech space, has created an entrepreneurial and empowered company culture at Virgin.

4. Flexibility Is the Most Powerful Lever

Most people are still managed as if we are living 50-60 years ago and must be present all day at work. There is no real reason for most people to be in an office or to have fixed vacation time if they are delivering results.

Flexibility is not about working less or producing less output. It’s about trusting employees to achieve the desired outcomes in a way that allows them to balance and blend work and outside commitments, such as family.

Flexibility is now the most powerful lever organisations have in attracting and retaining top talent.

Flexibility and vacation time are part of every compensation and benefits discussion with top talent. The people that value flexibility, particularly those with children under the age of 18, will trade part of their base salary, incentives or sign-on bonus for flexible working arrangements or additional vacation time. Traditional organisations with inflexible work arrangements are losing top talent to tech and other progressive companies.

5. Strategic Talent Acquisition

Tech companies have always faced talent shortages and tend to have a recruitment culture as a result. Talent acquisition is viewed as a high priority that benefits everyone, a contrast to some more established organisations where it is seen as admin work and considered a low-value process.

Everyone in the business has a periscope up, looking for the best people. The best companies provide their recruiters with a detailed brief, offer fast and meaningful feedback and are eager to brainstorm tactics to find and hire the right talent.

Remember Jack Welch, former CEO of General Electric? He spent 50% of his time interviewing potential talent. That’s how high a priority talent acquisition should be in every company.

Conclusion

Tech companies have the added advantage of playing in exciting spaces. Companies like Apple, Facebook, Google, Microsoft, Samsung, Netflix and Amazon are alluring by their very nature because they are at the leading edge of the products, services and social media that we all love. But let’s also give credit to their HR Leaders for designing performance-enabling people strategies that have underpinned these huge success stories.