Video streaming company Netflix has a policy of letting go of people who are pretty good at their jobs.
Dismissing competent people at a time when employers find it increasingly hard to find and retain people with relevant skills and experience may seem odd. Netflix’s description of its culture justifies the position by saying it wants a workforce that’s like a professional sporting team. The company strives to have a star player in every position even if letting go of average performers means higher attrition rates and costs.
Netflix’s strategy is extreme. But it is also an example of how HR strategies are evolving to cope with an environment in which employers see themselves as engaged in a war for talent.
“Culturally and historically, HR has been seen as an operating cost,” says Susie Quirk, KPMG’s HR transformation lead. “But in the last five to ten years, we've increasingly seen HR escape from the cultural perception that it does just payroll and personnel matters.”
HR has come to be regarded as an overall critical component in supporting strategic business decisions, she said, by developing three core capabilities:
“The first is talent attraction – how do I get the right people considering my company’s culture direction and strategic imperative,” she explained. “The second is talent management – using analytics to identify potential high-performers, and strong governance to support how they are managed.”
“The third element is critical roles and shaping the workforce of the future in a dynamically changing world.”
The second and third points are made difficult by changes in what people want from their careers.
Ladders vs. lattices
“We used to have ‘ladder careers’ where you climb the ladder to success and ‘lattice careers’ where you go sideways to find an opportunity to climb,” says Michael Rosmarin, a board member of the Australian Human Resources Institute (AHRI).
Dr. Natalia Nikolova, the Director of UTS Advanced MBA, agrees.
“We have to move away from the mindset that you do a particular degree and that is your career."
She recently explained that “The key point is to adopt what is called a growth mindset … where people are open to continuous learning.”
“We cannot assume that the skills and knowledge we have now will be relevant in five or ten years on from now. This means that individual workers need to constantly open to new skills, constantly acquiring knowledge, open to new experiences and trying new jobs even in new industries.”
Complicating matters further is workers’ desire for more flexible careers. KPMG’s Quirk explained that many workers don’t want to work for one employer from nine to five for 48 weeks of the year.
“We are now well and truly in the gig economy that has been talked about over the last five years,” she said. “We've got five generations in the workforce and the whole concept of agile working, working anywhere and activity-based working, is underpinning the world of work.”
“So, as a consequence, the strategic element of determining what does my workforce look like in the future is right at the forefront of HR thinking at the moment.”
UTS’ Dr Nikolova thinks that some concerns can be eased by the fact that there are core transferrable skills. She says workers “may not have experience in the industry but can practice critical thinking and problem-solving and soft skills.” Workers with such skills, she said, will be able to transfer to different roles.
But finding those workers and managing them as they switch between roles, careers, and gigs, will need new approaches.
“I think we need to look at employees in the same way you look at customers or potential customers,” says the HRIA’s Rosmarin.
“At the moment communications between employers and workers are standard and generic. The work we have done in marketing lets you understand where you are in your relationship with employees. If you leverage those type of approaches, you create a more relevant connection with employees.”
KPMG’s Quirk says doing so means “you have to start with a strategy and roadmap.”
“The core elements are to make sure that you're meeting the organization's strategic goals, whether that's the capability, a leadership uplift, or culture change.
Next comes a roadmap.
“That’s very much founded in mapping out your technology and capability uplift requirements over a period of time.” That technology will likely be an integrated suite.
“When you have payroll and finance and ERP set up, all of a sudden you have tools for recruiting, talent management, performance management, remuneration all together,” says the HRIA’s Rosmarin.
“That frees the HR function from the admin from the day-to-day administration.”
But KMPG’s Quirk warns that building that integrated system is not easy.
“I've seen many clients struggle with this,” she says. “The challenge lies in being bold and committed as well as clear on how far you are willing to change.”
“I think it's important to try and get your head around that up front, and we do this by considering the Target Operating Model of the future for HR based on leading practice. What we've found is that the change, in terms of role responsibilities, shifts in the HR team, and is a lot bigger than what they anticipated,” she added.
“For example, many companies find they can achieve up to 30 per cent greater efficiencies due to automation through Workday or another ERP. As a result, the role of the HR workforce will change”
Employee value propositions
“And what they do is they stop actually engaging with the business of doing talent assessments and they think about what does talent management look like in the future. How do we want to do talent management in three years? What’s our employee value proposition to engage external candidates? They've got this time to think more strategically about what an organisation could do differently.”
Perhaps what will emerge is a desire for a Netflix-style HR regime, which also includes a policy that staff can take as much leave as they want provided they do so at appropriate times.
But such radical regimes also have their perils: the HR leader who wrote Netflix’s culture manifesto was asked to live its values: she was given a generous severance years several years after creating the document that set the company on course for its amazing success.