HBR January/February 2023: What companies get wrong about talent management

Harvard Business Review

January/February 2023

Annotated table of contents

  1. Adi Ignatius, A good job isn’t just about flexibility

Adi Ignatius, the editor in chief of HBR, reflects on the return to office dilemmas, drawing attention to the article on the many dimensions of an effective employee value proposition in this issue.

Idea watch

2. HBR Team, The best way to name a new product

An analysis of 20,000 products introduced by consumer-packaged goods firms in the US between 2000 and 2012 linked their performance to three branding strategies: where they were positioned as new brands with an original name, as direct extension of a brand or a sub-brand. Five considerations stand out from the research and may be used to guide naming and branding strategies in the future. A new name is warranted when the new offering is not an obvious fit with the existing portfolio of products, or it is an innovative, risky product. Companies may take advantage of their large portfolios of brands and seek to emphasize the fit within it of a new product. Too many products offered under one brand can dilute its distinctiveness and appeal. Building an entirely new brand is advertising-intensive and thus expensive; exploiting a connection with an established brand may be cost-effective. David Placek, of the brand-development firm Lexicon, discusses examples of branding such as Azure, Hello toothpaste, Tide Alpha and Fabreze.

3. Dagny Dukach, When the Groundhog predicts an early spring, investors get optimistic

Dukach interviews Savva Shanaev on his research, with colleagues of the impact of Groundhog Day predictions on investor optimism during the past century. They found that when the groundhog predicts an early spring, the market appreciates by 2.78%. Optimistic predictions tend to come around only once every four years, however, so the overall effect may be quite small. As with other cases when market behaviour is swayed by irrational ideas, such as ‘sell in May and go away’, the Monday effect or the January effect, it tends to self-correct once investors become aware.  

4. Harsh Mariwala, Marico’s chairman on innovating across every part of the business

Mariwala started his working life at his family firm Bombay Oil Industries, set up in 1948 by his father and grandfather to sell oils and spices in bulk in India. Researching and learning from his experience, he gradually introduced new ideas for expanding the offerings of the company, especially in retail. By 1990, Marico was formed as a separate corporate brand with a capitalisation of $8 billion, competing on equal footing with multinationals. It has expanded its product portfolio, notably in food and beauty, and its geographical reach in Africa and Asia. Mariwala believes that this success is due to a culture of innovation that has shaped company development and business processes.

Spotlight: What companies get wrong about talent management

5. Peter Cappelli, How financial accounting screws up HR

Under the generally accepted accounting principles (GAAP), which regulate US businesses, employee expenses, such as salaries and training and development, are categorised as current expenses, to be deducted from current earnings. Thus, unlike capital assets, human capital does not add to the financial value of a company, and as a result they are more vulnerable to cuts, restrictions, and leasing workers. This categorisation of employment costs as current expenses is a profound conceptual error, argues Capelli. It fails to recognise that investment in human capital appreciates, as employees gain superior capabilities through experience and training. He suggests that investors request a detailed breakdown of employment expenses, retention, and training to enable them to make more nuanced judgements.

6. Mark Mortensen and Amy C. Edmondson, Rethink your employee value proposition

Mortensen and Edmondson propose a systematic approach to formulating an employee value proposition, considering short and long term, individual and collective benefits. Thus, short-term benefits, such as material offerings and connection and community, need to be complemented with growth and development investments and a sense of meaning and collective purpose, which develop over time. The authors suggest that companies take stock of what they have and what employees need, and make any adjustments to balance more closely these different elements. They should then apply consistently their solution, across recruiting and onboarding, managing performance and setting and reviewing policies. Ideally, this would become a re-iterative process, ensuring that companies have distinct offerings for their employees and are seen as attractive places to work.

7. Roger L. Martin, Designing jobs right

Martin observes that employees will tend to tailor the jobs they are given to their own preferences and capabilities. He then offers pointed advice on how to navigate this gap between the formal job description and actual expectations. For managers, it is best to treat the job as a series of projects. As for employees, they are more likely to be successful when they give their boss a job to do, making sure that managers are actively engaged for the whole life of the project and not just at the end. Thus, both managers and employees need to take a pro-active approach to ensure the alignment between different perspectives, individual and organisational.  

Features

8. Jeffrey F. Rayport, Davide Sola, and Martin Kupp, The overlooked key to a successful scale-up

Rayport et al. propose a refinement of our understanding of how start-ups scale-up and become stable and successful. Having established that there is a product for their market, and they are able to exploit it, start-ups need to pass the test of profit-market fit: adding new customers at low cost and generating significant additional revenue. Business models that demonstrate this type of resilience in what the authors call the extrapolation phase of development, typically meet a set of necessary and sufficient conditions. To get out of the starting gate, they have a robust market for a solution that is repeatable and distinctive. In addition start-ups need to make sure that the go-to-market strategy is effective, the monetization approach is robust, and there are significant network and density effects, increasing returns and substantial capital resources. As well as spelling out these conditions, the article formulates a rigorous process for navigating extrapolation.

9. Rafi Mohammed, Expand your pricing paradigm

As customer data becomes more and more granular, companies can get an increasingly realistic picture of actual use patterns for their products and services and may redesign pricing strategies. Mohammed reviews multiple examples showing how companies often borrow from other industries to create new, innovative pricing solutions to respond to customer needs. They are thus able to accommodate different usage levels and preferences, to appeal to customers on a tight budget, to provide price breaks and to establish prices when value is uncertain. Moreover, used well, prices can be modulated to help enhance business efficiency for instance through off-peak pricing, subscriptions, and initiation fees. Mohammed concludes with guidance for identifying and implementing a new pricing strategy.

10. Shantanu Nundy, Lisa A. Cooper, and Ellen Kelsay, Employers can do more to advance health equity

Even though companies are not normally considered to have main responsibility for health equity, they can play a significant role in helping all people to achieve their full health potential. Nundy et al. show that there is a business case for health care equity, and provide practical suggestions for optimizing benefits and health plan offerings, for finding interventions that address the social determinants of health, for expanding the availability of virtual care and for simplifying access to existing offerings. They use research and concrete case studies to illustrate how companies have benefitted from implementing such changes, often by identifying an initial population to focus on and ensuring broad engagement for the co-design of solutions.

11. Rita McGrath and Ram Charan, The permissionless corporation

The permissionless corporation, a term coined by Michael J. Sikorsky, would typically contain around four organisational layers: frontline, strategic, operational and team-coordination. In this article, McGrath and Charan flesh out the idea by rethinking the organisation of work to make the most of software and AI and to increase the effectiveness of all employees. They discuss input and output metrics for performance, the use of modelling to support decision-making on the front line, the use of values as alignment methodologies, and multifunctional teamwork. To illustrate how transformation may take place, the article presents in detail the case of Fidelity Personal Investments, under Kathleen Murphy, where deep re-architecting has led to continued market-defining innovations.

12. Karthik Ramanna, Managing in the age of outrage

Based on in-depth case studies of large organizations in several sectors, and skilful synthesis of insights from a variety of social sciences, Ramanna sets out a five-step framework for dealing with discontent. To begin, turn down the temperature and create a space for reflective engagement with issues, by putting aside deep-seated, potentially radicalising scripts and by creating agreement on rules of engagement. Second, analyse the causes of the conflict as well as factors that may have catalytic impact. To shape and bound your responses, take account of asymmetric capabilities and shifting expectations. Fourth, understand and use wisely your power to mobilize others, across space and time and finally, renew resilience. Each step is illustrated with examples that bring out all-important nuances in rich organisational contexts.

13. David Noble and Carol Kauffman, The power of options

In a preview of their forthcoming book, Real Time Leadership, from Harvard Business Review Press, Noble and Kauffman suggest that all leaders should have available to them (at least) four stances for shaping their responses and approaches to situations: lean-in, lean back, lean with, and don’t lean. To hone the skill of choosing appropriately between stances and deploying them effectively, the authors recommend a process for developing self-awareness and practice, starting with becoming aware of your default stance, through understanding the needs of the audience, spelling out when to use or not to use a certain stance. Finally, they illustrate with several examples of leaders in real life, difficult situations, showing the transformative power of learning how to use the Platinum Rule: treat others as they would like to be treated.

14. Thomas H. Davenport and Nitin Mittal, Stop tinkering with AI

This article distils lessons from research at 30 organizations that have implemented AI fully and have seen significant benefits as a result. Davenport and Mittal illustrate how these organizations have chosen specific objectives for their AI programs, how they work with producers of AI applications and master analytics. A flexible data infrastructure that can integrate data from across the organisation will also enable the more effective deployment of AI, its use in existing processes and in the creation of solutions across the organization. To sustain AI-led development, leadership and governance need to be robust, developing centres of excellence, investing continually and seeking new sources of data. Featured organisations include Deloitte, Seagate Technology (world’s largest disk-drive manufacturer), CapitalOne, several US government departments, Cleveland Clinic, DBS Bank, and CCC Intelligent Solutions.

15. Bent Flyvbjerg and Dan Gardner, How Frank Gehry delivers on time and on budget

Flyvbjerg and Gardner go behind the scenes at the Frank Gehry architecture practice to discover how they achieve a rare consistency in delivering large scale projects on time and on budget. The research illuminates how profound attention to detail and thorough preparation play a crucial role in making sure that there are no great surprises once the building starts. Project preparation always aims to make sure that commitments match ability to deliver, that there is a profound understanding of the client’s wishes and motivations, and that options have been examined through simulation, iteration, and testing. This upfront time investment for planning then pays off as implementation can be swift and effective.

Experience

16. Gabriella Rosen Kellerman and Martin E.P. Seligman, Cultivating the four kinds of creativity

Creativity can be a core competency for all of us. To help develop it, Kellerman and Seligman describe four approaches: integration, splitting, figure-ground reversal and distal thinking. For each type they provide a definition and examples taken from a business context. These is as well general guidance for developing a range of styles for everyone, for combining them when working in a team and for making sure that the organisation has a diverse range of creative talents. The business or work-related problems we need to tackle can be large or small but thinking creatively can add an invaluable dimension of fun and pleasure.

17. Mark C. Bolino and Corey Phelps, Case study: Should some employees be allowed to work remotely even if others can’t?

This case study discusses options around introducing a return to office policy for workers at the headquarters of an energy company. They are still working at will from home, or in the office, but their oil-field and offshore colleagues do not enjoy this flexibility. How could the company balance the preferences of the two groups with a sense of fairness and the need to foster a vibrant company culture? 

18. Eben Harrell, The power of everyday awe

As it is widely recognised, feeling in touch with the wider universe can be a great source of calm and solace in the face of adversity and stress.  In their different ways, the four books reviewed here provide suggestions for making wonder and awe an integral part of our everyday lives.

19. Alison Beard, Life’s work interview with Ron Howard

Ron Howard, the former child actor and director (among his credits is the direction of Apollo 13 and A Beautiful Mind) discusses his views on creativity and developing working relationships with actors. For instance, his rule of “one of six” has a powerful effect in eliciting superior performance and applies when considering an actor’s suggestion and making artistic decisions. He says: “If it’s gray – six of one, half a dozen of another – I always try to go that actor’s way, because you are getting an organic X factor in the execution. They are not responding to the director, they’re expressing themselves.”