Endeavor is pleased to make public the following transcript from a presentation at the 2011 Endeavor Entrepreneur Summit in San Francisco. The event, which assembled over 450 entrepreneurs and global business leaders, featured dozens of entrepreneurship-related presentations by top CEOs and industry experts.
Overview: Sal Giambanco, Partner at the Omidyar Network, discusses the importance of conducting talent reviews and the proper way to conduct them.
Bio: Sal leads the Human Capital and Operations functions of Omidyar Network. In this role, he works to develop and scale the talent at Omidyar Network and its portfolio organizations. Sal brings a wealth of executive experience in human resources management to his role as a partner at Omidyar Network.From 2000-2009, Sal served as the Vice President of Human Resources and Administration for PayPal and eBay. Prior to joining PayPal, Sal worked for KPMG as the National Recruiting Manager for the information, communications, high-tech, and entertainment consulting practices, while also leading KPMG’s collegiate and MBA recruiting programs. Previously, Sal directed Human Resources at Tech One, Inc. and held positions at Ernst & Young and ESS Technology, Inc. Sal began his career working in the public sector in a variety of roles, primarily in education and hospital ministries. Sal holds an MA in philosophy from Fordham University, a Masters of Divinity from the Graduate Theological Union in Berkeley, California, and an AB in economics and political science from Columbia University.
From the presentation:
Sal: All entrepreneurs, all organizations have a business strategy. There are various things that we will call new capital strategy. You can have financial capital, you can have a great idea, but unless you have the people that can execute on that idea, you don’t really get anything. You actually have to have people who are driving and doing things. These are all the things we talk about — whether it is human capital or human capital strategies.
How do you think about all the systems, all the processes, management structures, decision making, rewards, all those things that actually drive execution? This is the basic thesis, that nine out of ten organizations fail to execute strategy. One of the things we talk about is that there is a disconnect between what an entrepreneur wants to do. The exercise I had the entrepreneurs do yesterday is to close their eyes and ask the question, “Does everyone in your organization know your strategy?” If they don’t, why not? That’s the issue. Does everyone know the strategy of your organization? Why? Because what we find in research is that very few workforces actually know their strategy. The founder does, the entrepreneur does, the senior team does, but they don’t actually drive this down into their talent. The people strategy with the business strategy is really important.
This is the ecosystem that we are talking about. When we talk about the employee value proposition, it’s not just how much I am being paid, it’s actually why people join your organization. So we talked about the attraction engagement and retention and so you have to attract people, you have to engage people and you have to retain them. How do you that? All these things play a role and at the Omidyar Network we actually talk with our partner organizations, and go into detail on all of these. We talk about coaching, feedback, etc.
What we are talking about today is actually on the talent side. This is the attraction idea. What actually operates an attraction. We had a session yesterday on engagement. We focused on addressing poor performance, because every entrepreneur I’ve ever worked with has problems with employees. That actually has a lot to do with engagement because organizations that tolerate lousy performers – nothing upsets top performers more than tolerance and rewarding mediocre performance. So that is the backdrop for today.
What we are really talking about is everything we do at the Omidyar Network and relates to systems thinking. When we think about talent, we think about how this talent fits into the system of your business. Again, we always start with strategy because an organization is required to do something. What are we trying to accomplish? The second question is how should we be organized to meet our mission? What we are talking about now is the third question: Do I have the right talent to achieve my organizational objectives, which deliver on my business objectives? Most people conflate these two things. Most people say, “I have a mission, I have a strategy, I gotta go do something; let me go get the talent.” They generally forget about this middle section. We’re actually not going to spend much time on this middle section. We’re going to talk about the talent section.
We are going to talk about talent evaluation now. What are the talent review guidelines? The first thing is performance rules. Past performance is always the best predictor of future performance. It works in attraction, when you think about recruiting. Reference checks, background checks, really getting into how someone did at a previous role is really important to understand how they are going to perform today. Experience is really the best classroom. What we are talking about today is leaving a legacy for talent, identifying the right talent, and deliberately placing the right talent. This is the overall view of the questions that should be asked by CEOs. These are the key questions that they need to be asking. How imperatives shape our game plan. We have critical business things we need to do. You can attract, you can recruit, or you can develop your people; there are multiple strategies around talent management. How is the organization evolved? Are our best people in the right jobs? How do you know? That is an important question. Startup requires different talent than a middle company than a Fortune 500. So one of the most important questions is how does my team compare with the best in the sector? As CEO, are you asking that question? Then you have transition and succession plans.
This is a process that I’m advocating today. It’s called an OTR where you actually do an organizational review. May I recommend a three-step process in which each step is a process within itself. The first process is strategy process. Every organization should have a strategy. An organizational process that analyzes how you should be organized. And then a third process which is the talent review. It should be simple and focus in a story.
Think about how you are staffed. What are they key positions? What is required for those positions? Not today, but tomorrow. The talent review is focused on tomorrow, twelve to eighteen months out. Do we have the best people that are going to be twelve months from now? An OTR tries to get at whether we have the right talent for the future.
How do you know you have great people in your organization? An organization chart does not tell you where your best talent is. It tells where it should be, but not where it is. There is good talent up and down. And then, what was accomplished since the last OTR? When you are growing as fast as Endeavor Entrepreneurs you are essentially doubling constantly. So one of the strategies is then hiring ahead of the curve. You have to hire not to where it is today, but where it will be twelve months from now. Does your board have an annual discussion of talent strategies?
I talked about the role of the CEO yesterday. If you really want to motivate your top talent you have to understand their different motives. The balance is how do you institute programs that meet the individual needs while maintaining fairness for the rest of the organization. If compensation is your main motive then your talent is a bunch of mercenaries.
Where are your top people right now? You start as a new employee. Then you learn your job and eventually you get bored and you need a new challenge. This is when employees are most vulnerable to a recruiter or a competitor. When you are running an organization, you need to know what stage they are in at all times. Employees get into trouble when they get bored.
Most of the slides in this presentation are actually part of a handbook that you will be getting. It’s a step by step guide.
Think of your top talent as a wooing process. Why? Because top talent has choices.
So when people ask me how do they do it, this is a helpful framework. What we are thinking about is performance versus potential. Say Employee X is doing really well, she is beating her expectations, she is getting her job done. Great. Now what? The question not just about her performance, but in a talent review cycle, it is forward looking. How do we maximize performance? We need to think not about their performance, but their potential. That’s what makes it future looking. Most organizations don’t do this.
Question: How often do you do this?
Sal: Because it is so involved, I generally recommend once a year. I also think this is helpful to do after your performance review because then you have all the data.
Yesterday I talked about the fact that your top ten employees are probably doing the work of fifty people. We know who the top people are. We know who the bottom people are. Why aren’t we doing something about it? This process is designed to be an analytical tool. With the board you talk about your executive team.
My guess is that the best performing organization will have more people in the green area than down there. Your board will ask you about the succession plan. The succession plan comes out of the talent review. You have to know the potential of everyone.
Question: Do you think in the people in the red color can really go to the green colour?
Sal: If it’s low potential. I may have been a Steady Eddie when were beginning, but now that it is a bigger company, what is my potential to grow? These are difficult questions. Problem performance with low potential is a disaster. These are hard questions. Even if I could correct performance, if there is low potential, then why would I correct it?
This is a tool about how you think about performance and potential. You think about the job. What is the job of the person? What is their scope? What is the complexity of the job? What does the horizon look like? What are the potential contributions? There is the job and then the person. The person is generated by performance and then these are questions around potentials. Does the person have mental agility? Can the person deal with complexity and managing ambiguity? Can the person deliver results and inspire others?
In a growing organization, it doesn’t matter what I do. I am only successful if other employees are successful at the Omidyar Network. It’s not just my results. Am I inspiring the people around me? If I have, that is high potential.