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HBR May-June 2019: Recruiting

Harvard Business Review, May/June 2019

Annotated table of contents

1. Adi Ignatius, ESG comes of age

Adi Ignatius, editor in chief of HBR, introduces the article on the shift in investor priorities to embrace environmental, social and governance performance criteria.

Idea watch

2. HBR Team, When scandal engulfs a celebrity endorser

Celebrity endorsers for US publicly traded companies generated 128 incidents of negative publicity from 1988 to 2016, according to a recent study. In nearly 60% of the cases, companies did nothing in response, but those who did react quickly, either standing by or severing relations with the celebrity in question incurred fewer share price losses. Four factors played a role in the public reaction to celebrity misbehaviour: perceived innocence or guilt; the closeness between the celebrity’s profession and the brand; and convincing, timely public apology by the celebrity.

3. Nicole Torres, When you pitch an idea gestures matter more than words

Research led by Joep Cornelissen of Erasmus University exposed experienced, but non-specialist, investors to recordings of pitches for a fictional device meant to help people recover from injuries. The pitches were made by the same actor, but with varying emphasis on hand gestures, technical explanations, metaphors, analogies and anecdotes. The use of hand gestures proved to be significantly more effective, leading to 12% more investment interest.

4. Grete Faremo, The Executive Director of a UN Agency on running it like a business

Faremo has led the UN Office for Project Services (UNOPS) since 2014, following a high-level career in the government and private sector of Norway. UNOPS, which carries out projects for the UN and national governments in severely deprived or disaster areas across the world, often in support of refugees, had already undergone a process of restructuring to avoid bankruptcy. The agency needed to upgrade its methodology for costing its services to combine willingness and expertise to work in difficult circumstances with a viable commercial rationale. Under Faremo, the effort to integrate public and private sector values continued, as she gave frontline workers more say in decisions, created a governance structure for greenlighting quickly complex projects and embraced innovation. UNOPS diversified the types of projects it takes on to include for instance financing for social sustainability projects, in renewable energy, affordable housing and health infrastructure.

Spotlight: Recruiting

5. Peter Cappelli, Your approach to hiring is all wrong

The flow of employees in and out of jobs is increasingly shaped by the rise of external recruiters and the weakening of the internal hiring function as positions are increasingly filled by outside candidates. Retention is difficult and the costs of hiring are on the rise, as getting a new job seems to be the likelier route to a higher salary and professional advancement. Cappelli emphasizes that companies need to track their hiring processes to determine how many positions are filled from within, and especially how good the people they hire turn out to be. He also outlines several other good practices to increase the quality of their hiring processes: eliminate the posting of ‘phantom jobs’; design jobs with realistic requirements; focus less on approaching passive candidates; understand the limits of referrals; prioritize the quality not the quantity of applicants; test standard skills; standardize the interviewing process; and examine critically the high-tech solutions on offer.

6. Peter Cappelli, Data science can’t fix hiring (yet)

Cappelli points out the limits of existing software packages that sift through large pools of candidates to identify those with the highest likelihood of success for particular roles. In particular, most high tech products don’t have an explanatory model that links particular attributes to higher performance, relying on limited analysis of high performers rather the employee population as a whole. Moreover, they are backward looking and might be drawing on data with only limited relevance for the future of a particular company.

7. Dane E. Holmes, Expanding the pool

Holmes, the global head of human capital management at Goldman Sachs explains recent changes in the recruitment processes for entry level positions. Around 40% of applicants now get the chance of a first screening video interview, allowing the company to expand the range and location of schools it can include, reaching 1,268 in the latest round. Structured questioning and assessments are then used to ensure that the 3% of the 500,000 applicants hired every year are a good match for their jobs at Goldman Sachs.

Features

8. Nicolaj Siggelkow and Christian Terwiesch, The age of continuous connection

According to Siggelkow and Terwiesch the widespread penetration of communication technologies is creating new opportunities for structuring the relationship between companies and customers, with four levels of depth or intensity. Delivery models are increasingly shifting from ‘buy what we have’ to ‘respond to desire’, ‘curated offering’, ‘coach behaviour’ or ‘automatic execution’. The new models vary in terms of the amount of data shared between companies and customers, which in turns allows for differential levels of service and customer discretion. To illustrate, they show how the purchase of a new toner cartridge for a home printer would be structured in each of these models. They also cite the practice of companies such as Nike, McGraw Hill, and BP.

9. Kimberly A. Whitler, What Western marketers can learn from China

Market conditions are different in China. Rapid growth is much more important than profitability for instance, and the ownership of marketing channels is concentrated in the hands of only three companies, the BATs – Baidu, Alibaba and Tencent. For these reasons, the primary focus of marketing campaigns is to produce engaging content at speed that plays well on mobile devices, raising awareness of products rather than trying to obtain immediate buy-in through offers and sales. The article describes in detail the characteristics of the Chinese consumer market and gives multiple examples of stand-out marketing campaigns.

10. Joseph E. Aldy and Gianfranco Gianfrante, Future-proof your climate strategy

Although by no means general, the use of an internal price for carbon has been on the rise among US-based companies, in response to growing awareness of the need to address climate change. In this article Aldy and Gianfrante offer practical advice on how to measure carbon footprints, forecast future carbon prices, set internal carbon prices and use them to evaluate new investments, for risk management and strategy. Regular assessments of internal carbon prices can help companies react more effectively to changes in climate regulations and policy and respond to climate-sensitive stakeholders.

11. Walter Frick, How to survive a recession and thrive afterward

Frick, the deputy editor of HBR, reviews the literature on how companies have responded to recessions in the past and distils four lessons. Research suggests that lower levels of debt help companies to respond more effectively to a downturn, suggesting that companies would do well to deleverage before the downturn occurs. Decentralised firms have greater capacity to respond to localised conditions, absorb negative shocks and take advantage of opportunities. Retaining the labour force, even by decreasing hours or introducing furloughs if necessary can also help a company rebound after recession. Finally, contrary to expectations, investment in technology could help companies restructure their operations and processes and position themselves for superior performance in relation to rivals.

12. Robert G. Eccles and Svetlana Klimenko, The investor revolution

Eccles and Klimenko, who interviewed 70 senior executives at 43 global institutional investment firms, conclude that environmental, social and governance issues are ‘almost universally top of mind for these executives’. This finding corroborates other surveys indicating that more than half of global asset owners actively engage with ESG in their strategies. The change is driven by several factors: the need to diversify portfolios; the significant financial returns of ethical investing; growing demand on the part of shareholders; the understanding of fiduciary duty for the long-term; investors’ activism; and the trickle down of this interest within investment firms. As well as characterising this shift, the authors identify some barriers and suggest actions to prepare for the new era.

13. Joseph B. Fuller, Judith K. Wallerstein, Manjari Raman, and Alice de Chalenar, The workforce is more adaptable than you think

This article presents findings from a survey of employees in 11 countries and business leaders in eight of these (at different companies) collecting views and reactions to changing pressures that are likely to shape the future of work, in terms of technology, employee expectations, transitioning work models and the evolving business environment. Notably, there is a gap of perceptions between the two categories of respondents. Against managers’ expectations, employees are largely open to change, optimistic about the future and willing to undertake training. These results suggest that employers might want to take a pro-active approach to create a learning culture, engage employees in the transition, train larger numbers of workers, and find ways to manage chronic uncertainty. Each of these recommendations is illustrated with compelling industry cases.

14. Tiziana Casciaro, Amy C. Edmondson, and Sujin Jang, Cross-silo leadership

The ability to create connections horizontally across different departments in an organisation or an eco-system is often recognised as a source of enhanced productivity and a spur to innovation. In this article, the authors propose several practices for making cross-silo leadership a reality: develop and deploy cultural brokers; train people to ask the right questions; help people see other points of view; actively encourage employees to broaden their vision. These investments for developing soft skills for collaboration are likely to pay off across the board as illustrated by academic research and a variety of examples from companies including Moët Hennesy España, Chubb, Deloitte Canada, Google, New Songdo, Children’s Minnesota, and Southwest Airlines.

15. Nicholas Epley and Amit Kumar, How to design an ethical organization

Epley and Kumar argue that behaviour is generally ethically malleable. While formal compliance mechanisms and processes remain important, day-to-day actions tend to respond to cues in the environment about what is permissible. In this article they focus on describing four critical features that contribute to creating an ethical culture: explicit values; keeping values top of mind when making decisions; the alignment of rewards and ethical outcomes; and the cultural tone set at the top, and in the middle of the organisation. To become a reality, these features need to be carefully implemented across processes such as hiring, evaluation and compensation.

Experience

16. Sydney Finkelstein, Don’t be blinded by your own expertise

Developing expertise is often seen as desirable and its achievement an end in itself. However, as Finkelstein argues, over-reliance on particular notions of expertise also creates blind spots which can impair our effectiveness, becoming a source of vulnerability in the long run. To overcome this danger, he suggests several practices to be carried out regularly and frequently, including challenging your own expertise, seeking out fresh ideas and embracing experimentalism.

17. J. Neil Bearden, Case study: Was that harassment?

This case study explores a relatively light example of an inappropriate comment that might or might not be symptomatic of larger attitude problems for the person in question and the organisation as a whole. Such grey areas are very common, however, challenging us to make subtle judgements about when responses to ambiguous incidents need to be escalated and the costs of doing so.

8. Kevin Evers, The art of blooming late

Evers reviews five books about finding one’s calling later in life, which is often associated with deeper self-awareness. Honouring such knowledge may require a lengthy, day-to-day dedication to develop ourselves, but ‘it is never too late to “become” yourself.’

19. Ania G. Wieckowski: Life’s work interview with Bishop Michael Curry

Bishop Michael Curry is the first African-American head of the US-based Episcopal Church and in this interview he shares his thoughts on choosing a life’s work, the sources of his dedication and the challenges of leading this 1.7 million member organisation. He says: Often change is not so much about discarding the past as about reinventing it in a new way for a new time.

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