When: March 27
Where: The Millennium Broadway Hotel, New York
Former Home Depot HR director Dennis Donovan brought the flair of a company infomercial and broadcast it in surround sound to the Workforce Management Talent Management Conference.
But Dave Ulrich, a professor at the Ross School of Business at the University of Michigan and the author of several books on human resource management, brought the dynamism, smarts and an academic’s healthy skepticism toward long-held assumptions in human resource management.
Ulrich wins this reporter’s award for most interesting and engaging presentation on talent management in part because he was—gasp!—funny. Here are two of his gems:
Any customer can tell you that frontline employees have the greatest impact on customers’ attitude toward a company—not managers in a corporate office. A show of hands illustrated that point, prompting Ulrich to say, "It’s amazing we do research to prove this."
Forget about everything else: The most strategic decision an employer can make, Ulrich says, is to fire the most underperforming employees and make sure they are hired by the competition. "And then tell [the employee], ‘Do for them what you did for us.’ "
Ulrich is used to getting up in front of a crowd. He is, after all, a professor. He made frequent use of a marker, a tablet of paper and an easel to draw diagrams and to graph competency-to-retention ratios on an X-Y coordinate.
But in fact, Ulrich’s ideas are quite simple. Ulrich says finding and retaining talent comes down to the C’s: competence, commitment and contribution. All three are needed to make employees happy in the workplace. This is what he calls "the talent equation."
Among his first bullet points: "Realize that talent matters, but it isn’t the only thing."
Employees who perform well, who are "competent," need to feel they have a voice in the company. This generates "commitment." If they feel they can make a difference and that they are needed, the employer will have generated a feeling of "contribution."
First, Ulrich says, assess the competence of your employees by performing a competence audit. Meet with your company’s leadership team—for about four hours—to identify the technical skills of the company and the social skills of a company. Then identify the challenges that lie ahead and create a strategy to respond to those challenges. Finally, given the challenges, managers must ask themselves, "What do we need to be good at technically?" and "What do we need to be good at organizationally?"
"If I can’t do this audit in HR, I can’t be in HR," Ulrich says.
Ulrich, who spent three years as a Mormon missionary, says contribution is the part of work that feeds the soul and helps give meaning to one’s work life.
An employer who can deliver the three C’s will be a magnet for talent, Ulrich says.
After listening to Dennis Donovan talk about his experiences at Home Depot, attendees may have thought that all was well at the Atlanta-based home supply retailer and that former CEO Robert Nardelli was a beloved icon among the company’s employees.
In his speech titled "Building a Winning Future on a Foundation of Change," there was no mention of the controversy that surrounded Nardelli’s pay package, which hit $245 million in the five years he was CEO as the company’s stock declined 12 percent. Nardelli resigned January 3.
While Donovan talked about "a perfect storm" that took place in 2000 as Home Depot’s revenues plummeted, he went on to explain how he and Nardelli addressed the company’s issues when he joined in 2001.
Donovan admitted that employees and managers were resistant to Nardelli when he arrived as CEO in 2000.
"We needed to transition a CEO that no one wanted," he said.
To do this, Nardelli and Donovan went on a six-week tour holding town hall meetings with store managers. Their efforts were effective, said Donovan, who recalled a meeting where store managers cheered Nardelli on, the crowd even lifting him overhead at one point.
Donovan emphasized the importance of implementing change quickly.
"You will achieve success when the rate of internal change is faster than the rate of external change," he told attendees.
For example, one Saturday afternoon in July 2001, Donovan and Nardelli called in 60 leaders within the company and told them that day to create a centralized merchandising business, which would be announced the following Monday. After managers got over their fears, they went to work and the process was completed within 3½ hours.
"And at the end everyone cheered," Donovan said.
Metrics was another focus of Donovan’s while he was head of HR at Home Depot.
"Once a year we did an MRI of HR," he said.
On top of creating a very detailed review process for each employee, the company staffed all of its stores with HR managers, putting in place 1,300 employees—800 from the outside—within six weeks.
Donovan never mentioned why he was no longer at Home Depot or that his employment contract included a clause that entitled him to a multimillion-dollar severance package if Nardelli left.
Only when asked about what advice he would give Home Depot’s new CEO, Frank Blake, did Donovan vaguely acknowledge any of the controversy around Nardelli’s pay.
Donovan said that he would advise Blake to make sure he meets the needs of the multiple constituencies that Home Depot serves and focus on how to absorb all of the company’s recent acquisitions.
He then said, "And well, I designed his pay package," as if that shouldn’t be a problem this time around.
Blake’s annual compensation is $8.9 million—a fraction of Nardelli’s annual pay, which was $25.7 million.