The Fortune 500 is an impressive list—at any point in time it includes some of the largest and most profitable companies in the world. Unfortunately, not all of them are the most adaptable and agile.
In fact, if you could magically transport yourself into the future, you’d likely find that nearly half of the organizations now on the list would be gone within 10 years. Some will have been gobbled up through acquisition, others simply closed shop after losing their competitive edge. The PricewaterhouseCoopers Technology Institute uncovered this high Fortune 500 attrition rate in the decade ending in 2009 and says even greater volatility is likely over the next 10 years.
Why the churn? Research by the Boston Consulting Group offers an important insight. After studying 2,500 US companies, it found that adaptability creates value and that the most adaptive companies typically outperform their slower-to-change peers over the long term.
In short, adaptability is essential for keeping today’s Fortune 500 companies on the list, and for all organizations to survive in the years ahead.
This has ramifications for all executives, including chief human resources officers. My conversations with CHROs throughout the world reveal that the shrewdest among them are reexamining their HR processes in light of the adaptability imperative, and are finding opportunities to help their companies thrive amidst upheaval. These CHROs are focusing on three important areas.
1. Continuous communication about employee performance. As one step to make the entire enterprise more adaptable, CHROs are updating traditional HR activities into near real-time processes. As I wrote in an earlier column, annual or biennial performance reviews are out of sync with today’s accelerated pace of change. Today’s top talent need modern, continuous assessment processes that provide feedback early and often.
2. Continuous monitoring of employee sentiment. Like once-a-year performance reviews, only-sporadic employee surveys are seen as too little, too late by today’s most progressive CHROs. They’re augmenting these in-depth but infrequent gauges of worker satisfaction with quick pulse-checks that become commonplace. In fact, one very large company asks employees to numerically rate their overall contentment each day as they’re ending their shifts.
Maintaining close communications like these fosters closer engagement among managers and employees. Even more, the data can flow into sophisticated analytics systems to help leaders better understand employee sentiment, something discussed in greater detail in “HR Executives Need To Think Like The CMO.”
CHROs are becoming more adept at understanding sentiment changes over time. To do this, they are focusing on what I call “sentiment vectors,” a vector being a combination of the direction, speed, and a rate of acceleration or deceleration in a trend. So instead of just gauging employee sentiment at a point in time—think annual employee survey—sentiment vectors help executives read prevailing trends and the rate at which they are changing.
That’s an important strategic advantage in an environment that demands adaptability. For example, if the company’s industrial sector is experiencing a period of constriction and negative press, CHROs can keep a close watch on employee attitudes. When warning signs appear, CHROs can advise senior leaders to hold a town hall meeting to address questions, outline the company’s competitive strategy, and act before concerns negatively impact worker performance.
3. Continuous recruiting of top talent. In the past, recruiting didn’t typically begin until a new position was about to open—the HR world’s equivalent to just-in-time talent acquisition. Today, recruiting is becoming more like how marketing departments are forging closer relationships with target customers. They maintain a steady stream of communications with high-value consumers, even those who may not be making buying decisions at the moment.
Similarly, CHROs in highly adaptable organizations make sure recruiters stay closely engaged with all-star employees, and give them tools for continuously communicating with peers about the value of working at their company. Thus, the old employee-referral model is morphing into a social sharing program where employees authentically share their opinions about their organization and what makes its culture tick—and cultivate a core pool of talent in the process. This approach is often referred to as using employment brand ambassadors, and is proving more effective than some more traditional approaches to recruitment marketing.
Winners Take All
Savvy CHROs are forging closer connections among employees and companies through modern processes for continuous appraisals, sentiment analysis, and recruiting. Along the way, these executives are gathering the insights they need to monitor changing business requirements and use adaptability as a competitive advantage in today’s winner-take-all economic environment.
Bertrand Dussert is Oracle's vice president for human capital management transformation.