Generation Y: Russia is Not Ready

Today I was a guest speaker at Moscow School of Management Skolkovo, trying to convey the Executive MBA students the importance of Change Management and why it should or should not belong to the area of responsibility of HR. One thing struck me as hard to believe: those heads of large departments and directors of companies have never heard about the Generations Theory, do not know anything about the Millennials, Boomers or that they belong to Generation X, and they give no cognisance to the fact that the nature of their workforce is changing.

I shared just a couple of slides to rest my case on changing demographics and Russia's total unpreparedness for that shift. Let's begin with some numbers. These are the projections of the State Committee of Statistics for the demographic picture of Russia 10 years from now - in 2012. The chasm (words fail me to come up with a better definition for what's looming in a very near future) cannot be negated: in 10 years the number of 20-24 year olds who form the core of the future potential of a company or of the entire nation will be half of what it is now. Given that we are already struggling to resource the business and the war for talent is rampant, I fear to imagine what it is going to become in the years coming. Should there be no strategy for talent import in place pretty soon, the business will be facing a collapse situation. A basket case of a country...

But that gap will become everyone's headache in a couple of years. Right now everyone seems to be relaxed and laid back, watching listlessly the revenues from the natural resources Russia is so lucky (or unlucky) to possess. We are so content with the situation that no heed is taken that the workforce is changing and that Generation Y is voluminous enough to make its statement in the world of business. The European businesses have recognized the needs of the new generations and have taken the necessary steps to make sure that they are able to attract and retain the top performers by providing the so-much-valued flexibility and the opportunities for self-actualization that characterize Generation Y. Below is a slide from Top Employers research done last year across Europe:

What do we see in Russia? The business (nor the Government) could care less what type of people will be shaping the nation's economy or are shaping already. Why? Let's take a simple example of working from home. Across the world, it's a reality. In Russia,

• if you don't come to the office, according to the Labor Legislation it is an absence;
• there are provisions for home work, but if you decide to go that way, the employer will have to attest the working conditions and certify that your apartment is fit for working - can you imagine conducting an exercise like that?
• if you work from home and an accident occurs, is that an industrial injury and the company is liable?
• etc, etc, etc.

The legal hurdles to such a seemingly simple issue are tremendous, and everyone is keeping silent: the unions (which is a joke in Russia right now, really), the business, the government, the civil society (which is maybe even a bigger joke than the unions).

Thus, what I left the students with were questions and problems. Hopefully, they left the classroom with more questions than they had come with because that definitely was my intention. Skolkovo is supposed to nurture crème de la crème of the Russian busines elite, so if they don't start asking the right questions at the highest levels, who will?

New Age Manager

I wonder, if we run a survey to find out which one of the following elements (which are - mind you! - are essential for the New Age Manager) would be the weakest link in the chain, what results will we get? Without making it a wager, I am pretty sure it's gonna be Authenticity and Trust, and it being the foundation of the managerial competence, developing all others in isolation will be little gain.

My question to the thinking world will be: can you develop this competence without professional coaching?

(borrowed from http://www.towerswatson.com/manager-redefined)

Making Recruitment Fun

Just like most children want to know if something is an animal, vegetable or mineral, most employers want to know what type of people come into their organizations. For those purposes they invent a wide variety of instruments ranging from online assessment tools to elaborate assessment center techniques. The recruiters and assessors will carefully observe everything you have said and done, classify it accordingly in immaculately looking recording forms and will pass their judgment according to the company's assessment methodology whether you are a suitable candidate for them or not. Nowadays that nearly everyone is following the same route of such evaluations and assessments, it has become somewhat trite and hackneyed.

So it was a gush of fresh air when a few weeks ago a friend of mine shared an informal (but none the less comprehensive) candidate assessment scale used by one of her senior managers. I cannot look at it without tears and at the same time admiration for the boundless creativity that is inane in the Russian culture.

According to that fine high-ranked specimen of a huge monopoly, all candidates fall into the following categories (I am trying to convey the manager's attitude as close as possible here):

• GHOUL. These have no place in the company and should be escorted (ideally with security) out of the interview venue. Serious self-esteem issues. Can be entertaining but only in retrospect and solely because of masochistically morbid curiosity.

• VEGETABLE. These fall into two subcategories: sad vegetables and happy vegetables. Sad vegetables make you yawn and ponder over Karen Walker's categories of why people choose to be poor or tax evasion being a victimless crime. Happy vegetables do become amusing with their eagerness or rosy idealistic categories of democracy and human rights. Both types are OK for hiring and will form the "solid citizen" pool of the company. Dispensable at will.

• STAR. Enough said. Should hire if the salary ambitions are adequate. Top score for females.

• ALPHA-MALE. Does not apply to women. The highest grade one can get. Issues like moral turpitude or harassment are foreign concepts for them, Machiavelli is a kin, and Joseph Stalin School of Management is the preferred academic institution. Hire by all means and costs: an invaluable asset but will eat you alive at the first opportunity. 

It makes me sad to think that this manager is up there at the senior level, that his approach and comments are tolerated and even made into urban myths, perpetuating the stereotypes of Russian management. Suppose I were to disclose the name of the company or even the name of the manager - nothing would change, as that is what others expect. It might only make that company more desirable for new entrants: to see how charismatic its leaders are, just like Boris Yeltsin's ratings went up after he got drunk and fell from the bridge.

At moments like this I can only quote a famous Russian poet Fyodor Tyutchev:

You can't perceive the Russian land,

 You'll fail to measure it with measures,

From common way apart it stands,

You can but trust in Russian treasures. 

Fresh Talent in Demand

I had the pleasure of working with Monika Hamori, an IE Business School professor, who is rightfully among top 40 business school professors under the age of 40. I helped her with research on a number of topics, including labor market intermediaries, CEO careers and job hopping. Also, we worked on the topic of grad HiPos, i.e. high-potential employees fresh out of college or recent graduates with a few years of professional experience under the belt. Having gone through a few assessments myself, I have the perspective from the other side of the fence, and surely I can boast some professional hands-on experience, since I dealt closely with the Shell graduate program.

The article on HiPos and job hoppers will be published soon, and until then the only thing that I can share is a list of questions that one needs to consider before implementing or getting into a leadership development program, so this post will be interested both for practitioners and graduate job seekers.

So, what do you need to think about before tackling a graduate program?

• what level of talent is targeted: fresh out of college, MBAs, grads with experience?
• what is the talent supply on the market (local and international)?
• are you targeting any specific backgrounds, e.g. engineering or investment banking?
• what metrics do you use to rate the program effectiveness? E.g.:
• the graduate attrition rates after 1/3/5 years
• ROI: investment vs outcome
• offer acceptance rate
• total number of candidates vs enrolled into the program at various levels
• # of staff administering the program
• milestones: future assignments lined up, coaches ready, major program events carried out, etc.
• what do people within the organization say (focus groups)? How do their opinions match with the opinions of the graduates themselves?
• program design: 
• duration
• philosophy
• talent-driven vs vacancy-driven approach
• program elements (mentoring, trainings, personalized development plans, etc.)
• number and types of assignments
• what is the level of organizational support? Can you detect ostracism or cynicism with general staff and the management?
• how would you assess internal equity of incoming graduates (total compensation & position matching)?
• how do you market the program both internally and externally?

P.S. Personal observation: American Idol type of talent programs never works. This applies to those companies that draft HiPos from the market and then do not know what to do with them: as a result, both suffer. However, it is a topic for another post.

Why IBM Works: Diversity 3.0

I could not but admire the IBM Corporation, listening to the presentations on their diversity programs. I am a tad suspicious when big managers talk about diversity initiatives at their organizations, as the intent is normally drastically different from the implementation, but this time I was 100% convinced: I had heard the speeches, I had seen the videos and the materials and I had talked to the employees: at IBM diversity is not a program but a culture.

If Diversity 1.0 is mere compliance with the legislation and 2.0 is a more advanced version of integrating D&I (Diversity & Inclusion) practices into the business processes, Diversity 3.0 is shaping the agenda and proactively converting differences into the critical competitive advantage of the everchanging world of today.

Few managers understand the business case for diversity yet. The general feeling is that it's a nice-to-have but when push comes to shove they retreat to the safe haven of similarity and homogeneity. Yet, diversity only becomes a competitive advantage once everyone in the organization understand that:

• the marketplace is becoming increasingly global: to reach into the new markets and grow your business you need to understand the cultural nuances of those market segments you are trying to conquer. Making your workforce diverse facilitates this process tremendously: basically, you are bringing the market intelligence into your company! Taking it even further, foster supplier diversity programs and go for diverse clients and customers.
• great places to work attract great talent: the power of the workforce is in their differences and not similarities. Feeling welcome makes people work harder, be loyal and recreate this environment of acceptance and suport. How sustainable can dog-eats-dog or I'm-better-than-you-coz-you're-strange environments be?
• diversity breeds innovation: we all know that innovation comes from combination. Put as many differences together (Lynda Gratton calls them heuristics), create conducive environment for creative juices to flow and there is not much left for you to do - change will emerge by itself reinventing the organization and making it stronger and more adaptable to the changing market needs.

Change starts with listening. Listen to what your organization or community is asking for. The trick is to listen not to the loudest voices, but to everyone. I get a feeling that at IBM every word is heard. Uthopic, of course, but that's what I heard from the employees themselves. They are not afraid to talk about their personal experiences in the workplace and they are proud of their differences and extremely acceptable of the differences of others. It flows in the company and it flows from the top. I urge you to watch this video about Policy Letter #4 and think where your organization is on the Diversity 3.0 journey:

50 EUR Note or How to Lose Talent

Jokingly, the 500 euro notes in Spain are called "bin ladens": they exist in theory, but nobody has seen them (I am not sure if this joke is still relevant in the light of the recent developments). The jokes are only funny when they are not played on you, thoght... I did not have to deal with a note as large as a 500-euro bill but even a tenth of it gave me quite a headache today.

Speaking metaphorically, I fell prey to the global drive of wading away from cash transactions and eliminating cash from the value exchange. I had to take a bus from Plaza de Castilla in Madrid to go to Alcobendas, the fare for which is EUR 1.50. I arrived at the bus station 10 minutes in advance with a general feeling that everything was under control and I had more than enough time to get the bus and maybe even enjoy a coffee on the way. Imagine my dismay when I relaized that I only had a 50-euro note in my wallet and no coins at all. I start darting around the terminal looking for someone who would change it into something more tradeable as the bus driver refused to accept it upright. Now... the ticket machines did not accept it, the ticket office did not have change and even the hot-dog-stand vendor could not help, even though she was a most amiable lady. My last hope was an ATM, and when I asked for EUR 50 hoping that I would get two twenties and a ten as usual, the wretched thing spat out another 50-euro note at me and that was already happening 30 seconds before the bus departure. Cursing the banking system, the electronic means of fund transfers and the public system of the Community of Madrid, I went back to the ground level and got a taxi. Taxi drivers always have change for some strange reason.

Still being in the metaphorical mood, I started contemplating the implications of having "500-euro notes" in organization, i.e. senior seasoned and well-qualified employees who do not fit the structure any more. That happened to Shell South Africa a couple of years ago, when after a successful implementation of Global SAP many employees who were working on the project could not be integrated back into the workplace because they have outgrown their old positions, the organization has become much flatter due to streamlining of the business processes and, in general, there are fewer jobs at the top (the champagne bottle effect). So they were like those 500-euro bills: high value, looking pretty but hardly utilized in the new environment, which suddenly became extremely transactional and controlled. As a result, many had to exit the company.

Moral of the two stories: sacks of coins are heavy to carry but having just large bills may get you nowhere, thus balance is the magic word. There is a caveat though... this rule does not apply if you have LOTS of money and can swap the bus station for a helipad :)

Adverse Selection

The notion of adverse selection traditionally belongs to the realm of Economics or Banking. The Wiki definition of adverse selection (so that we are on the same page) is:

Adverse selection, anti-selection, or negative selection is a term used in economics, insurance, statistics, and risk management. It refers to a market process in which "bad" results occur when buyers and sellers have asymmetric information (i.e. access to different information): the "bad" products or customers are more likely to be selected.

Interestingly enough, this term has recently been borrowed by People Management sciences in studies of labor markets. The basic assumptions are the same: information is asymmetric, it is imperfect and the labor market is heterogeneous. Aggravated by the amount of applications, companies often make wrong recruitment choices, since the screening and background check efforts are well beyond their capacity. At the same time, applicants are likely to apply for jobs, for which they are overqualified or underqualified, which skews the entire talent picture and throws the employer into the trap of guessing.

Boyle (1999) identified four types of candidates from adversely selected pools:

• The unhappy (and thus probably not a desirable employee); 

• the curious (and therefore likely to be a job-hopper); 

• the unpromotable (probably for a reason); and 

• the unemployed (probably for a worse reason).

Nowadays that we are striving for leaner functions, it is highly improbable that the companies are able to avoid the negative consequences of adverse selection should they not resort to the services of various labor market intermediaries (LMIs). Examples of such may be background check agencies, executive search firms, career services at academic institutions, temporary placement firms etc., i.e. an agency reducing the amount of uncertainty in the process of candidate selection.

LMIs in one form of another have existed for thousands of years, but those were largely informal. These days such processes and services are highly formalized and higher proportions of those are moving into online domains. Online recruitment is now a reality, and such giants as monster.com or hotjob.com boast millions of resumes on file, and those portals are able to provide both parties, employers and seekers, with personally-tailored information at low cost, which is normally shifted onto the employer. The problem comes when the employment decision is to be made, because it is somewhat similar to getting married after a few weeks of online dating: you do not want to end up with an undesirable person next to you even if it is going to be a short engagement, but at the same time there is a lack of time and resources to do proper screening and matching. Then you would more to more expensive employment agencies or even contingency firms, but is that really the answer to the problem?

There is little research done on LMIs up to date. I am certain that we are going to see more literature on the topic soon, but, as we know, academic knowledge is always lagging behind - what is there that we have to do now?