Apple's Game Plan: Avoiding Culture Shock

 

Read the case and discuss the following questions in groups:

1. What did Steve Jobs do as a top manager in term of HR management?

2. Which of Jobs’ activities ensured Apple’s success?

3. Why is Steve Jobs recognized as the most talented manager of the world? Give examples and prove your opinion.

 

The day after Steve Jobs’ death, Apple Inc.'s stock price barely budged. It was an outcome nearly a decade in the making. Since at least 2004, Mr. Jobs and Apple's board of directors have been putting into place a plan to maintain the legacy of his management style and his decision-making, according to former Apple employees.

Among Mr. Jobs and the board's moves there is slowing the flow of departing executives to build a bench of talent and installing programs ranging from annual retreats for the company's "top 100" managers to an in-house "university" that codified Mr. Jobs’ work over the years into case studies.

By the time Mr. Jobs died on Wednesday, much of the infrastructure and institutional knowledge was in place for Apple to continue on - despite fears that a company that depended so acutely on its co-founder's vision and personality would immediately flail without him.

The corporate culture that Mr. Jobs worked to instill, and now leaves behind, encourages creativity within a formal structure of product development and launches, according to former Apple employees. That is in contrast to the start-up free-for-all feeling of a younger company like Google Inc. Apple's secretive culture is top down, driven by the demands of senior executives and defined by a belief that what people are working on is important.

Apple "is an army... everyone has a role," said Andy Miller, who sold the wireless advertising company he co-founded, Quattro Wireless, to Apple in 2010 and recently left Apple to join venture-capital firm Highland Capital Partners. "The rare thing [Apple] had on their side was time," said David Larcker, director of the Corporate Governance Research Program at Stanford University. Since Mr. Jobs' health unraveled over nearly a decade, Apple's board had years to evaluate and groom executives, such as current Chief Executive Tim Cook, and develop ways to convey the company's culture and business lessons to new executives, he said.

Much of the planning for Mr. Jobs’ legacy happened without explicit discussion, said former Apple executives. Avie Tevanian, Apple's chief software technology officer who left in 2006, said Mr. Jobs did not talk about succession regularly but believed that talent would remain that as long as Apple maintained the right culture.

Mr. Jobs’ thinking was "let's provide a really good place to work and be successful and you will always have a deep bench of people," said Mr. Tevanian, now a managing director at private equity firm Elevation Partners. Mr. Jobs worked at keeping people around, he added, especially key executives who were often heavily recruited.

In the years following Mr. Jobs' return to Apple in 1997, turnover at the top was high, especially with executives who did not meld with the co-founder's notorious temper. However, following Mr. Jobs' first health-related leave of absence in 2004 for pancreatic cancer, Apple's management team stabilized. Executives had an unspoken desire to build a team that had a long-term track record, according to a people familiar with Apple's thinking.

Chief among Mr. Jobs’ talent picks was Mr. Cook, 50, who joined Apple in 1998 to help make its manufacturing more efficient. He temporarily ran Apple in 2004 when Mr. Jobs was on his first medical leave.

A year later, Mr. Jobs appointed Mr. Cook as chief operating officer, signaling to other employees that he was priming a successor. Later that same year, Mr. Jobs allowed Mr. Cook to join Nike Inc.'s board, a move that other executives said they took as a sign that Mr. Jobs was grooming top talent. Each of the three times that Mr. Jobs took a medical leave from Apple; Mr. Cook took on more responsibility, said people familiar with his leadership. Even when Mr. Jobs was holding the CEO title, he left many day-to-day details about running the company to Mr. Cook, preferring to focus on the bigger picture, according to former Apple employees.

Like many other tech companies, Apple attracts and keeps top talent with stock programs that reward people for the success of their performance. However, it does not necessarily rely on benchmarking salaries with the rest of the tech industry, said Aaron Boyd of compensation-research firm Equilar Inc.

After appointing Mr. Cook CEO in August, for instance, Apple's board gave him a compensation package that makes it hard for him to walk away, with 1 million restricted stock units, half of which vest in 2016, and the other half in 2021.

According to an Equilar analysis, the award is the second-richest equity award in Silicon Valley in the last 11 years, after Mr. Jobs’ package in 2000. Mr. Jobs built Apple's culture to idolize product development and a sense of perpetual improvement, according to current and former employees. Regular product post-mortems, where employees examine the successes and failures of new gadgets a few months after launch, embodied this spirit, said former employees.

Mr. Jobs also began rallying executives at the top of the company by assembling executives at an off-site meeting held annually or so called the "Top 100," according to people familiar with the sessions.

The group included a core group of Apple's senior leaders and dozens of others invited because they were working on high-priority products. Together they would discuss topics like Apple's retail strategy and hold internal product unveilings. Participants were told that they were cultural keepers of Apple, and were responsible for propagating that culture to other employees, according to people familiar with the meetings.

Starting in 2008, Mr. Jobs also launched an effort to codify the culture and business intelligence he built into its own in-house MBA program. Apple hired Joel Podolny to serve as dean of a secretive program it calls Apple University. In that role, Mr. Podolny has interviewed top-level executives and crafted case studies on key Apple business decisions, said people familiar with the program. Those classes have been optional, according to one former employee. "You feel like a kid coming out of "Rocky" ready to do battle," Mr. Miller said of Apple University, which he and the managers at Quattro participated in after the company was acquired.

Reading 2

a. Take notes while reading the text. Select main ideas about talent management and summarize them. Answer the questions:

1. From your standpoint, can demand management methods be applied to HR management? Why?

2. Do you think there is a talent management crisis? Why?

3. What is a flow of talent?

4. What are the challenges of HR managers?

5. How are they similar to the ones of operations managers? How are they different?

6. How can HR managers and operations managers cooperate?

7. Describe the case of Cat Logistics.

8. Is S&OP a talent management enabler? Why?

9. How has S&OP changed the work of HR managers?

10. Why should HR managers be sensitive to regional nuances?

11. From your point of view, how can recruitment be improved in the future?

 

Is Talent Management the Next Frontier for S&OP? ^[39]

The idea that the flow of talent is akin to the flow of product is not new. Many of the talent management challenges that companies face today are analogous to problems that have already been analyzed in the operations research field.

Delve further and the challenges become familiar. HR managers are wrestling with the demands of globalization, business volatility, and a more complex mix of skills, at a time when planning horizons are contracting. They must ensure that their "inventory" of talent meets short- and long-term demands. When HR forecasts are off the mark, the result can be excess talent - and the possibility of damaging layoffs - or a scramble for new blood.

Supply chain managers also can relate to the day-to-day challenges faced by their counterparts in HR. Take, for example, the extreme swings in demand that HR managers deal with. It is not uncommon for a manager to navigate through a protracted recruitment program and be ready to send out job offers, only to find that the positions no longer need to be filled. Also keep in mind that, in general, it is far more costly to manage a supply of people than a supply of widgets.

But the reasons for extending Sales & Operations Planning (S&OP) to the talent pipeline go beyond the similarities between the respective supply chains. Operations managers are trained to use and appreciate tools such as S&OP; they are masters of program management and applying technology to real world problems. Moreover, they are taught to evaluate and redesign supply chains in line with the organization's strategic direction. HR managers, on the other hand, seldom have the opportunity to learn these technical skills. The HR team/function can benefit greatly from these disciplines - and, by extension, so can the company's talent management strategy.

It is becoming increasingly important to take talent acquisition and retention to a more effective level. The types of skills required to run a supply chain are changing, as are the methods for finding and recruiting professionals. The emergence of new channels such as social media sites, online networks, and so forth, illustrates the many new options available to companies when seeking job candidates.

In this environment companies that develop world class recruitment and retention programs can attract the best and the brightest. Cat Logistics offers a solid example. Harnessing the planning capabilities of S&OP to build and manage the Cat Logistics talent pipeline is part of the company's strategy to deliver superior results by maintaining global leadership and building the best team in the industry.

From a supply chain management perspective, the application of S&OP in the Cat Logistics talent management program is basic. From an HR standpoint, however, it is a leading edge application that could become a significant innovation in talent management.

For some time, Cat Logistics' managers have been required to submit a five-year business plan forecast, but this now includes an estimate of their group's headcount requirements over the period. These estimates are used to analyze workforce trends - which groups are growing and the rate of growth in different geographies, for example - at the departmental, divisional, and corporate levels.

And in much the same way that production forecasting must respond to variations in demand, so the HR process also has to be sensitive to demand signals. An economic downturn or strategic course change can transform the supply/demand picture quickly. There are also regional nuances in demand patterns to consider. In India employees might need regional knowledge such as an understanding of local differences in tax codes and infrastructural limitations, in addition to more general supply chain competencies. Postings in other countries, notably China, may require a different set of skills.

The projections are assessed in terms of alignment with corporate strategy to determine whether adjustments need to be made. This process is called Strategic Workforce Planning (SWP). It originates at the corporate level and is carried out at the business unit level, providing Cat Logistics with a global footprint of the human resource needs over a five-year period.

This planning process includes a tactical element. One year estimates are derived from the five-year figures to provide more accurate forecasts of future staffing needs. By taking the number of people currently employed and the projected staffing needs one year down the road, and building in an allowance for losses through attrition, it is possible to generate a robust recruitment target for the following year. The number of sources of "inventory" available to fill the gap between current and future needs is limited.

Talent is recruited internally, from educational institutions, from other companies, or (increasingly) from the military. Recruits can be new graduates, mid-career, or senior professionals, employees or contractors. S&OP enables Cat Logistics to manage these sources of talent more effectively. Armed with a more accurate picture of how many individuals they need to hire and what mix of skills is needed, Cat Logistics' HR managers can make smarter investments and derive more value from recruitment channels such as universities and search firms where appropriate.

The deployment of S&OP disciplines in the HR arena, still at an early stage, requires a more thorough knowledge of the process. Supply chain and HR professionals need to collaborate to further develop the approach. Cat Logistics is bridging these two functions, recognizing that the closer relationship is critical to the success of the company's S&OP-based talent management approach.

In an environment where everyone is busy, it can sometimes be difficult for HR to build support and maintain engagement from the operational team. An initial key to demonstrating SWP value at a company has been an intense focus on ensuring the process is easy, the data is accurate, and the results are useful."

It is also important to recognize that the learning process is two-way. Supply chain managers can benefit from the opportunity to appreciate "people" issues that are often overshadowed by the technical aspects of their role. These so-called soft issues are growing in importance for operations and HR managers because impending supply chain talent shortages impact both functions.

b. Explain the following concepts in English:

talent flow	talent pipeline
staff recruitment	workforce trend
region nuances	posting
SWP	staffing needs
contractor	S&OP
layoff	job offer

c. Complete the table with correct word forms:

Verb	Noun	Adjective
	retention
		volatile
collaborate

d. Match terms by consulting the text:

1.

day-to-day	a) estimates
recruitment	b) professional
job	c) program
senior	d) challenges
accurate	e) offer

2.