Marc Effron, CEO of The Talent Strategy Group, frequently visits India as a bulk of his clientele is based in the country. The author of the bestselling One Page Talent Managementis writing another book on his favourite subject. Effron, who has worked with Hewitt and Avon Products before he branched out as a consultant to many enterprises including Bank of America, Philips and Reliance Industries in India, says people he has come across in the country, whether they are entrepreneurs or their employees, display a hunger that’s not seen these days in Americans or Europeans. This hunger is positive, as it is aspirational, with a pride to take their nation forward, Effron tells Satish John in an
interview. Edited excerpts:
Are challenges for Indian companies different from those for their western counterparts?
There are different challenges for Indian companies as they are in the growth phase now. When firms move from entrepreneurial to operation stage, their needs change. Most companies around the world mess up that transition. This is a unique set of challenges for fast growing companies in India to manage that transition from an entrepreneurial environment to a more established operational environment.
How do these two phases differ?
To lead these two phases, you need different capabilities from CEOs to run the companies. Whether these companies are in manufacturing or in information technology, they often see radical shifts. What I see challenging with most companies I work with around the world is that they simply haven’t figured out their leadership production line-up. In other words, they don’t have a way of producing great leaders on a consistent basis to a consistent specification.
How do you improve the mean level of performance of people?
It all boils down to basic performance management. It is amazing that most companies don’t do well. Basic performance management sets clear goals, coach people throughout the year and reviews on a regular basis every year. Most firms struggle to set those stretch goals that interest and challenge employees. If you set that right, so many other things fall in place easily. So the simple thing to do is to set up a small number of understandable goals for everyone, which will be the easiest way to manage the aspirations of employees.
How much is compensation a factor to keep the morale of an employee up?
Compensation is a hygiene factor. If one is paid 30% more salary, it won’t make him more motivated. I think there is brain chemistry around it. There have been studies which prove that when one gets a compensation increase, it will give an effect of a dopamine release that drugs cause. The individual will feel good for a moment and then completely go back to the old level. It has no lasting impact at all. So the argument that companies should give huge incentives does not have any lasting impact. The average employee wants a great manager, a great career and just enough of a salary.
But managing attrition is a huge challenge for Indian companies...
Part of it is opportunistic. If given an opportunity to earn extra few bucks and you don’t see a career for self in a company, then why not. Especially in an aspirational economy. That’s a human behaviour. Somebody is going to make me a little richer today than tomorrow. It is going to happen. There are two things companies can do to retain a larger percentage of people. It is to engage their people with a good manager and a good compensation. Companies have to identify the top 10% of high potential employees around them. Then invest in a very different way in the top 10% of your staff. If a company wants to retain those people, first of all, you’ve to tell them that they are one of the best. Then they have to say the way they are going to invest in them. So the top 10% of people should be given a compelling proposition. So that way they can manage the top 10%.
Do you find stereotypes in Indian, Chinese or American talent?
My experience suggests how consistent (in behaviour) we all are across geographies, because our brains all come from the same place. The personality factor comes from the same factors around the world even if cultural nuances shift us in one way or the other. A lot of stereotypes may be true for many different reasons. Many people ask me when you go to India what is it that strikes you. I find them hungrier in a positive way. They are more aspirational than I see in other parts of the world. For instance, in the US people lack the drive to succeed. Or the resolve for their country to win. Whereas Indians believe that if they all act collectively the country will win. Some of the pride is driven by the entrepreneurial behaviour. It will be a huge competitive advantage. They will be working hard for their families and their countries. That kind of a mindset is almost unbeatable. If there is one differentiator then that is the entrepreneurial mindset. The leaders in India are also starting to understand their talent and also in getting talent, perhaps a little better than their western counterparts. In the US, there is a little bit of selling that a CEO has to do to get talent and in Europe there is a lot of selling, but when I come to India it is much about how to solve this problem. They have started realising that they need to invest more in acquiring and training talent. They are developing a talent strategy.
Three companies you admire the most in spotting and nurturing talent?
IBM has done an amazing job in the last 15 years. The proof is you can look at the transition from Lou Gerstner to the current CEO Sam Palmisano. Palmisano came through the leadership development programme and now he is going to be replaced by one or two of his colleagues who will come through the same process. So IBM has a true leadership machine. The CEO has taken an intimate interest in building those talent practices. IBM has done a tremendous job in nurturing talent through their ranks. There are a few other companies which do well in this sphere. PepsiCo and Bank of America are a few.Butthese companies are not doing it that well today as they used to do it before.
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