A Model for HRM in the IE

Four core principles are important to HRM in the IE: developing human capital through individual talents; developing social capital through communities of practices and networks; developing agility, learning capabilities, and readiness for innovation; and developing new leadership skills.

Developing Individual Talents for Knowledge-Intensive Organizations

The challenge human resources managers face is how to get the best talent and make the most of individual resources, competencies and skills.

The basic tenets of human resources, defining the work to be done and the parameters under which the work will be done and setting pay scales based on measurable and defined criteria, have not changed in this IE, but new kinds of employee/company relationships have emerged, as follows .

• Work style ” Employees perform project-based work and must learn to be self-reliant and self-sufficient.

• Contingency relationships ” Companies adjust their human resources on short notice according to their needs. In environments where the social legislation is less restrictive (as in the U.S.) some companies go as far as to adapt their recruitment to the phases of a project.

• Individualized relationships ” Roles, salaries, and career possibilities are determined by individual talents and performance more than by industry negotiations that set general pay and classifications systems.

• Contractual relationships ” the organization's day-to-day life is structured around short- term and project-based relationships.

In a context of qualified work force shortages, intense competition to attract top talent, and high employee turnover , the traditional competence-based approach has limited efficacy. High-tech companies face three critical issues over time: attracting more talented employees, developing their skills, and allowing them to grow as the company grows to retain the best performers. Therefore, new approaches must be invented in recruitment, training, and retention.

Inventing New Recruitment Processes

Buying individual knowledge on the open market still remains the basic solution to rapidly increasing a firm's intellectual capital. In a competitive climate of low unemployment, firms need to create an employee value proposition or brand that distinguishes them among the potential employee market.

In addition, new recruitment approaches must be developed. The hiring decision is more and more disconnected from available jobs or assignments. High-tech firms generate contacts, watch for the best on an ongoing basis, and try to hire them and then fit them to a job. For example, some companies are paying employees referral bonuses (as much as $3,000) for recommending a qualified worker. Cisco Systems recruits 50% to 60% of its new hires through referrals from its Friends Program. For HR managers, outside networks can represent fertile sources for finding talent and understanding the dynamics of the job marketplace .

Finding the Right Retention Package

Once people are hired , organizations must retain them. The average job tenure in Silicon Valley is 2 years , ^[2] compared with 3.5 years in high-tech start-ups in other places in the United States or 6.5 years for the mining industry. ^[3] In knowledge-based industries, losing talent is no longer an HR issue; it's a business issue. A company with 50,000 employees and an annual 6% turnover rate incurs replacement costs approaching $18 million a year.

There is no silver bullet that will retain skilled employees. It takes a package including such amenities as equitable pay, rewards and recognition, training and development, cutting-edge technology, interesting projects, and on-site services such as childcare, shopping centers, and laundry facilities. In addition, each company has its distinctive and more visible favorite tool: stock options for Cisco, continuous training for Hewlett-Packard, intellect challenge for Genentech, teamwork at Quantum, a friendly atmosphere and fun at Peoplesoft, etc. Some of these companies view this tool to be so important that they have created a vice president for retention.

Evolving from Training to Learning Processes

Developing a resilient and adaptive work force requires new training methods . One of the current practices is to encourage a "self-reliance" approach in employees' professional development. High-tech companies are interested in the idea of self- reliance because they hope that employees will adapt more quickly to change and commit to creating a learning environment at every level of the organization. IBM calls its program Career Fitness Service, using the fitness analogy to suggest that career development should be viewed as something you do continuously to keep in shape professionally.

Traditional training has to be redefined for the high-tech context. Learning time must be provided at the right moment, when needed. People want to be convinced that it is useful, especially in learning non-technical skills. Therefore, training should focus on end results and place learners in control. To accomplish this, training methods are evolving toward action learning (using role play, simulation learning, just-in-time training, and in-the-moment coaching) with more flexibility in the choice of locations, times, and media.

Fostering Solidarity, Cooperation, and Cross-Fertilization Among Individuals: Social Capital

Social capital is another key asset in knowledge-based companies. Sharing the same culture and shared values builds a sense of community. At HP for example, the "HP way" and its "rules of the garage" promotes each employee as a member of an extended family. This culture can be witnessed through a company's expressed mission, or vision statement, such as 3Com's "to transform the way people live, work, communicate and learn thanks to information technologies." A company's culture is also based on myths, former projects, outstanding innovations, and extraordinary personalities that become role models for all employees. Culture replaces structure as an organizational principle and values are used both to explain and guide action.

HR plays an important role in encouraging common values, informal networks, and communities within a company, allowing the company to develop its social capital and collective intelligence. In high tech, the most used organizational form is modular projects that keep the responsibility at the level of small and relatively autonomous small groups.

Developing Agility: In Search of "Fast HR"

High-tech industry executives call for a flexible and fast HR that delivers instant services to line managers, finds alternative options to expensive and time-consuming training classes, and replaces complex job descriptions with flexible roles. The HR function must be prepared to quickly adjust everything for which it is responsible. Complex information management systems allow people to create, link, and share information from a variety of media such as text, graphics, audio, video and image, across time zones and distance both from within and outside the organization.

Developing New Leadership Skills: A New Management Model for the IE

Leadership is important to the development of knowledge-based companies because it helps build a cohesive vision for the flexible and unbounded companies of the IE as well as cohesive work units. The conception of leadership itself is changing in the IE. New expectations, roles, and skills are emerging, far from the traditional management approach of command and control.

Managing Is Like Gardening

A commonly used analogy in the U.S. when speaking of this change, is gardening management. Like a gardener, who cannot control the elements (rain, sun, drought), the manager must cope with a number of external hazards. All the manager and the gardener can do is imagine their garden in a near future and to do their best in order to make it happen (sow seeds , water just enough, protect specific plants, leave others to develop themselves , weed, turn over the soil, cut and trim where necessary, add peat, etc.). The gardener (like the manager) has to nurture an environment that will allow the garden (or his project and objectives) to grow as planned, so that the seeds (and the teams he is in charge of) develop and give their best.

Rather than representing perfection , the multi-skilled manager, the "new" manager-gardener, quite simply reflects a different way of managing, neither good nor bad in itself, but better adapted to more complex and transversal situations, where hierarchical authority does not work as well as uniting and motivating.

So, knowledge-based companies are using new approaches to help leaders grow. Employees are developed through a combination of formal external education, in-house training, career-pathing systems, succession planning, team projects, on-the-job experience, and mentoring. This process is more than a series of isolated events. Continuous on-the-job activities replace the traditional program approach, which was composed mostly of discrete training events.

New leaders are no longer identified through the traditional great performers model. Now the process is as important as the result, and some basic leadership skills such as risk taking, relationship building, leading change, and having an entrepreneurial mindset must be taken into account. Companies are beginning to track innovations back to the source to identify the people who played key roles and who seem willing and capable of challenging the status quo.