Before you read the analysis and assessment below please view the video – it only takes 9 minutes.
Analysing the evidence – does Google manage its human resources professionally?
First, the video itself; what is its purpose? Obviously Boston Consulting Group (BCG) must have thought that Google had something to teach the HR community in 2010; and have their own reasons for wanting to be associated with Google in this way? But why should Laszlo Bock, SVP People Operations, be willing to share Google’s HR secrets? The purpose of an HR strategy is to create a competitive advantage and the video is entitled “Creating People Advantage 2010”. So if Google had such a competitive advantage why would they be willing to share it? Or are they only willing to give the impression of strategic HR?
Onto the content; applying MI’s principles and criteria. MI’s over-arching goal of creating as much societal value as possible always leads to the question – what is the value proposition of the organization? In Google’s case its mission, according to Bock, is “To organize the world’s information and make it universally accessible.” Details matter. Google’s mission has been misquoted by Bock because it ends “… and useful”. Bock calls this a “noble goal” and “inspirational”. Yet this mission is not phrased in such a way that Google’s value can be measured or assessed. So what are Googlers being inspired to do? For Google’s mission to meet MI’s standards maybe it should read – ‘To organize the world’s information and make it universally accessible so that it can be used to create as much societal value as possible.” This would be a far cry from Google’s motto – “Don’t be evil”.
The video refers to Google providing free food, rock climbing, massages, oil changes and other perks. Bock’s justification is built on 3 reasons:-
- Creating a community
- Driving innovation
- Efficient working
Maturity analysis always sticks to the focused value question – how do these 3 activities create value? MI defines value as a combination of output, cost, revenue and quality. Unfortunately BCG does not ask what the value of these activities are and Bock provides no data. Instead we hear, for example, that “micro kitchens are informal places to interact … and create a higher likelihood of serendipity” but no measures are offered for the number or quality of innovations that flow in this environment. Compare this with a Stage 6 organization like Toyota where employees’ innovative ideas are generated by a systematic approach, rather than serendipitous, and measured to achieve rates in excess of 500% per year.
Despite Bock’s claim that Google has a “tremendous focus on data and a willingness to experiment” the only measured data mentioned in the interview is the participation rate of 96% in the annual employee engagement survey – Googlegeist (the spirit of Google). Although he adds that the survey deals with “specific issues”, not just engagement, no specific examples are shared. Similarly, Google employs people in HR with ‘advanced degrees in analytics’ who “run interesting experiments” but no further information is provided about the type of experiment or whether they produce any value.
Bock testifies to the well-known adage that the character of an organization is really tested during hard times. So when the ‘slowdown’ came how did Google respond? It continued with salary increases and promotions and was “gracious and thoughtful” in the way that it exited employees; even going back to employees, let go in earlier headcount reductions, to make sure they did not suffer worse treatment than more recent downsizings. There is no further rationale offered as to how or whether this approach forms part of a coherent HR strategy. Based on the scant information provided, reducing headcount whilst maintaining salary increases and promotions could well lead to an imbalanced organizational structure and a culture of ‘deep pockets’.
BCG mentions in passing that Google is in “the top 4 of the Fortune best 100 companies to work for”. Presumably they expect the viewer to regard this as, self-evidently, a good thing to be, without question. A maturity analyst would not make that assumption. MI is avowedly evidence-based and schemes such as ‘great’ or ‘best’ companies are only as good as the evidence they produce to show a causal connection between becoming ‘great’ and producing more societal value. We know of no scheme, currently, that satisfies this criterion.
Initial assessment and conclusions
So what is the initial assessment based on such limited information? All we can conclude from the evidence presented here is that what Google is doing apparently makes it a ‘best company’. The same data would not lead the maturity analyst to believe that Google is a very mature organization. The lack of a clear, strategic HR rationale would put Google below the maturity ‘wall’ because there is no tangible connection made between HR practice and organizational value.
Google still makes huge profits but this may be attributable to its original business model more than any other factor. It has almost a monopoly as the preferred search engine. A maturity analyst will not be seduced by this into thinking Google is managing its human capital very well. Microsoft used to be fêted for its HR practices many years ago but when it lost its dominant market position its HR practices were seen as wanting. So the crucial question for Google investors now is how well is it maturing? Maturity is a very long term game and only time will tell what Google’s societal value was. In the meantime, the maturity analyst will at least provide some predictive indicators of what its long term chances are.
Postscript – when I posted this on 5th November I was totally unaware of this story about Google wanting to change its mission , written only 2 days before. I have sent a message to Larry Page in case he wants to adopt it.