October 27, 1997
Key to Success: People, People, People
"All we can do is bet on the people whom we pick," says Fortune 50 CEO. "So my whole job is picking the right people." He's not kidding: He personally interviews all candidates for the top 500 jobs at GE. Few bosses of the world's most admired companies go that far, but our survey found that the ability to attract and hold on to talented employees was the single most reliable predictor of overall excellence. With that in mind, consultants at the Hay Group, FORTUNE's partners in. conducting the survey, set out to see what hiring and career- development practices the top companies have in common. Seven basic themes emerged:
Top managers at the most admired companies take their mission statements seriously and expect everyone else to do likewise. Mission statements--often viewed by the troops as platitudinous--surprisingly get lots of respect from this year's winners. Says Fortune 50 CEO: "Making your numbers but not demonstrating our values is grounds for dismissal." Instead of some vague expression of values, GE uses a clear and specific list--succinct enough to fit on a wallet-sized card--that keeps everybody pulling in the same direction. "Most companies have created a sketch of the culture they want to build," says Bruce Pfau, a managing director of the Hay Group. "By contrast, the most admired companies have something closer to a detailed architectural blueprint, and they are constantly referring to it." For instance, lots of companies say they want global thinkers, but Procter & Gamble and Citibank back that up with action: Fully half of senior managers at both U.S. companies are non- Americans.
- Success attracts the best people--and the best people sustain success. It sounds commonsensical, and it is. If you want to get great people, start by being great at what you do. Says Intel president Craig Barrett: "People perceive us as leading- edge, successful, and visible in the marketplace, and they want to be a part of that."
- The top companies know precisely what they're looking for. The most admired outfits go well beyond the resume and put candidates through intense psychological testing. Federal Express, for instance, looks for what the company calls "risk taking and courage of conviction." You probably won't land a job at Disney unless you have an "up personality." Procter & Gamble's strategy is to hire the best young people now and. develop them over their entire careers, so CEO John Pepper visits college campuses to seek out what he calls "the lifeblood of our future.
- They see career development as an investment, not a chore. Intel spends an impressive 6% of its total payroll--$160 million last year--on its in-house university, and all senior managers must do a teaching stint there every quarter. Everyone who aspires to senior management at SmithKline Beecham has to have "2+2+2" experience--hands-on experience in two businesses, in two roles (say, manufacturing and finance), in two countries. And the most admired companies' CEOs, like Bertelsmann's Mark Wossner and Gillette's Alfred Zeien, personally coach the most promising young talent.
- . Whenever possible, they promote from within. The most admired companies hire people not for a single job but for a career. At Citibank, a talent inventory program keeps track of about 10,000 employees worldwide--how they're doing, what skills they need to work on, and where else in the company they might thrive. Citibank human resources chief Larry Phillips calls the program "critical" to the company's global growth.
- They reward performance. Melvyn Stark, a compensation specialist at the Hay Group, notes that at the most admired companies a far greater percentage of the work force is eligible for stock ownership, options, and bonuses. At Federal Express and Intel, for instance, all employees qualify. This variable pay accounts for a much bigger than average piece of everybody's total compensation. And the admired companies value long-term performance more than short.
- They measure work force satisfaction. Judging from the variety and frequency of their internal surveys and 360-degree evaluation schemes, the most admired companies seem genuinely interested in what their employees think. Intel surveys a broad sample of workers every two years to make sure they're getting what they want.
What does it all add up to? Simply this: Every company claims that its people are its most important asset. The most admired companies in the world show they really mean it.