With rocky market conditions showing no sign of smoothing out, organisations are placing an increased emphasis on talent management. True Value’s Lyle Heidemann explains how creating a strong company culture can help attract and retain the brightest associates in less than fortuitous circumstances.
As businesses fight to remain competitive, there is a growing recognition that their most valuable assets are also, in many cases, the most intangible.
Skills, experience, competencies, motivation – all of these variables are frustratingly hard to pin down. Nonetheless, a company’s success in harnessing them can make a real difference to its balance sheet. Costs can be cut quite dramatically, not to mention generating revenue, through adequately optimising the abilities of your workforce.
With human resources no longer the preserve of HR departments alone, more and more companies are catching on to this logic. A 2010 survey found that nearly half of US companies had a clearly defined talent management programme in place, up from 37% two years previously and representing a rise of around a third. The number of those employing a dedicated talent management executive jumped, meanwhile, from 21% to 30%.
The picture becomes clearer still if years of boom and bust are compared. In recession-hit 2008, 88% of senior managers cited talent management as a strategic priority. Contrast this with the growth year of 2006, in which only 53% said the same, and the trend is obvious: where budgets are squeezed and cost-efficiency is key, companies invest renewed energy in deriving the best from what they have.
A two-pronged HR strategy
Chicago-based retail co-operative True Value is ahead of the curve. In keeping with its name, this US hardware firm places a suitably strong emphasis on human resources. It is an attitude that has trickled down from the CEO.
Lyle Heidemann, who came to the helm in 2005, is integrally involved with the human capital side of the business. “How closely do we work with our HR team?” he says. “If you ask them, they’d probably say closer than they’d like! We spend a lot of time – myself, the organisational development manager and our head of HR – discussing our company’s strategies.”
In practice, this means ascertaining whether the right staff are being employed in the right roles, determining workers’ developmental needs and setting up goal-led career paths. The main concern is to take a double-pronged approach, looking not just at individuals, but at how their skills feed in to the organisation as a whole.
“We want to demonstrate to our associates that they can progress,” says Heidemann. “We always ask them to define what they need, either to become better at their job or to be considered for promotion in the future. And we look at ways in which their positions support us in the achievement of our long-term strategy.”
Like many industries, the US hardware sector felt the bite of the recession. Because hardware demand is closely tied to building construction activity, a drop in the latter meant fewer people shopping for home improvement solutions. As a result, many smaller wholesalers and their establishments were forced to shut up shop.
True Value rode out the downturn with a sharp change of direction. Originally known as TruServ Corporation, itself a merger of three different organisations, the company brought in new management and streamlined operations. From this upheaval emerged a new way of doing business.
“For over 50 years, we concentrated on figuring out how to sell something to our retailers,” says Heidemann. “Now it’s about helping our retailers sell something to our ultimate customer. What we’ve tried to do is develop a culture that’s geared towards retail, rather than wholesale.”
Today True Value has 12 distribution centres, 3,000 employees and 5,000 stores, with these stores operating both as independent hardware shops and specialty businesses. The transition towards retail brought with it a need to understand shopper demographics and conduct an image overhaul.
“We wanted to change from being a ‘stodgy old hardware store that men loved’ to one that appealed to women too,” says Heidemann. “So the store designs were created with what we call the ‘five Ps’ in mind – people, place, product, promotion and price.”
In essence, this amounted to a strategic U-turn. With $1.8 billion of revenue produced in 2010, True Value prides itself as a company unafraid to move with the times, responding to an evolving market with a regenerated approach.
Of course, implementing a cultural sea change is not easy. Over the past few decades, there has been a great deal of research into what an organisational culture actually is – how best to define it, understand it and mould it along more successful lines. While occupational theorists lack consensus on many counts, they agree that this aspect of a company is both pivotal and resistant to change.
Take the MIT professor Edgar Schein, for instance, who claims that culture comprises three distinct layers. Firstly, there are artefacts visible to the outside observer; secondly, the shared beliefs of an organisation’s members; and, finally, the network of tacit assumptions and unspoken rules that govern their behaviour at the deepest level. Discrepancy between these layers is often what stops a company from being as integrated and successful as it might be.
Employee retention and orientation
True Value’s strength may in part be attributed to an unusually cohesive set of values. Far from being mere slogans, its guiding tenets are interwoven throughout the entire organisation.
To begin with, all new associates are put through an employer orientation, initiated by Heidemann himself. “I try to explain to them early on what our vision is and what we stand for as a company,” he explains. “We talk about integrity; we talk about respect for human beings; we talk about ethics. We have a hotline within the company, so that associates can feel comfortable advising us of any issues that arise.”
The company also extends this ethical reach into the surrounding community. Every time there’s a shareholder conference, it organises a half day of volunteering, as well as maintaining a charitable foundation internally.
What Heidemann finds especially encouraging is his younger associates’ willingness to embrace social outreach. “They are more interested in volunteering and citizenship than our older, longer-service employees,” says Heidemann. “That was a pleasant surprise for us.”
While Generation Y is frequently discussed in terms of ‘portfolio careers’ – the tendency to flit horizontally between various organisations, rather than seeking out a job for life – True Value could serve as a mascot for the retention of younger talent. In the four years that the company has been recruiting from the college campus, it has only lost two of its 16 recruits.
In part, this is surely to do with the sweeteners offered in terms of benefits. Heidemann concedes that, as an employer, you have to be competitive both from a cash and an incentive standpoint, offering the total package, and possibly providing ever more in the way of healthcare as the US grapples with soaring costs.
What seems to be most salient, however, is the way in which a company’s guiding principles chimes with employees’ own. “Pay is clearly an issue to them,” says Heidemann, “but they also need to feel like they’re adding value to a place, and working for a company they believe is as interested in their careers as it is in its own success.”
The personal touch
Attitudes such as this place True Value at the crest of an upcoming wave. More and more workplaces are integrating psychological research into their talent management strategies. Rather than simply treating staff as reward-driven automata, they are asking questions about what truly makes people tick and, consequently, what makes them want to stay.
For now, you might think True Value’s workforce has incentive enough. Situated in one of the US’ major urban hubs, the headquarters have recently been refurbished to make them open and contemporary; conducive to working, socialising and generating ideas.
Perhaps the ultimate test of a company’s strength is how well it can function as an interdependent organism, insulated from political and economical turbulence. A tight organisational strategy will allow a company to shoulder the burden at the highest level, giving employees the semblance of constancy and boosting morale.
“Our strategy is not affected by things that happen from a federal government point of view,” says Heidemann. “We’ve continued to stay focused on what we can control and what we’re trying to do, not only for our corporation but for our retailers and then our customers. When we make a decision, the first thing we ask is, ‘Is it a good decision for our ultimate customer?’ or, if it doesn’t affect them, ‘Is it a good decision for our retailers?’ Then, lastly, we consider, ‘Is it a good decision for us?’”
While market conditions remain shaky, strong talent management provides something of a bastion of security – and is perhaps one of the savviest investments a forward-thinking company can make.
This is the cover feature for the latest edition of Chief Executive Officer