In the past decade business conditions, increasing pressure of international economic and social environment as well as internal complexity of the companies determined greater focus on Human Resource Management (HRM) agendas and strategies. Human capital and internal expertise developed by organizations help companies not only to offer a competitive edge but to invest in sustainable organizational growth with a high level of core and unique capabilities. Latest developments in the HRM field demonstrate that effective planning, recruitment and training and development programs can make a significant contribution to the cost-focused strategies and increase operational and commercial productivity of the organizations (Millmore, 2007).
/> One of the major shifts that HRM went through over the past decade is from reactive instrument of human capital fulfillment to proactive strategic tool that enables organizations building their internal talent pool to address growth expectations and be more flexible and responsive to the market changes. It is possible to argue that there are several critical steps for HRM strategic alignment that all the organizations should consider. First of all, clear formulation of strategic goals that will assist HRM professionals in divisional alignment of strategic skills and capabilities. Secondly, long-term vision and understanding of market-driven forces that mostly affect the organization (Boxall and Purcell, 2011). This will enable prioritization and specific focus of HRM efforts and formulation of the key core competencies that the company can use to compete. Finally, the company should be able to perform a gap analysis between existing and needed capabilities and formulate clear and effective strategy to close this gap within a given timeframe (Kornbluh, 1984). It is important to realize that there is no universal strategy that can take an organization to the top and each company should be able to develop its own success formula. The objective of this document is to analyze the process of development and formulation of some key elements of HRM within a given organization and outline some of the learnings and findings from the experience of this company. For the purpose of this study, it was decided to look at the HRM practice of HRM-driven fast-growing corporation – Yahoo. The research paper will look specifically at the process of planning, recruitment and training and development as it is developed and implemented in Yahoo Corporation.
Yahoo Corporation Background
Yahoo Inc. is one of the world´s leading American-based technology companies that offers a variety of internet-related services, including search engine, internet portal, mail and directory and other related services. Established back in 1994 by two university colleagues by 1998 Yahoo became one of the most popular internet starting points for global users. Today, the company is headquartered in Sunnyvale, California and employs over 14,000 individuals globally.
Financial year 2013 demonstrates stable business environment and healthy organizational position. The company declared overall sales revenue of USD$ 4.7 billion, which represents 6% decrease comparing to the same period 2012. The decrease of the revenue volume is mainly determined by the reduction of Yahoo operations on Korean market and does not reflect long-term deterioration of the organizational profit (MarketWatch, 2013). The company experienced fast-paced growth over the past decades mainly through inorganic growth strategy in acquisitions, such as Tumblr, Flickr and PeerCDN. Overall, the company spent over USD$ 12 billion in traffic acquisitions over the past seven years and managed to accommodate under its corporate umbrella over fifty small and medium-sized brands. This, inevitably, brings forward the role and responsibility of organizational HRM in building on organizational alignment and shared values (MarketWatch, 2013). Taking into consideration extremely short lifespan of these acquisitions, it is possible to argue that Yahoo went through numerous challenges in bringing different organizational cultures, behaviors and strategies under a common denominator of Yahoo brand.
The complexity of organizational HRM in Yahoo Inc., today, is determined by as many as 14, 000 employees in the US and over 60 other global locations. Recent developments and changes in top organizational management created a number of debates around the issues of sustainability and long-term orientation of Yahoo growth endeavors. Many business professionals argue that growth strategy based solely on aggressive acquisition strategy will not leave the company time and space for creating and developing internal capabilities that will be able to sustain the company and its competitive edge in the long run (Ingram, 2013).
Human Resource Management
Yahoo places a lot of emphases on developing effective tools and strategies for employees’ development and retention. While major inflow of human capital comes from acquisitions that the company is focusing on, it is still evident that HRM heavily focuses on alternative planning and recruitment programs. The company´s mission statement is “To connect people to their passions, communities, and the world’s knowledge” and Marissa Meyer, current CEO notes that people that work for Yahoo are the major customers, bringing forward the idea that the organization should be able to develop on the drive to comprehend and bond with each employee to create loyalty and integrity. The company´s Code of Ethics outlines the importance of organizational integrity and put individual actions and decisions into the core of Yahoo values (Yahoo, 2013).
An analysis of the benefits that the company provides for the employees illustrates overall focus on performance culture and high performance is highly rewarded. The company places a lot of emphasis on the development of authentic working environment and building employee´s loyalty through bonus structure and benefit schemes aimed at personal and professional development elements. The argument is based on the overview of the major benefit packages that Yahoo provides to the employees. Among others, the advantages that Yahoo employees receive include:
- Corporate Health plan;
- Free day care and after-school care services;
- Employee Internal and external training and development programs;
- Free gym and yoga facilities on sites or with third-party providers;
- Investment plans with yahoo match up to 50%;
- Talent Management Program and international mobility programs.
High level comparative analysis with the company´s major rival Google, reveals some of the core differences, such as the lack of focus on employee development and assistance programs. As such the company does not have any Employee Assistance Programs as well as training and educational benefits for the employees. Instead, Yahoo offers personal savings plan for college tuition and materials.
It is interesting to notice that revitalization of corporate culture and employee empowerment recently became the core focus of Marissa Meyers´s strategic HRM. As a result of the efforts done to create empathetic working environment and developed aligned and comprehensive corporate culture the company managed to attract its former employees and reduce the turnover rate. Based on the statistics, provided by the company´s CEO, 14% of the 2013 year recruits in Yahoo are so-called “boomerangs” that previously worked for the company (Pepitone, 2013).
The objective of Human Resource Planning (HRP) activities is to ensure the best fit between employees and their organizational functions. The companies in modern business environment place a lot of emphases in strategic analysis and continuity of job description and formulation processes. Yahoo Inc. is not an exception and, taking into consideration, the focus on technical capabilities, innovation and creativity that build on core organizational values, the company has a challenging task of building robust job analysis strategy.
For the analysis and HRP the company uses Position Analysis Questionnaire (PAQ) which allows Yahoo HRM continuous control and re-design of the job function to ensure the best match of the job and employee. As an internal tool, PAQ is widely used by the HR professional and specially trained middle and top management and proved its effectiveness in integration and reformulation of job function in constantly changing working environment and organizational structure, determined by acquisition strategy (Brannick, Levine and Morgeson, 2007).
Yahoo HRM is focused on attracting, selecting and retaining talent. Talent management by itself is more complex process which includes three stages: 1) attracting and selection, 2) engaging, training and development, and 3) retention (Lockwood, 2006). This process takes time and Yahoo Inc. is well-recognized for its superior capabilities in talent management practices. Statistics, provided by HRM Research Quarterly demonstrates that the company spends on average six thousand hours to hire five hundred employees, which outlines as much as twelve hours per hire. The company has two major recruitment channels: direct recruitment from leading technological universities and acqui-hiring that allows the company acquiring talent through Mergers & Acquisitions (M&A).
Yahoo has adopted an interesting strategy to the formulation of the role of HR Director that, in contrary to the majority of the companies from Silicon Valley, combines the function of a business partner as the VP of People with a Chief Development Officer. This combination of the roles, which accumulate the responsibilities of M&A partner management with Talent Management and Corporate Culture Architecture, gives a new perspective to the HRM function, innovative for technological companies. The objective that the company aims to achieve with this innovative approach to HRM leadership is to combine the vision of corporate culture with the talent management acquisition and achieve greater alignment between these elements. Moreover, this strategy is extremely effective to avoid silo thinking between the core business functions, especially in the situation, when acqui-hiring is the core talent acquisition strategy (Sallivan, 2013).
One of the major observations that can be done in Yahoo HRP practices is the lack of focus on forecasting labor demand in the organization. The company is utilizing a dangerous strategy to attract talents to the organization and further analyze organizational needs, allocating existing internal resources to suitable job functions. During the financial year 2012, the company hired over 1,200 professionals that lead to oversupply of the manpower and may result in strategically ineffective people management in the future. This risk is determined by the fact that the company puts at risk the potential to provide growth and development opportunities for its people, and this may lead to a lower level of employee satisfaction and outflow of “brains” from the company (Armstrong and Baron, 2002).
Training and Development
Acquisitions as HRM management require more complex and multi-faceted people management practices. Often, the knowledge that is required from HRM leadership on the technical and operational sides of the business is significantly wider than for the companies with traditional talent acquisition schemes. The reason for this complexity is the fact that once the acquisition took place the company should be able to effectively evaluate current job design and ensure correct and accurate placement of ‘acquired talents’ within the existing organizational structure. With that in mind, training and development procedures have become extremely important for the successful completion of the HRM Talent management processes. The challenge, that the HR managers have to address in this situation, is the ability to utilize on new talent and ensure their fit in current corporate structure and culture. They should, at the same time, maintain motivation and satisfaction level among employees of the mother company.
Yahoo Inc. built its Performance Management System (PMS) in a way to incorporate both, technical and commercial quantitative measurable of individual performance, as well as individual and personalized development plan. The company brings down strategic objectives to the tactical level by utilizing a system of joint Key Performance Indicators (KPIs) across functions and organizational hierarchy. Employees´ appraisals are done on the annual basis with mid-year review to ensure alignment and guidance for employee personal development plan. The results of this review are used to assign specific training programs and coaching objectives for each individual in the organization. Such approach to personal development allows employees feel engaged and motivated and clearly outlined the ways in which the company sees this employee´s contribution to its future development.
Among training and development initiatives, Yahoo Inc. offers rotational program that aims to enact international mobility into the corporate structure. Employees are able to request and apply for international positions with average assignment duration of one to two years. This initiative is highly promoted by the company management as it allows building cross-cultural and cross-functional awareness among the personnel (Yahoo, 2013).
Yahoo is the company that places innovation and creativity in the core of its business strategy. The company believes that the human capital is a core asset and investment in talent acquisition is the key for sustainable growth and building of competitive edge in the Silicon Valley industry. With that in mind, talent management as it is seen in Yahoo Corporation as central for its growth strategy. Yahoo aims to enact the culture of constant innovation into the organization and this strategy is pursued by M&A that aim not only at acquiring new and ‘potential winner’ technologies, but talents. This strategy places a lot of emphases on the organizational competence in terms of corporate culture architecture and integration of shared values into constantly evolving working environment.
The entire concept of the company is focused on great and differentiated customer experience and product, and this philosophy is supported by the emphases on rewarding high performance. Yahoo Inc. offers a personalized approach to personal development management and tries to incorporate “energy and creativity” to its organizational behavior and working environment.
One of the major learnings from the Yahoo Inc. experience is its structural and effective approach to talent management under extreme aggressive growth strategy. A lot of companies fail to recognize the need for job redesign and evaluate the skills and capabilities that the company will require to go through this change. Yahoo Inc. HR planning model along with combined role of its HRM management in business partners’ relationships and systematic talent management allowed for transparency and clarity in re-evaluation of future needs of the company through human capital management and talent acquisitions.
Conclusion and Recommendations
Yahoo Inc. has been placing a lot of emphases on building the concept of systematic talent management that implies continuity in recruitment, retention and personal development programs. This approach is supported by the innovative role of Jackie Reses as the Chief Development Officer that enacts embracing approach to the business partners and internal personnel. It is evident that the company has created its unique and, more, authentic approach to people management. Under new leadership of Marissa Mayer, Yahoo started to get back on track as a pioneer and innovative organization that managed to align its international growth strategy with core HRM capabilities and functions. Recent statistics and employee feedback demonstrate that the organization starts to gain more and more credibility as a leading in the industry employer.
One of the major challenges that Yahoo may face in near and long-term future is the ability to meet the internal demand for personal and professional development. At the moment, in a situation when a company is going through aggressive growth stage, it can offer numerous opportunities for personal and professional development. It is, however, not clear, how Yahoo is planning to address the issues of potential oversupply of talent within the organization once its growth is slowed down. The image of the ‘great company to work for’ is based on the systematic talent management strategy that builds on the core capability of the organization. The lack of focus on forecasting the future demand for talent may negatively affect the image of the organization.
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