Alan Schwartz on Why Talent (Still) Matters
Brands don't win because of ad campaigns, according to Hodes CEO Alan Schwartz. They win because of people
Alan Schwartz loves a good ad. Whether it's the vintage Volkswagen “Lemon” or the slurpy but hip “Wasssup?” for Budweiser, the power of great creative to build brands and connect with consumers is an idea that's never left him.
But Schwartz is starting to lose some faith in brands. Not because of advertising, mind you. Nor because of the loss of trust that the country wrestles with post-Enron. But rather because companies are eroding their brands by weakening their delivery system: people.
The way Schwartz sees it, people deliver the brand that marketing builds. They shape, service and renew it with every action and every response. “Whether a customer walks into a showroom, cafe or hospital, it's their interaction with people that will determine the fate of the brand,” explains Schwartz. “Companies are spending millions getting them in the door and then blow it because their staffing budgets were slashed and they've got the wrong people in place.”
Recession or boom, according to Schwartz, talent matters. In boom times, talent is scarce and a thin workforce can damage a brand. But, during tight times, there's intense pressure to win marketshare--something only talented people can do. In his mind, winning in the market is all about matching talent to the brand.
But before the Hodes CEO could take his message to the boardrooms of America, he challenged his own executives to renew the Hodes staffing strategy. We spoke with Schwartz from his office in Manhattan, the day before a company-wide conference call to unveil his new strategy.
Q: Does talent matter more now than it did before?
A: Talent has always mattered. But it matters even more today because of all the technological advancements that people rely on.
Q: How so?
A: E-mail, websites, automated phone attendants--they're deceiving. They make it seem like we're serving customers. But often we're not. We're just distracting people with things that don't help them. We're relying on technology to lead us, rather than the other way around.
People--talented people--solve problems and make sense of things. Not technology. That's why it's so important to have the right talent inside a company.
Q: Yet, you don't hear the same urgency for talent as before. Is the "War for Talent" over?
A: No. We're breathing easier now because of the recession, but companies that put their guard down will pay a big price. As the boomers retire, two people will leave the workforce for every new person that enters. By 2008, there's a projected 10 million-person shortfall in the labor market. And it's much higher when you factor in the skills mismatch; some industries will encounter an acute need for talent, much like IT in the late 90s.
When you think about how long it takes to build an employer brand, five years isn't much time. Companies must ready themselves. The next war for talent won't be a war. It'll be a bloodbath.
Q: How do companies react to these stats?
A: Frankly, companies are more concerned with survival right now. Many have gone out of business; others are fighting to survive. The dot-com meltdown, Enron, the talk of war--those issues have shifted priorities. There's enormous pressure from Wall Street to perform, and that's putting stress on everyone. Talent issues aren't at the forefront.
What is at the forefront--what executives ARE reacting to--is trying to build some brand momentum. Companies are spending a fortune to promote their brand and increase sales. Yet, at the same time, they're slashing their labor costs. This creates an ironic twist. You build a brand and then don't have the right people to deliver it. You're undoing all of your work and wasting money because you won't be able to deliver on your promise to customers.
CEOs need to make some aggressive choices. Talent matters. You need good people to develop, sell00 and support your products and services.
Q: I'll bet that's not an easy sell in the boardroom.
A: Nothing is an easy sell. But look at the airline industry. For years, bad, uncaring service was pervasive. And then Southwest Airlines came along and focused all their effort on their people. On talent. Today, while airlines are going out of business, Southwest's market capitalization is more than all the other airlines put together.
Q: So, talent issues aren't soft issues that have no relevance to Wall Street.
A: Right. Look, I'm not going to be naïve and say, "spend more money, hire more people." It would be wonderful to have fatter budgets, but in the real world, executives and managers have a cost structure and a bottom line.
But talent issues aren't about quantity; they're about the right people at the right time for the right job. HR and the executive team must address this. They have to rework their process, their message and their technology to get the right people on board.
Southwest? They did a salary survey and found that Southwest employees made, in some cases, half of what their counterparts at other airlines made. So, it's clearly not about bigger budgets. It's about talent. Talent matters. People deliver the brand.
Q: You've said "talent matters" frequently, which is also the Bernard Hodes Group tagline. What of Bernard Hodes Group? Are we talking about the cobbler's kids with holes in their shoes? I mean, like most public companies, you've been battered by the recession, had layoffs, have the pressure to perform. What matters to you right now?
A: Helping people love their job. Let's face it; you spend most of your life working. If you're not getting a positive experience from it, why are you bothering?
My dad had his own company and always told me, "You can never have enough talent in an organization." Those words stuck with me. I want our people to feel excited about what they're doing; that they're learning, growing and facing new challenges. It's just like Southwest. I know that if they're happy and educated, they'll take care of our customers, and if customers are cared for, that will take care of our business.
Q: Can you give me an idea of what that means, specifically?
A: We've got a 360-degree process that's used with clients. You assess, strategize, implement and measure. We turned it on ourselves and looked at everything we were doing. During this assessment, we polled everyone in the company and interviewed people in every office in our network. We analyzed the feedback and the results were pretty clear. People want the opportunity to learn and to understand what's expected of them, and the chance to grow. But, they also wanted clarity on the company's vision and values.
We took these results to our creative leadership and key regional managers, and asked them to develop a core strategy to address each issue. They came back in spades. On the company side, we've developed a truly simple and clear mission statement, defined our values, and clarified our core competencies.
But the people piece is tremendous. We're now embarking on training programs, peer-to-peer workshops, client case study/role-playing--we're even redesigning our evaluation forms and changing how everyone is reviewed.
While our aim is continuous improvement, our goal is to have a happy workforce that's engaged. We're already on that path: IKEA, which recently joined us as a client, said we were truly happy people who enjoyed each other. I can't think of a better business outcome.
Q: How do you sell it to a board of directors who want to hear about cutting--not spending--and quarter-to-quarter results?
A: We're a people business. If we don't focus on this, then we don't have a future. It's that simple.
If our people are passionate about their work, they deliver better work to our clients. They create a mood that is simply contagious. It goes back to what I said at the beginning. Talent matters. Not technology. People solve problems. And people make the difference between a happy customer and one that wants to hang up.
Think of it as an addition to the rules of the market: the so-called "soft issues" we've talked about, in reality, are hard issues. They are bankable. Talent matters.
Alan Schwartz is CEO of Bernard Hodes Group. For more than 20 years, he has helped build Bernard Hodes Group into a worldwide presence, first as CFO and then COO. He joined the company from DDB, the legendary ad agency that created the popular "Think Small" and "Lemon" Volkswagen advertising in the Sixties. Schwartz started his career as an accountant with Price Waterhouse.