Developing an effective human resource strategy to manage an organization’s human assets requires considering employees as investments. Such an approach helps ensure that HR practices and principles are clearly coordinated with the organization’s overall business strategy. It also forces the organization to invest in its best opportunities and ensures that performance standards are met. Google is one company that has reinvented their approach to human resource strategies. Google has renamed their human resources to people operations. Several human resource strategies have made Google what it is in today’s market. The top HR strategies that have made Google a success include strategies in management, hiring, and recruitment, training and development, compensation and their 70/20/10 rule. The rationale behind each of these strategies is easily revealed through their overall business strategy.
Keywords: human resource strategies, people operations
Google: Human Resource Strategy
Google has renamed human resources to people operations. This encourages employees to participate in running the company and building effective teams. One philosophy that Google focuses on is what they consider people management when it comes to human resource strategies. Sullivan (2013a) reveals a top priority for Google. They believe that innovations come from people and you cannot maximize innovations unless you are capable of recruiting and retaining innovators. Google uses a human resource strategy called databased decision-making strategy.
This human resource strategy has been highly successful in attracting innovators and managing them within the company. “Almost everyone has heard about Google’s free food, 20% time, and wide range of fun activities but realize that each of these was implemented and are maintained based on data” (Sullivan, 2013a). The following will be a brief description of some human resource strategies that Google uses for their people management practices as it relates to a data-driven approach. Management HR Strategy
Human resource managers at Google have determined that great managers are essential for top performance and retention. One practice they use to keep manager’s performance high is to have their employees rate managers twice a year. The researched data proved that Google could maintain its success not by superior technical knowledge but by one-on-one coaching with management, which included expressing interest in employees and providing personalized feedback to those employees. Google also uses the PiLab. The PiLab conducts applied experiments within Google to determine the most effective approaches for managing people and maintaining a productive environment (Sullivan, 2013b). This data driven strategy has provided results to human resources on the approaches of how to be successful in their HR strategy. Hiring and Recruitment HR Strategy
Google is also unique in its strategic approach to hiring because its hiring decisions are made by a group in order to prevent individual hiring managers from hiring people for their own short-term needs. They are explicitly seeking to attract the kinds of people to the company who will be successful in their open, collaborative culture (Zhong, 2011). Hiring the right people is a key HR strategy at Google. Their retention rate and turnover data proves that the organization has been successfully able to attract, retain, and motivate a younger generation of workers who would otherwise be more apt to leave an organization. Training and Development HR Strategy
Another important HR strategy for Google is in its training and development program. Google employees are offered tremendous opportunities to learn and grow. Some of the professional development opportunities include classes on individual and team presentation skills, content development, business writing, executive speaking, delivering feedback, and management and leadership (Lawler, 2014). Google pays special attention to training for engineers due to their level of importance to the success of the company. They want to ensure the engineers as well as other employees have received the mandatory training and development sessions for a minimum of 120 hours per year. This is about three times the industry average in North America of 43 hours per year. Despite the cost to Google, this is an essential part of their HR strategy and contributes to their overall business strategy.
Compensation HR Strategy
Google has an unusual HR strategy when it comes to its compensation structure. Google is often known as one of the most sought after and yet one of the most underpaying employers in the industry. Despite this, employees are still attracted to working their dream job at Google. More frequently than not employees are attracted to the support system, that can help them create anything rather than monetary returns. Therefore, the work hives at Google have day care and elder care centers, have spa and hair salons, car wash and oil check facilities, and virtually everything that a technology obsessed geek would like to worry least about, in the form of an all-inclusive liberal benefits package, but the actual take‐out cash component is negligible (Sullivan, 2013b). Google offers all employees unlimited sick leave as well as 27 days of paid time off after one year of employment. This is highly unusual for most organizations but Google believes in an even work live balance and keeping their valued employees returning to work happy. 70/20/10 Rule HR Strategy
Another important HR strategy for Google is the 70/20/10 rule. This HR strategy ensures creativity remains a top priority at Google. Employees are required to divide their time into the following three parts: 70 percent is spent on search and advertising
20 percent (1 day of the work week) on a project of their own choice 10 percent to far-out ideas HR believes that with this strategy, employees will remain motivated and committed to innovation and novelty and therefore production will increase. Because of this rule, some very successful ideas have emerged such as Gmail, and Google Talk. HR Strategy Rationale
Google is continuing to grow every year, and some of these HR strategies are becoming more challenging. Behind every strategy comes rationale for using it and how it provides continued success within the company. It is important to note that HR strategies, activities, and policies are actually driving Google’s corporate business success. Google’s HR strategies reveal that the company’s approach helped in increasing employee productivity. The average Google employee generates more than $1 million in revenue each year (Lawler, 2014). The following will give rationale for each strategy previously discussed. People Operations Rationale
People operations focus on the idea that HR is not just administrative functions but ideally focuses on the meat of the company. The meat of the company is people or human capital. Human capital is the stock of knowledge, skills, and abilities among employees that provide economic value to the organization (McShane, 2013). This rationale was developed as part of the overall business strategy at Google. Google takes pride in their human capital by ensuring they are part of the team and actively involved in the decision making process (Bock, 2011). Human capital can also consist of employee capability, employee satisfaction, and employee sustainability. These three components of human capital are considered an essential part of organizational growth.
Employee capability is the creativity and knowledge that an employee contributes to the organization. Employee satisfaction refers primarily to an employee’s emotional or affective state. An employee’s overall satisfaction relates positively to job satisfaction, reflecting the difference between what the employees want from their job and what they perceive it as offering to their overall success within the organization. If employee satisfaction is high, then an employee’s commitment to the organization is high which will result in a greater retention of that employee. Management Style Rationale
The main philosophy at Google that backs up their management style is open door policy. Top management leaves their office door open in order for workers to feel free to come and talk directly versus phone or email communication. The official policy states in part Google desires to maintain a friendly, cooperative atmosphere between employees and all levels of management. Consequently, the company provides opportunities for you to express yourself without recrimination. If you have a problem with your manager that, despite your mutual efforts, cannot be resolved, you may discuss this with the next higher level of management or with human resources. While Google prides itself on being an open organization where you can approach any member of management directly, we recommend you first attempt to resolve the issue through your manager or human resources (Gupta, 2009). This open style of management allows better communication between staff and management, and can help ensure staff is more productive at solving problems that may arise. Hiring and Recruitment Rationale
The rationale for using small teams to do all the hiring for Google is quite simple. These teams seek to recruit and hire the most qualified individuals out of thousands of applicants. The hiring decisions are made by a team in order to prevent individual hiring managers from hiring people for their own short-term needs. Human resources also approach recruiting scientifically. They have developed a way to predict which candidates have the highest probability of succeeding after they are hired. This rationale saves time and money, and provides a greater success rate for new applicants turning into long-term employees. Training and Development Rationale
A properly trained employee is an essential part of maintaining a successful organization. Research has shown that a majority of people learn by on the job training, including a hands-on approach. Google has adopted this rationale for their training programs by not focusing only on classroom training but by placing emphasis on hands-on training. Google has increased discovery and learning through project rotations, and learning from failures (Sullivan, 2013a). They believe a well-trained employee will increase production as well as increase the company’s reputation. As productivity and reputation rises the profits will also rise. Compensation Rationale
Rationale behind the lower compensation packages offered at Google has to do with the importance of work/life balance philosophy. As previously discussed Google places a significant amount of importance on the benefits offered instead of the actual monetary salaries. Money is important to survive but Google also wants to make everyday life easier for employees by offering in house daycares, and free meals along with many other benefits. If they can keep the employees from spending their work time performing life chores, then they will increase productivity by improving the employee’s job satisfaction. 70/20/10 Rule Rationale
This concept allows the employee to grow in their abilities as an employee and as a person. By allowing this concept, Google is reinforcing its relationship with its staff and developing brand strength externally. Good news spreads quickly. As a happy employee who enjoys spending time creating their own projects, shares with outside friends and family, this increases customer satisfaction for the brand name of Google. This rule is part of Google’s HR strategy as well as their business model strategy. Analysis of HR Strategy
Google has developed an effective HR strategy that does align with their overall organizational strategy. One of the biggest parts of their organizational business strategy is to focus on people. Google executives have learned that continuous innovation cannot occur until a firm makes a strategic shift toward a focus on great people management (Sullivan, 2013b). By shifting to this idea of hiring great people versus hiring mediocre people, the business decisions will reflect their knowledge, skills, and ability.
Executives at Google have a clear understanding of strategies in the human resource department, and have a clear understanding of how they effectively tie into the overall business strategy of the company. One thing they have done successfully is to focus all business decisions on data and analytics. This is evident in the HR department with how they make their decisions. A mission goal that they highlight is to bring the same level of rigor to people-decisions than they do to engineering decisions (Sullivan, 2013b).
Reinventing the HR strategy at Google has been a success. Top executives coached effective ways to measure human resources so they can improve in this area. One deficient area Google was able to recognize was the areas of predictive analytics, statistics, and mathematics that would be needed to transition into the databased model of a HR strategy. Change can be difficult, and some HR managers are not open to this idea of a data based approach when they consider HR to be a people based function.
The transition to the data based approach of HR could have been introduced in a more effective manner among current HR managers at Google. When this concept was first introduced, it was done ineffectively. Management decided to change the strategy and without warning made it effective. Open communication is key to effective strategies within an organization. A change of this magnitude needs to be tested, and employees should be coached and eased into before it can be an effective change. HR’s Effectiveness and Metrics
HR metrics is important because it allows organizations to make the connection between the value of what HR is doing and the outcomes of the business. One of the key metrics within Google that make their HR strategies effective is the revenue factor. It indicates the effectiveness of company operation with the use of the employees as their human capital. Without this key metric, human resources would be the same as any other organization. Changes and Alternatives
After researching Google, it is hard to think of many needed changes to their already effective HR strategies. I would recommend to HR and management that they continue to stress the importance of training and development with all current employees as well as any new employees. I would also recommend that HR take full advantage of continuing to implement the job rotation strategy. This will provide employees insight to each department, and the job duties of other employees as well as the different jobs available at Google. Call to Action
In order to implement these recommended changes it will be necessary to call to action all management and the human resources department. One way for training and development to remain a top priority to all employees is to
develop a reward system for completing the required number of hours of training, and additional rewards for extra training in the employees’ area of expertise. These rewards should be monetary.
Human resources should develop a rotation schedule with the help of the employee’s on-site manager. Once the employee is properly trained in their area of expertise they should then be rotated through each department that works directly with their department. This will not only help employees learn about the other departments but they will also gain an understanding of the duties of other employees. This will make requests from other departments less stressful to all employees, as they will know what it takes to generate and submit that information. Conclusion
Google has placed great emphasis on the people within their organization and made these valued people part of their HR strategies. This strategy has been highly successful to this organization. Many organizations could benefit from the simple HR strategies that Google has focused on in their company. Sometimes it is not what you know but whom you hire. This is a common philosophy at Google as they strive to continue to hire great people to do a great job.
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http://www.ere.net/2013/02/25/how-google-became-the-3-most-valuable-firm-by-using-people-analytics-to-reinvent-hr/. Sullivan, J. (2013b). How Google Is Using People Analytics to Completely Reinvent HR. TLNT. Retrieved August 19, 2014, from http://www.tlnt.com/2013/02/26/how-google-is-using-people-analytics-to-completely-reinvent-hr/. Zhong, R. (2011). Human Resource Management Issues at Google. Human Resource Management Issues at Google. Retrieved August 15, 2014, from http://www.slideshare.net/rachelzhong814/human-resource-management-issues-at-google.