Long reads

Has the Silicon Valley revolution changed HR forever?

12 Jul 2018 By Katie Jacobs

Trendy Californian firms are making work cool again, with even the least stylish companies adopting their ideas. But beyond the facial hair, is this fresh approach to HR here to stay?

It was, perhaps, the least likely meme of all time. In 2009, a PowerPoint deck intended for a relatively select audience became an overnight sensation most HR professionals will by now either have read or been significantly influenced by.

The 124 slides of the ‘Freedom and Responsibility’ document describe the workplace principles and culture of streaming service Netflix. They have been viewed more than five million times, and include nuggets such as the company’s approach to holiday (take whatever leave you feel is appropriate) and expenses (the policy is five words: act in Netflix’s best interests). Facebook COO Sheryl Sandberg has called it “the most important document to ever come out of [Silicon] Valley”. 

When Patty McCord, former chief talent officer at Netflix and co-author of the document, started making waves in HR, her peers “didn’t like [her] at all”. She would speak at events only to have people walk out. Now she’s getting fan mail. She relates how one HR director recently emailed her to tell her she had scrapped her performance review process after finishing McCord’s book, Powerful. 

The reaction to her work illustrates our fascination with the ideas that emanate from inside the chrome-fronted campuses of Google, Facebook, Amazon and their ilk. They have contributed digital tools that change the way we work, promoted the notion of agility and flexibility and – we must assume – fuelled the unstoppable growth of the indoor slide industry.

At the same time, even if we ignore the fact that Silicon Valley does not have a monopoly on progressive working practices, the time has come to question whether it has been an unabashed force for good in the labour market, and whether all its ideas are quite as good in practice as they sound.

“HR professionals have aspirations to do things differently because of associations with those start-ups,” says CIPD membership director David D’Souza. “We associate success with the rapid growth of these brands and therefore associate their techniques with best practice – but there are more complex issues.” 

Think diversity disasters at Uber, concerns over privacy coming out of the Facebook-Cambridge Analytica scandal and the reported exploitative working conditions at Amazon warehouses (and the way the ubiquitous e-commerce giant has apparently encouraged employees to give instant, often merciless feedback on their colleagues). 

“Silicon Valley has broken down working boundaries, expanding across geographic areas, letting teams work together in new ways,” argues Wendy Murphy, senior director of HR for EMEA at LinkedIn. Much of this is down to the tools these companies have developed. Some, like smartphones, allow us to work from anywhere. Others, such as LinkedIn, have enabled new direct recruitment models. Glassdoor, meanwhile, promotes previously unimaginable levels of transparency. 

Then there are the working practices, driven in part by the tight talent market of a fast-growing industry. According to data from code.org, there are more than 520,000 programming vacancies in Silicon Valley, about 10 times the number of qualified graduates in the sector. This “red-hot market for tech talent… has driven a race to the top in working standards and benefits”, says Murphy. Perks range from the superficial (free food, bartenders on payroll) to the more values-driven (LinkedIn gives every employee one day a month to ‘transform themselves, the company or the community’).

“Talent is at the fore of these companies and the most important people are often not the leaders but the coders, and that’s an interesting structure,” says D’Souza. “They try and make people feel welcome, comfortable and well looked after.” 

But while he believes “putting money into the work environment can only be a good thing”, there is a darker side. “They want people to be able to spend time there without yearning for home. One of the worrying things about the idolisation of Silicon Valley organisations is that the concept of work-life balance isn’t respected as much as it could be.” 

What happens in the tech industry affects every employer that wants to be viewed as cutting edge – it’s why Google’s leftfield interview questions were so widely copied (until Google admitted they didn’t work) and why the concept of work time to pursue personal projects and passions is so popular. But it also matters because such firms are competing for top talent in the UK. Google is building a 1,000,000 sq ft building in London with the potential to house 7,000 staff. Facebook plans to recruit 1,300 people and Apple is taking over the former Battersea Power Station site to build a state-of-art campus for 1,400 employees. 

A growing number of corporates – the list includes Barclays, Aviva and Manchester Airports Group – are also trying to co-opt the start-up mentality by creating internal tech hubs and incubators with the feel of Silicon Valley, aiming to lure bright digital talents away from fintech firms with promises of hipster-friendly working environments. 

Nora Jenkins Townson, founder of Bright + Early, an HR consultancy that works with start-ups, says that while hiring software engineers used to be all about “crazy perks”, things have evolved. “A lot of large firms think the perks are the reason people are going to start-ups instead of them. It’s not. It’s about taking care of the whole person, giving them responsibility and moving at pace.” 

Indeed, beneath the glossy surface, those who have worked in Silicon Valley agree that what makes the difference is culture and structure. And that’s not easy to drag and drop. McCord says some of the companies she consults for have introduced an open time-off policy, only to regret it: “They need to have another infrastructure in place for managing outcomes and deliverables.” 

Michael O’Keeffe, founder of innovation consultancy The Innovation Beehive, which works with companies including Google, adds: “Lots of organisations say ‘we need be creative, let’s put in a ping pong table’. But unless you work around changing the culture, you get people displaying the same behaviours, just on uncomfortable furniture.”

Culture is embedded in the how and why of work at Google and their ilk. “In start-ups, we not only look at how to innovate in technology, but come to an understanding that how we structure and lead organisations is critical to how we deliver,” says Kevin Goldsmith, former Spotify CTO and architect of its ‘matrix’ structure of organisational design. “Start-ups are about disrupting industries. We don’t stop at technology – we look at everything.” 

Much of this is based on the increasing agility of development processes. “When I started, tech companies were organised similarly to manufacturing firms: command and control, long planning cycles, strict hierarchies,” he says. “But building software isn’t like building a car – you change it constantly. Apps can be updated daily using customer feedback.”

To support agile product development, Spotify developed a structure that flattened and democratised decision-making and accountability. ‘Tribes’, ‘squads’ and ‘chapters’ come together and dissolve for specific projects, with leadership strictly demarcated from technical management competencies. “When you do that around product development, you realise people want the same thing everywhere,” Goldsmith adds.

 “With the start-up environment, company values are what define further growth,” says Murphy. “Because of fast-paced growth and limited resources, start-ups (which do not have processes defined) are giving more decision-making power to individuals.” For example, she says, LinkedIn’s “values have grown to define us. They empower our employees to be more innovative and creative, and give them the freedom to take intelligent risks while working towards ambitious goals – something that differentiates start-ups from ‘traditional’ corporations.”

But being rewarded through stock options should also not be overlooked as an empowering factor. And a large part of the reason that Silicon Valley companies can play with organisational design isn’t because they are ‘special’, but because they are unencumbered by legacy, says Peter Cappelli, professor of management at The Wharton School: “They don’t have the internal control systems to begin with, so they haven’t had to dismantle them.”  

This can contribute to the “big problem” with such firms: they are founder-driven. “These founders don’t [tend to] come from a business background and don’t have experience with formal management systems,” Cappelli says. “They have the ‘I must be a genius because I’m so rich’ mindset – young male founders who are not well socialised around how businesses work and don’t feel bound by rules.”

The need to reinvent absolutely everything is a well-acknowledged flaw among tech companies, and it extends to HR. Many founders boasted about how they didn’t need a people function since everything they did was about talent management. Uber is just one chastened firm that has since realised its under-investment in HR was extremely costly. 

“It’s not all roses to come out of Silicon Valley,” agrees McCord. “There’s this weird underbelly, where we assume the cool companies are doing something right, so we copy it and call it best practice. Napping pods, slides, free meals… I call it the infantilisation of work. It’s the basis of ‘bro culture’ and I don’t know that it has served us well.” Alluding to privacy controversies, she adds: “These are the biggest, most influential companies in the world now: it’s time to grow up.”

Nowhere has the bro culture played out more starkly than at Uber, where a blog by a female engineer about her experiences with sexual harassment and discrimination contributed to the ousting of CEO Travis Kalanick. This is where HR should be playing a key role as a challenging voice, if the culture and leadership support it. “The best HR professional in the world can’t do a good job unless they have the ear of the leadership team,” says Jenkins. “[At Uber] HR was not empowered to do anything: it seems indicative of a culture that doesn’t value HR, where it is seen as a transactional function.”

Murphy says LinkedIn has avoided “some of the worst mistakes” in D&I among its peers, and emphasises that “this didn’t just happen: HR had a major role. We have worked hard to achieve this with a focus on gender equality that starts at recruitment and is reinforced throughout the employee lifecycle.”

McCord cites the example of James Damore, the Google engineer who wrote a lengthy memo criticising diversity: “Would I have fired him? In a heartbeat. But hopefully I wouldn’t have hired him. When I read [the memo] I thought ‘I have met a million of you’. [In the interview process, HR should have said] ‘he may be a brilliant engineer, but the guy is a jerk, move on to the next one’. HR needs that degree of influence.” 

When it comes to improving diversity, Murphy believes that the use of artificial intelligence and data insight tools will be critical. “By using workforce insights and AI, HR and talent professionals are empowered to make a real change,” she adds. 

But this is where the real concerns about the Silicon Valley influence on wider workplaces begin to kick in. What if the prevalence of technology, combined with a laissez faire attitude to privacy, is leading us down a darker path, eroding the rights and respect that make us feel valued at work and creating a two-tier workforce where tech talent is rewarded and empowered but many blue collar workers are treated as little more than expendable digits? 

Bruce Daisley, Twitter’s European vice president, already worries that many of the tools designed to connect us “prioritise the immediate over the thoughtful and the urgent over the important. [The concept] was that we could do our job more efficiently, but meetings have doubled because of scheduling tools, email volume has gone up and we are expected to be connected all the time.” This is leading to burnout, “a perennial sense of guilt” and, ironically, a sense of loneliness and isolation, he feels.

Beyond everyday collaboration tools, monitoring technology is becoming increasingly sophisticated, from digital badges that monitor interaction to Amazon’s productivity trackers and even microchips embedded in the skin in the name of making Silicon Valley staffers’ lives more convenient. This management by algorithm can create “heartless systems”, warns Jamie Woodcock, sociologist of work at the Oxford Internet Institute who has undertaken extensive research into the use of monitoring tools at call centres. 

“Part of this is the Silicon Valley dream of being able to get away from the messy aspect of workers and viewing them as numbers on a dashboard. But you are still trying to manage people,” he says. “Coding has an obsession with measuring things, which cuts out the more human aspect. You can find efficiencies or monitor performance, but not find out why.”

Cappelli adds: “The people who design these tools almost always know nothing about management. They are engineers with a production view of the workforce: the smart people designing stuff while worker bees carry out the work.” This feeds into the fact that when most of us think of Silicon Valley working practices, it’s tech experts that spring to mind, “rather than Amazon’s legion of warehouse staff”. 

These tools may be cutting edge in terms of technology, but they amount to little more than 21st century Taylorism, says Cappelli. “It’s the same ideas, they can just apply them to more people.” What such tools can’t do, he says, is measure the value of good work. And that is his fundamental challenge to business: “How much do we want to ignore what we know about management?”

Yet despite these concerns, much of Silicon Valley’s approach does align with the tenets of good management. Reading former Google HR chief Laszlo Bock’s book, Work Rules!, it’s perhaps surprising how basic many of his tips should seem to HR professionals: trust people, give work meaning and create a place where employees want to work. 

In many ways, what the Valley’s approach to HR and work represents is a series of contradictions: set people free but monitor them closely; make the world a better place but create a system that separates winners (highly paid coders) and losers (warehouse workers); keep people happy at work, but within a meritocracy that places a specific type of IQ above everything else. The tricky role for HR is to balance these competing objectives, while enabling agility and challenging poor leadership. 

And for those who don’t live on the Googleplex, we have the opportunity to pick and choose what works for our contexts and cultures, rather than copying and pasting. Because what really matters for HR is universal and perennial. As Murphy puts it: “With all the technological advancement, it’s crucial not to lose sight of your main motivation: your people. Maintain the human touch.”  

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