Bill Gates on Talent Management

Bill Gates directly addressed the issue of Talent Management in education during his address at last week’s TED conference. After an initial discussion of the battle against Malaria in the poorest parts of the world (complete with an actual release of mosquitoes into the crowd) Gates gives a great example of a true Performance Management process at work. It’s useful to look at because it mirrors exactly what HR professionals would like to accomplish inside of their own organizations.

You can watch the video of the talk here (the Malaria discussion is about ten minutes at the start): http://www.ted.com/talks/bill_gates_unplugged.html

As you watch the discussion, note each piece or step of an integrated talent management process that comes into play:

1. Defining Organizational Goals – In the U.S. the top 20% of individuals get a superior education, but the balance of people are continually getting a less and less competitive education versus some other countries. The goal then is to increase the performance of the bottom 80%.

2. Identifying key Jobs that affect the desired outcome – Gates presents evidence from studies that show the difference in performance between top quartile teachers and bottom quartile. It turns out that teachers in the top quartile are able to increase the performance of their classes on test scores by 10% in a single year.

Gates puts an exclamation point on this with the example, “If the entire U.S. for two years had top quartile math teachers, the entire difference in test scores between us and Asia would go away.” This of course begs the question, how do we find, recruit, and or grow more top performing teachers?

3. Characterizing what predicts success in that role (Competencies, Skills, and Experience) – Once you’ve decided which key jobs drive the economic value of your company, or in this case your organizational goal to improve education, you need to describe what traits are predictive of success (in say, your Job Profile!) Gates simply asks, “How do you make a great teacher?”

Mr. Gates then takes us through a quick set of attributes that might be predictive of what makes a top quartile teacher: Seniority, whether the person participated in Teach for America, whether they have a math degree (he’s talking about math teachers), or whether the person has a Master’s degree. In real life of course, there might be 10, 20 or 100 different measures.

4. Measuring variability of performance in that job – Gates illustrates the problem of feedback in the teaching role. He actually hits on what is more of an Education specific issue – that is, that teacher’s contract might only allow a principal to observe in his or her classroom a single time a year, and only with notice. The problem is the total lack of coaching or feedback on the behaviors and competencies that make someone a great teacher. Union issues aside, there are certainly comparisons to the once a year appraisal process common in most corporate settings. Does anyone believe that type of appraisal process is core to changing the behaviors that drive top quartile performance? Of course not!

5. Turnover & Retention in that role – Guess what? According to Gates, “On average, the slightly better teachers leave teaching. There’s a lot of turnover.” That may have a lot to do with the next step…

6. Pay-for-Performance – Spoiler alert. If you haven’t watched the video, this ruins the payoff. As it turns out, the characteristics that are predictive of top quartile performance map out like this:

- Possession of a Master’s Degree: Almost no effect
- Teach for America: A little bit more effect
- Math major in college: A bit more effect
- Actual past top performance: GINORMOUS effect

Gates kicker in this section, of course, is around the pay portion. What do teachers get bumps in pay for? Seniority, and earning a Master’s degree.


7. Coaching & Learning and Development – Finally, the most optimistic part of Gate’s presentation comes at the end. If you can move around some of the incentive systems the real opportunity is around developing individual teachers. Using various tools to coach and develop individuals, the hope is that they can encourage the behaviors that drive top quartile performance.

The one major piece of a talent management process Gates doesn’t mention in all this is Recruiting. However, from here it’s an easy leap to see the value in integrated talent management. If we fully understand our Organizational goals, the jobs that drive the goals, and the job behaviors that predict top performance, we can focus hiring efforts on measuring those behaviors and skills.


Did you notice there is no discussion here about managing “A” players? While you want to identify key players, it’s not to manage them, it’s to learn what behavioral competencies they use to produce top performance. The “managing” part is about managing “A” jobs. How do I reduce the variability of performance in the key roles that drive my Organizational goals? By focusing on a foundational piece of the system, in this case jobs, they’re looking to increase the performance of the whole. THAT takes an integrated approach to talent management. Of course, there’s no discussion here of technology, just the process. However, in practice, you must have technology in place to support a systematic approach to this many individuals.

“By thinking of this as a Personnel system, we can do it better.” - Bill Gates

Less Thomas, more Milton...

After reading Hot, Flat, and Crowded by Thomas Friedman, I have to say that what the United States really needs is not the prescriptions of Thomas Friedman, but a big dose of Milton Friedman!

With my dig out of the way, I have to go on to say that I consider Thomas Friedman must reading. The World is Flat and the Lexus & the Olive tree were both great reads, and Hot Flat and Crowded is just as interesting. While I ended up disagreeing with his conclusions, the reading is certainly fascinating and a great addition to the conversation on the environment.

The most interesting discussion in the book was about the correlation between freedom in the world and the price of oil at any given time. Studies have shown that when a worldwide “freedom index” (an amalgamation of different factors including free elections and other characteristics of free societies) is compared to the prevailing price of oil, a surprising correlation of less freedom comes with a higher price of oil. Basically, it works like this. The higher the price of oil, the more money Petro-dictators have to give away free goodies (in the form of social subsides) to their people. Then in turn, the higher level of goodies, the lower social unrest in these countries. Unfortunately, in return for higher standard of living/handouts, those same people are willing to live with reduced freedom. Or at the very least, it’s harder to get an opposition movement going.

The reverse is true as well. The lower the price of oil, the harder it is for Petro-dictators like you’ll find in Venezuela, Saudi Arabia, Iran, Iraq, and Russia to hold onto their tyranny. Friedman claims this is one of his main points when speaking in front of conservative groups who might be less interested in his global warming message. I have to say, the value of low-priced oil for national security reasons is compelling on its own. I just differ on how to get there (drill here, drill now!)

That discussion is worth the cost of the book on it’s own. Friedman than goes on to discuss several other aspects of the battle against global warming. If there is a flaw in the book, it’s Friedman’s total hook, line, and sinker buy-in to man-made global warming. Assumption after assumption is presented as fact, and if you don’t agree that it’s irrefutable facts you’re a “naysayer.” In the end it doesn’t matter. Even a naysayer like me sees the great benefits to a green revolution (“you had me at national security”).

My real point of contention with Friedman is his gas tax. He rightly observes that high oil prices represent a price signal makes a market for alternative energy. He’s also right that the unpredictable price volatility prevents true private sector investment in alternative energies (why would I put 100 million into wind-farms technology when oil might be a dollar cheaper six months from now – as it’s turned out to be).

It is the kind of conundrum that argues for some type of government intervention. Even a laissez-faire kind of guy like me can almost get over that (almost). Friedman’s solution is to tax you more. He’d like to put a floor on the price of a gallon of gas – still allowing shifting in the price, but any savings below a certain floor determine the amount of the tax (e.g. If the “real” price of gas is $2.50 and the floor is set at $3.00, Uncle Sam nets fifty cents). His goal is to set the price high enough and stable enough to foster investment in alternative energy sources.

It would be one discussion if this new consumption tax was offset with a reduction in other taxes such as income, but Friedman basically chalks it up to “hey, extra revenue for the government!” The real problem in my mind is the distortion of the market. “Price” is the most important piece of information for effective free markets, and price controls always corrupt the outcome. Because of that I just cannot get on board, as seductive as it might sound.

The real solution is in the passage on moon shot versus “1,000 garages.” The question he’s looking at is about whether this effort is a massive “moon shot” effort that needs an enormous centralized government solution, or whether it instead will get solved by the thousands of inventors and entrepreneurs out there. It seems to me that rather than mucking up a perfectly good free market system (bounded by law/contracts), why not sponsor the equivalent of the Ansari X Prize? Heck, we’re talking government here…even if you made the prize “one BILLLION dollars,” it would still be cheaper for American tax payer.

The Price of Everything

"The Price of Everything: A Parable of Possibility and Prosperity," should be required reading in every high school across America!

The book explains "how the world works" in the form of a parable. A young, professional tennis player is dismayed when a local hardware store raises its prices after a natural disaster in his town. The obvious "price gouging" infuriates him and he becomes the spokesman against the big box retailer in an on-campus movement at Stanford. When our hero's girlfriend comes home and talks about her unique economics professor the action is just getting started.

It's not such a page turner that I'm really risking ruining the ending for you here, but I'll save you the details. It's a parable, so it's about the lesson more than the story. The reason I loved the book is that it is able to explain in plain terms a free market system and how it works. Not a demand curve in sight but you'll take more away from this book than any basic economics class you had in college!

Right!

Came across this one on the web today. Couldn't resist.