Workbook for VLM

Discussion 1. Background of HRM

A student, reading the literature on HRM, was contemplating over a series of terminologies that he
came across during his readings. First, he encountered personnel management which changed to
human resource management (HRM), personnel economics (PE) and strategic human resource
management (SHRM). Then parallelly, he realizes that there is something called industrial relations
(IR), organization behavior (OB) and then organization development (OD). In HRM he started
reading Dave Ulrich and realize that there is something called ‘outside in approach’ and CoE (Centre
of Expertise).

Discussion 2. Why doesn’t this HR department get any respect?- Loft Securities

For most of its 30-year history, Loft Securities had enjoyed a stellar reputation when it came to
attracting – and keeping – highly qualified people. The company had never paid much attention to HR
because it hadn’t had to. And the human resources department hadn’t been able to pick up the slack.
Under Washington and the two CEOs who came before him, the department was simply an
administrative function. Human resources department was perceived as just a bunch of clerks
processing benefits forms and tracking vacation days. Robinson, the new HR head wanted to change
the perception, but failed miserably.

Not For Lack of Trying

Rose asked Robinson to outline what he had done since joining Loft, and he quickly described a
variety of actions. When he had first joined the firm, he had spent a good deal of one- on-one time
with each of the senior executives, asking them about the kind of people that made the company
successful and how they viewed the talent they currently employed. He had also met with many other
employees – managers, brokers, administrative assistants – and all the members of his own
department. He established a set of internal service standards, performance guarantees, and ongoing
customer- satisfaction measurement programs for his department. He created “listening posts” – that
is, he sent a member of his staff to each of the firm’s locations on a regular basis to hold office hours
and answer question. He implemented an “HR ambassador” pro- gram, assigning individual members
of his staff to develop relationships with the people in a particular area of the company so that they
would have a voice speaking for them within HR. Once Robinson presented his findings and outlined
his plans, thinking they were well-received because at the time they met with little in the way of
challenges or discussion. While the top managers were being polite, but they weren’t paying attention
was Robinson take on the meeting.

HR in particular is a difficult area – although most internal-service functions would argue that they
are underappreciated as well. Rose added “Does Loft respect its IT department? Its accountants? Look
around you. You’re probably not alone.”

Discussion 3: Recruitment and Selection – S.G Cowen

S.G. Cowen case is a prestigious, mid-sized investment banking firm. Like most firms on Wall Street,
SG Cowen made hiring decisions in the early winter and spring of each year to fill a new class of
associates who would begin that summer. The hiring process for new outside associate hires began in
the fall, when SG Cowen would make company presentations at its “core business schools,” where it
participated in the on-campus recruiting programs. These schools were NYU, Chicago, Columbia,
Cornell, Emory, USC, Washington University, Notre Dame, and Berkeley. Rae, director of
recruitment at S.G Cowen oversees the recruitment drive.

In the bull market years, the Goldman’s of the world would back up the recruiting truck to places like
Harvard and invite slews of students to climb aboard. It was tougher for S.G Cowen, because they
didn’t have the alumni base in New York. S.G Cowen advocacy for making Cornell a core school
converged perfectly with Rae’s new strategy for choosing core business schools. “We used to go to
the top 10,” Rae said, “but at some of the top schools we were getting people in the middle of the
class.” Paying more attention to the next 15 schools in the top 25 was Rae’s new strategy. Here was
resistance initially from senior management, as this was viewed as going downstream. But Rae said,
“Senior managers eventually saw the wisdom. We were hiring at the top of the class, and these
students also tended to be more loyal. We were not missing much by not going to the top schools.

Whom to Choose?

Natalya Godlewska Natalya Godlewska was an MBA student at Cornell and had earned an
undergraduate degree in finance at an eastern European university. As an undergraduate, she had been
the student with the highest grade point average (GPA) in the finance department, and she went on to
serve as a graduate teaching assistant in the finance program at Cornell’s business school. She spoke
fluent Russian, Polish, and German and some French. Prior to business school, she had worked for
four years for CommScan, a company that developed M&A modeling software used by many major
Wall Street firms. She had gone to the SG Cowen presentation at Cornell, called the bankers she had
met to have informational interviews, and then had been one of the top candidates from Cornell sent
on to Super Saturday. At Super Saturday, her interviews had mostly gone well, although there was
some hesitation from two interviewers.

Everyone was uniformly impressed with her finance background, her analytical knowledge, and her
understanding of the financial markets. When one of the bankers had telephoned her references, her
previous supervisor had responded positively about Godlewska’s skills and also commented, “This is
the person I would want to bring to a tough negotiation.” She seemed very determined, ambitious, and
ready to work hard. But one associate and one managing director each expressed strong reservations
for different reasons.

The associate felt that Godlewska might not be a good culture fit with the other associates and that she
had seemed stiff and uncomfortable during small talk at the opening of the interview and also at
dinner the night before. The managing director felt that some bankers might lose patience with
Godlewska’s less-than perfect English and that this would affect her ability to work smoothly with her
managers. Other people on her interview schedule spoke up in her defense. Associates should be
made to deal with
people with different backgrounds, and it was all too easy to use “culture” as an excuse.

Martin Street Martin Street was a second-year Wharton MBA who had previously served four years
in the military. He had no business experience, but he had substantial leadership experience, most
notably having led a rescue operation in war-torn Bosnia. He was president of his section at Wharton
and also of the Running Club, having completed two marathons and one triathlon in the past year. All
of his interviewers agreed that he came across as a dynamic personality and that he was confident and
articulate.
SG Cowen came to Wharton toward the middle of the recruiting period, so as one banker said,
“People either really want SG Cowen, or they didn’t get offers from other firms.” Street had told them
he was taking several finance courses, but SG Cowen was not allowed to ask him about his grades
because that was forbidden under Wharton recruiting rules. Cowen had difficulty scheduling Street
for Super Saturday because he was always involved in recruiting events at other firms. He had said
that he liked smaller firms and liked SG Cowen’s areas of specialization, but they still were unsure
what the likelihood was that Street would accept the offer if it was extended. They were also wary of
whether he would play firms against one another in terms of wanting additional time to interview and
consider offers, which might prevent SG Cowen from being able to fill that slot with another top-
choice candidate. One professional in recruiting said, “If a person doesn’t sign and accept the offer
letter right away, we’ve made a mistake.”

Ken Goldstein Ken Goldstein was a second-year MBA at Berkeley who had previously worked at
PricewaterhouseCoopers for five years. He had quickly risen to be a manager at PWC, managing
multiple audit teams simultaneously, drawing up budgets and pricing for projects, making
presentations to win business, and resolving technical accounting issues for clients. When SG Cowen
called his reference at PWC, he confirmed, “Ken’s performance appraisals put him in the top 5% of
the firm.”

Everyone who had interviewed Goldstein liked him and thought he would represent SG Cowen well.
In fact, when Rae looked over the written comments on all the evaluation forms, they were uniformly
positive. Why hadn’t Goldstein been an immediate “yes,” why was he one of the “maybes” that
warranted this discussion? One banker said, “I can tell you what everyone’s afraid to say. Ken is
married and has two sons, a newborn and a two-year-old. Whatever he did at PWC, we can’t tell at
this stage of his life whether he really will be willing to work 24/7 like the rest of the associates.” One
of the senior associates said, “It’s hard on the other first years if we make allowances for Ken to pick
up his kids at daycare or not work on a weekend when his wife’s away. None of the first years expect
to have a life, so what happens when they see Ken having a life?” Some interviewers said Goldstein
had openly talked about his intention to be able to balance a family with being a banker. One of his
interviewers said, “I commend him for trying, but I break promises to my kids all the time, to take
them to the first day of school, to get home for a game.” Another banker said, “It’s weird to say this,
because we always say we’re looking for maturity, but I almost think Ken’s too mature. If he were on
my team, I wonder if he would do what I tell him to do, or if he’ll dislike taking orders. He’s used to
having a lot of responsibility and being in charge.”

Andy Sanchez Andy Sanchez was a second-year MBA at the University of Southern California and
had completed his undergraduate degree in economics at UCLA. Sanchez had found early success as
an entrepreneur, having started his own business during his first year of college, a Kaplan- style
tutoring business to prepare students in Los Angeles for high school achievement tests and the SATs
in both English and Spanish. After college, he ran the business full time for three years and then
continued to run it while he enrolled in business school. Last year, his business had served 4,000
students at an average price of $500 per course, resulting in $2 million in revenue and clearing
$400,000 in profits divided between himself and an equity provider.

Sanchez’s interviewers all found him enthusiastic and personable. He had talked to a lot of people at
SG Cowen and had stopped into the New York office to have informational interviews or talk to other
associates on several occasions when he was in the city for other meetings. He always sent follow-up
e-mails and notes to everyone he spoke to, was friendly to the other candidates at Super Saturday, and
was great at making people relax. He was well informed about the firm, telephoned other alumni from
USC to talk to them about their banking experiences, and seemed as though he had been reading up
on investment banking, speaking very cogently about recent landmark deals in some of his interviews.
When asked whether he was sure he wanted to leave his business, he said he was ready for new
challenges and that his younger brother was going to run it in his absence.

The biggest concern interviewers had with Sanchez was from his resume, which listed a 2.8 for his
undergraduate GPA. When asked about his business school GPA, Sanchez had said it was a 3.1. At a
time when most schools including USC had a fair amount of grade inflation, SG Cowen bankers were
concerned that he had had so many “Cs” on his record over the years. “We’re not looking for rocket
scientists, but a 2.8 really sticks out,” one banker said. Sanchez had pointed out to one of his
interviewers that his SATs and GMATs were quite high and that his low grades only reflected the
amount of work he was putting into running his business. Rae looked over the other resumes of the
Super Saturday candidates, and Sanchez had a very competitive SAT score and one of the highest
GMAT scores. Sanchez had told one of his interviewers, “There was a lot of demand for our services,
so we got excited and grew the business pretty fast, and I also needed to make enough money to put
myself through school and then put my two brothers through school. Unfortunately, that left me little
time for studying.”

Discussion 4: Internal Alignment of HR practices – Egon Zhender International

In 1964, Zehnder started his own executive search firm and specialise in filling top managerial level
positions for the client firms. Since inception Zehnder was very particular about maintaining few
values, which he thought was critical for firm success. Some of these values are summarised below:

1. Clients come first in everything they do

Firm owned wholly and equally by the partners. The firm relied on organic growth, depending on its
existing partners to lead new office expansion, rather than acquiring local firm. Cash from operations
was used to finance growth without recourse to debt. “It took us a good decade to begin gaining
sufficient momentum of reinvesting our modest capital to begin increasing our geographic coverage,”
reflected Zehnder. In 1978, the firm was converted into a corporation. All partners, including
Zehnder, were given equal equity stake and one vote each in partners’ meetings. “As a result of this
shift in ownership, the partners assumed the full character of equals in voice,” Zehnder observed
subsequently

Recruitment

Candidates underwent between 25 and 40 interviews at five of the firm’s international sites. If two of
the interviewers expressed doubts about a potential candidate, no offer would be made. Typically,
only 10% of candidates successfully made it through the interviews. Zehnder outline his recruitment
strategy “Whenever we recruit for this firm . . . we are naturally looking for growth. But we are also
attempting to select those who have already shown their ability to survive and contribute significantly
to society and to the advancement of our practice.”

Performance Management
Each consultant was expected to conduct an average of 12 searches per year. Average billings per
search ranged from $60,000 to $120,000. Two consultants were assigned to each search, one taking
the lead and the other acting as backup. Working in tandem assured clients that there would always be
a consultant with whom to talk. Moreover, this approach prevented consultants from operating as
individual practitioners. They eagerly share information and ideas about existing and potential clients.
Similarly, they pass around information about the executives who might best meet a client’s needs.

Compensation

EZI followed a partner compensation system, unique to the search industry, of distributing profits on
a “lockstep” basis—depending only on the firm’s worldwide profits and seniority. EZI partner
compensation had three constituents: salary, equity stake in EZI, and profit shares. No records were
kept on individual performance, and no commissions or performance-based bonus were paid. Upon
retirement, partners sold back to the firm their shares at existing economic value. According to
Zehnder “Second, our seniority-based system requires us to find people who want to stay with a
company for the long haul. . . . Nothing benefits a client and its executive search firm more than a
consultant with a well-developed network of executive contacts and a finely honed intuition. The
seniority principle did not extend to consultants who were not yet partners because “they [were] still
proving their partnership qualifications on many levels,”

Change in business environment and strategic review

The Internet’s growth had triggered a new wave of competition, causing some within EZI to question
the firm’s high-touch approach. Job-placement sites such as Monster.com had grown quickly into
viable businesses for matching candidates with jobs. Additionally EZI’s competitors had begun to
expand aggressively into Europe, often by entering into high-profile mergers with boutique search
firms.

Internally, Zehnder announced that he would retire from the firm in June 2000, triggering concern
about the firm’s future. Now we felt that we were approaching an inflection point in the history of the
firm,” added O’Brien, “and so, we should re-examine carefully the direction of the firm. A worrisome
generation gap was also emerging. The younger consultants especially were feeling unsettled by the
market changes. They were concerned that the older consultants were not paying much attention to
these changes.