Quantifying Human Potential.
In Conversation with Caitlin MacGregor: CEO of Plum
People first. Always.
That’s the message I took away from my conversation with Caitlin MacGregor, Co-Founder and CEO of Plum.
I went into our discussion with the intention to talk to MacGregor about how she built Plum over the last nine years. We covered this, but we also had a challenging conversation about the priorities of modern-day talent management. For the uninitiated (a group that included me just a few short weeks ago), talent management is the science of maximizing business value using human resource planning. More simply put, it’s the strategy a company employs to recruit and retain high-quality talent, invest in developing their staff's skills and career goals, and create motivational levers to help improve performance.
MacGregor helped me see how talent management strategies take their lead from company culture, particularly whether employees are viewed as assets or cost centers. And, as often happens when talking about company culture, we delved into my experience at Netflix and how it is revered in tech circles and fortunate 1000s alike.
What I enjoyed most about this week's conversation was MacGregor’s unapologetic candidness. It's rare to have a CEO question whether looking at talent as a “Dream Team" and not a "family" is the best way to maximize company value. We got into that, but we also touched on hiring for potential versus past performance, and the mission at Plum to:
Quantify human potential at scale
Determine a candidate's potential through the power of human skills
Investing in talent as the best kind of talent strategy.
Enjoy!
Caitlin MacGregor’s story is one of perseverance and adaptation. Voted as most likely to save the world in her high school yearbook, she’s been trying to prove her classmates right ever since. Part of that mission includes building a company that prepares millions for the new world of work. MacGregor founded Plum in 2012 out of the need to find the best potential talent, which, ironically, led her to help build a new approach to talent management. MacGregor and her team have since created products that enable HR and Talent executives to measure candidates based on potential and not strictly past performance.
Sink or Swim
The modern workforce often expects that a candidate's past performance indicates they’’ll be ready to go on day one. We’re going to throw you into the deep end and expect you to swim. This was true of my experience at Netflix. I was meant to have the expertise to do my job as soon as I walked in the door, and any training came in the form of jumping into the deep end. This was part of Netflix’s overall "Dream Team" and the very mentality that MacGregor is challenging.
We model ourselves on being a team, not a family. A family is about unconditional love, despite, say, your siblings’ bad behavior. A dream team is about pushing yourself to be the best teammate you can be, caring intensely about your teammates, and knowing that you may not be on the team forever. [Excerpt from the Netflix Culture memo]
“This approach prioritizes proof over promise,” and Netflix doesn’t have a farm system to develop talent! It also doesn’t address the new crop of workforce leaders who think differently about what they want to get from (and give to) the workforce. MacGregor acknowledges the obvious success that Netflix has had with the dream team approach, but worries about its effect outside of their four walls. The Netflix culture is the topic of many HR conferences and it is praised in numerous corporate culture articles and case studies that analyze its ins-and- outs. It is also the focus of No Rules Rules, a new book by Erin Meyer and Reed Hastings, Netflix’s CEO. The book details the culture of reinvention at Netflix. The fact Meyer and Reed's book is both a NYTimes Business Best Seller and shortlisted as one of the Financial Times Best Business Books of the year gives further credibility to the culture at Netflix as a shining beacon of what radical management culture can provide.
But as the world of work changes, will the radical candor culture continue to thrive?
Millennials as Managers
Within a few short years, seventy-five percent of the workforce will be Millenials, filling positions as managers, directors, and executives at companies all over the world. Gen Xers (who currently hold greater than fifty percent of leadership roles worldwide) are known for their efficiency in everything management style. While millennial managers are often categorized as deep generalists who are extremely team-centric and guided far more by social responsibility than their predecessors. Millennials are also generally prone to conflict avoidance.
How will talent management and company culture adapt to the characteristics of this new dominant group in the workforce? What does it mean for these managers as they start hiring and building out teams? What’s the type of talent management style that meshes with the shifting nature of the new “manager mentor” mentality. I put a few of these questions to MacGregor.
On hiring for potential vs. past performance:
CM: Right now, in the US, there are half a million accidents a year from people failing to use their rearview mirror when reversing their car. So, we make a point to use our rearview mirror as we're backing up. But if we want to drive forward through traffic, we don't look in the rearview mirror. We look ahead. Unfortunately, most talent practices are still looking in the rearview mirror. They’re literally looking at the historical data of applicants like schools attended, jobs had, and how quickly they shot up the career ladder to make decisions about the future. This needs to change. We need to be looking forward.
On valuing human skills:
CM: Resumes often articulate and prioritize hard skills over human or social skills. Using the combination of the two is a much better predictor of how someone will do in a new role rather than looking at hard skills on their own. Plum quantifies human potential by measuring personality, social intelligence, and problem-solving ability resulting in a dataset that’s four times more predictive of job performance than a resume. Most job descriptions focus on eligibility: four years experience in X, proficiency at Y, but hiring managers and HR teams need to be far less concerned with eligibility and more focused on whether this person can thrive in the new role.
On promoting diversity:
CM: The existing system is flawed. The resume is flawed. Using an 8x11 piece of paper as a gatekeeper for deciding whether a candidate is right for a job is just plain wrong. The resume is often embedded within the systemic barriers and biases that dictate access to education, access to internships, and landing a first job.
Software > Gut
Part of my mission with the Infinite Learner is to understand the skills gap that exists in today’s workforce. When I brought this topic to MacGregor we proceeded to get into the weeds on Plum's new Talent Resilience platform, which is designed in part to solve this very problem. I wanted to learn how quantifying human potential at scale can help an employer determine their staff’s existing skills and talents, and also inform future talent decisions. I also wanted to know why she thought HR leaders were going to trust a piece of software over their years of lived experience.
CM: Talent Resilience relies on one consistent metric leaders use to break talent decision silos: quantified human potential. QHR is a universal, unbiased talent metric rooted in industrial-organizational psychology that measures human skills. It helps to reveal a person’s innate talents, such as innovation, persuasion, teamwork, adaptation, and communication. Our efforts in building this platform acknowledge there's a subset of leaders at the forefront of talent management saying, "Hey, we are going to be the first generation of leaders that aren't simply about command, control, and profits at all costs." At Plum, we wanted to create a platform for those leaders to create a strategy that sets up employees to thrive.
Interesting fact: The practice of Industrial-Organizational psychology originated during WWII when lives were literally on the line to find the best candidate for a position. Scientists were tasked to develop a methodology for selecting officers and pilots, and placing them into roles best suited to their skills, and develop them to be top performers.
In true Infinite Learner fashion, I had to take the Plum talent assessment! Designed to measure cognitive ability, problem-solving, situational judgment, and individual intelligence, it ranked my talents, work style, and work preferences. The results of my top talents were not a total surprise for me (Communicator, Manager, Persuader). After all, I took 10+ years in the workforce to figure these out! Rather, it was the competencies that were the lowest on the assessment that revealed where I had the most to learn (Execution, Adaptation). Where the true opportunities lay - I’m using the Infinite Learner to work on both!
[Want to do the Plum talent assessment? Try it out here.]
What if we prioritize knowing our strengths and learning opportunities from the start? What if we had the ability to design talent strategies around what we’re good at while creating programs for employees to work on areas of opportunity? Having something concrete to reference a) your strengths, b) what you can work on, c) where you show the most potential is invaluable to everyone's development efforts.
The ROI of Investing Internally
Traditional upskilling investments have typically focused on the top 10-20 percent of the employee base. This leaves upwards of seventy percent of employees who rarely benefit from their company's investment in learning and development programs. MacGregor’s thesis is that the health and sustainability of any business depend on thriving employees and on creating a workplace where employees have a strong sense of belonging. When 100 percent of talent knows their leaders and peers understand their unique skills, they are empowered to bring their full human potential to work every day.
Theoretically, this sounds great but, I wonder why not just hire candidates who already have the skills you need (as has been commonplace for years)? Should a company really be responsible for up-skilling or re-skilling its employees when their jobs become obsolete? I ask MacGregor for her take.
CM: I'll use the example of Hilton. With the impact of COVID-19, so many of their front desk staff were laid off due to Shelter-in-Place. At the same time, they started hiring like crazy for their call centers. It's expensive to lay off the front desk staff and hire brand new call center employees. And look, not every front desk team member is going to make a great call center person. But if you take everyone you laid off and assessed not only what makes them amazing but also what skills were transferable to the different job opportunities, you could probably find matches for 80% of those people you're about to get rid of. Now the onboarding time of them getting to know your culture, and getting to know your people, and getting to know how your company works, becomes non-existent. You've not only saved all that time, but you’ve bought so much more employee loyalty when you hire up for all of those front desk jobs. You can just put them right back. Retention! I think it's financially one of the smartest things companies can do.
Why wouldn't you want to set your people up to thrive? When your people are doing well, the company succeeds. MacGregor and I talked about how true leadership means committing to making sure your organization is solid, and the only way to do that is to ensure that your people are thriving. Everything else is just automating a broken system.
Employees as an asset, not a cost center. Millennials managers taking over. Looking at potential, not past performance. These are all reasons to believe the shift in how companies manage their talent needs to adapt. I think about my time in the corporate world and how often shortcomings were looked at as flaws instead of opportunity areas. In a world where we will all be forced to constantly evolve and grow, the benefit of knowing where our weak spots are is meaningful. As much as talent itself changes, talent management strategies need to change with it.
So, how are you managing your talent?
Interesting article. The example of layoffs vs. new hires and the related costs should ring home to major employers. It seems obvious but it appears that most corporations are not thinking is this way! Great insight!