! ! ! ! ! ! Laurea in economia aziendale - Economics & Management A.A. 2013 - 2014 ! Course: Human Resource Management Prof.ssa Anna Comacchio Project Work 1 HRM Business Model ! Group Name: GoogleIt! Bastianello Giulia De Cian Barbara Gravili Candida Sonego Agnese ! ! ! ! ! ! !1 ! Content ! 1 - The Google company page 3 ! 2 - HRM Business Model page 4 2.1 Key customers page 4 2.2 Value proposition page 5 2.3 Customer channels page 7 2.4 Customer relationships page 8 2.5 Revenue streams page 9 2.6 Key resources page 9 2.7 Key activities page 10 2.8 Key partnerships page 11 2.9 Cost structure page 11 ! 3 - Conclusions page 12 ! 4 - References page 13 ! !2 ! 1. Google: the company “Googlers from all over the world work here to do things that matters” Google Inc. is a global technology company focused on improving the ways people connect with information. It has been founded in 1998 by Larry Page (today Google CEO, along with Eric E. Shmidt) and Sergey Brin (today director of special projects). Google is nowadays the most used search engine worldwide and, people connect to Google basically everywhere there is power. This means that a huge proportion of the global online search requests are handled by Google, placing the company at the core of the Internet users’ experience. The two founders were still students at Stanford University when they met in 1995 and then created together this search engine (initially called BackRub) which used links in order to determine how relevant specific webpages were to users. As a matter of fact, today Google is more than just a search engine: it offers over a 150 Internet services and products, from e-mail and online document creation, to language translation, video sharing, maps, advertising as well as software for mobile phones and tablet computers called Android. A wide and diversified product portfolio that has put Google on the top four list of the most influential companies in the hightech marketplace, along with Apple, IBM and Microsoft. Larry Page & Sergey Besides the great contribution that Google has been providing to the state of the art technology, what is really fascinating is the company Mountain View Headquarter culture. On the company website are reported 10 points about Google’s th vision and the company culture could be summarized with 9 point “You can be serious without a suit” which means that an environment based on fun, people formal interactions and casual atmosphere is the prerequisite in order to foster creativity and innovation. Google attracts the greatest minds from all over the world and each year receives from 3.5 up to 4.5 million of job applications and those people who then get the chance to work for it, they feel blessed and extremely lucky to be part of what the founders consider a “family” rather than a work place. Google mission is “to organize the world’s information and make it universally accessible and useful” and with this powerful statement the message provided is that people at Google (which are known as “Googlers”) are there with a specific purpose: change things and shape the environment. Every single employee has the opportunity to give a contribution and have an impact on the company decision making, and the fun culture helps people enjoy what they do and give their best. At Google innovation comes especially from people, that are the reason why the company invests a lot on human resources and the HR department is heavily committed in attracting the most brilliant ! !3 ! minds and recruiting the right people, a duty that makes it the strategic partner of the business operations. Nevertheless, 97 % of the revenues come from website advertising alone. As a matter of fact, not only is Google a search engine, but also a very successful advertising platform, through innovations like AdSense, AdWords and YouTube. Google has millions of advertisers and advertisements and what they do is, as Larry Page said in the TED presentation previously mentioned, to pick the ads that are the most relevant to what users are actually browsing, so the idea is to make the advertisement useful and not just annoying and this is for sure another innovative element that contributes to the company’s success. Google key statistics (Valuation Measures) from yahoofinance.com 2. The HRM Business model Google’s fortune has always been determined by talented, smart and creative people working in this well-managed company where everything is all about innovation. To start with, at Google the HR function is not called as such; instead it is called “People Operations” and the teams involved in this function consider themselves as “the champions of Google’s colorful culture”, which means that the People Operation role is consistent in the company, because they are in charge of finding the innovators, namely, the people who will fit perfectly in the company and that for sure will bring fresh contributions to always improve company’s operations: from great engineers to people with high entrepreneurship competence. The Vice President and HR leader is Lazlo Bock, who has been running People Operation since 2006. Doodle for the Labor Day of May 2013 Following the business model canvas, we are now going to analyze the HRM business model of Google, starting from talking about its customers, the Googlers, and then describing the activities, the value proposition, the resources and eventually a quick look at cost and revenues related to this function. 2.1 Key customers Working at Google must be an exhilarating experience, and this is proved with surveys conducted by the company to verify employees’ satisfaction but also it can be inferred reading Googlers opinions about their working experience; the following one is just an example out of many: “I've never worked at a company that I love and admire as much as I do Google. Not even close. There is hardly a day that passes, even after many years, in which I do not find myself thinking how fortunate I am to be here. This begins with a remarkable company culture built upon a clear underpinning of !4 ! ethics and integrity, combined with the desire - and the ability - to do truly important things. If I were to sum up in as few words as possible why I love being at Google: Simply by being here, I feel very naturally motivated to be (and also very proud to be) my best possible self”. Moreover, Fortune magazine awarded Google the number one workplace in its 2014 list of "100 Best Companies to Work For." This is the fifth time in a row at the top and it reflects the efforts to create a unique spot and culture. However, it is also a challenge to actually being hired at Google. The company is seeking for real talents, not everyone is meant to be a Googler, and therefore the “HR customers” are those ones that are smart, committed, talented and creative enough to pass the strict selection. In an interview for The Economist (the English weekly newspaper), Laszlo Bock, Google’s leader of People Operation, talks about the hiring principles and the requirements applicants have to meet in order to get a job at Google. He mentioned 2 points: Capability and learning ability before expertise: basically they would rather hire smart and curious people than those ones deeply expert in one area only and not able to do something different; the reason is that 90 % of the time a smart person that is able to learn quickly would come up with pretty good answers to problems and new creative ideas, while someone who has been doing the same things forever, they would just keep using the same repetitive approach. No compromise on the hiring bar: the reason why it always takes as longer to fill an open job is because, as Laszlo Bock said, “we have to kiss many frogs before finding our princess” which means that not only do they look for a very specific type of personality but also they keep this hiring bar very high to ensure low rate of people that will not actually work out. Google is also great for the strong sense of respect towards diversity. In the official website they claim to “hail from all walks of life, and speak dozens of languages, reflecting the global audience that we serve”. Therefore diversity is also a criteria to define the kind of “customers” that the People Operation deals with. Diversity of its workforce can be seen through the number of communities formed by Google employees, such as Black Googlers Network(BGN), woman@Google, Hispanic Googler Network(HGN) and many more. All the Googlers come from completely different backgrounds, countries, races, languages but they all share three main characteristics which are being fast moving, ambitious and visionary. Google workforce is also considered the youngest in the industry, since the average age is 27 years! As far as the job family is concerned, jobs are actually defined as “cool things to do that matters” which also reflects the fresh and innovative spirit of the company. Therefore Google hires people that will “build cool staff” (engineers and designers, people involved in product development,..), then those ones who will “sell cool stuff” (in charge of selling products, establishing relationships with customers,..) and finally the “do cool stuff people” (involved in line operations). 2.2 Value proposition Employees at Google are extremely involved in their work place and motivated through the unique environment that surrounds them. In fact they are the ultimate receivers of researches and analysis taken by the Human Resource department. ! !5 ! Taking care of its employees and hire people who are willing to learn is a goal of the HR department. This means enhancing people to be passionate and believe in what they are doing, making them feel their job valuable. Laura Rooklin of Work Estate and Workplace services stated on a BBC interview that they always try “to figure out any type of programs who make Googlers happier, healthier and more productive”. This is the true value proposition for Google Human Resource department. This value proposition is also very personal, because what motivates one employee is different to another. This value proposition is based on a deep concern of the needs of the employees, such as seeking for motivation, creativity, flexibility and coordination between team members and supervisors. The direct Google answer to these needs is to place its employees into a friendly, comfortable and playful environment through which they can get a continuous stream of motivation. The usual problems of young employees or householders are overcame by careful initiatives and benefits of HR Google department, such as bringing their relatives and pets at work, offering an excellent variety of free food, colorful and customized desk and even travel insurance, childcare and laundry facilities. The usual problems of young employees or householders are overcame by careful initiatives and benefits of HR Google department, such as bringing their relatives and pets at work, offering an excellent variety of free food, colorful and customized desk and even travel insurance, childcare and laundry facilities. Google, indeed, is trying to get the best perks for its employees, it extends its variety from the most common, such as healthcare insurance and retirement benefits, to the most atypical, such as free haircuts, swimming pools, ping pong, billiard, football, nap pods, massages, yoga sessions and high tech toilets. Inside Google Yet, what employees really expect and what eventually actually do while working at Google is to have very few limitation, large budgets, lots of small projects based on their own ideas and develop their projects as independent product line, doing things they love. People at Google are very talented and Google knows that they need to preserve their imagination productivity. Therefore, psychological surveys, interviews and brainstorms are used to keep a constantly updated psychological profile of the employees. Astro Teller, the director of Google’s top secretive research lab (Google X), unveiled the Google’s secret to boost motivation and its approach to failures. Essentially Google rewards people from failing rather than complaining for them. Indeed they believe the contrary would kill innovation and so people wouldn’t come up with great ideas and take risks because of fears. Astro Teller made it clear through an insightful metaphor, he said that “finding new transformational ideas is like sending out a team of scouts to explore uncharted terrain for new mountains to climb. If you shame them when they come back, if you tell them that they've failed you because they didn't !6 ! find a mountain, no matter how diligently they looked for or how cleverly they looked for it, those scouts will quit your company." To summarize all these concepts up, Google is trying to keep the best talents in the best work place. Larry Page once said “if you're changing the world, you're working on important things. You're excited to get up in the morning” , this is what People Operations is trying to manage from a physical, emotional, financial and social point of view: people with high potential for ground-breaking projects. 2.3 Customer channels Human Resource channels are used to make people integrated and engaged in the Google community. It concerns reaching employees and communicate with them and make them comfortable and communicative to each other. At Google, HR discusses to its employees extensively about business objectives, organizational results, and relevant current informations. Some of its employees are also shareholders so they are more interested on checking data, reports and all that concerns Google activities . From the very first new week employees get to know their manager, and this has been shown to be very productive. Laszlo Bock, who heads Google's People Operations Department said, “When an employee starts on their first day, we have data that says, if the manager shows up and says, 'Hi nice to meet you, you're on my team, we're gonna be working together,' and does a few other things, those people end up 15 percent more productive in nine months.” Moreover, Google holds regular formal meetings between employees and Eric Schmidt, the firm's chief executive, and Larry Page and Sergey Brin, its co-founders. During these meetings, employees are encouraged to present new ideas and projects. Google is doing all this in order to ward off conservatism and prevent middle-agedom, explained Mr Schmidt. They eventually make reviews and innovative analysis through them. Google tries to establish an informal, social and learning environment. It tries to maintain an open culture as the start-up’s. Every single employee has a concrete role and can contribute with his ideas during the weekly meeting as known as TGIF (which stands for “Thank God it ‘s Friday”). Besides that, they can ask directly to Larry Page and Sergey Brin or any other executive about any company matter. Google reaches its employees through a variety of channels. Laszlo Bock said “We try to have as many channels for expression as we can, recognizing that different people, and different ideas, will percolate up in different ways”. One of these channels is Google Moderator, a management tool designed by Google’s engineers. This is used during tech talks or company-wide meetings, it lets anyone ask a question and then people can vote up the ones they prefer and would like answered. Through it, people can discover existing ideas, requests and suggestions in a more organized and faster way. Another one is the Google Universal Ticketing Systems, or ‘GUTS’, which is a way to document issues about anything, and then make reviews for patterns or problems. Managers try to ! ! !7 ! solve problems through a whole day program involving all the Googlers called ‘FixIts’, which is focused on a particular problem. HR department constantly holds surveys to the employees about their managers. One of these surveys is the so-called ‘Googlegeist’, which aims to collect feedbacks of hundreds of problems and then to find volunteers to solve them. People at Google also communicate via web, through emails and social media, such as Google plus conversations, Linkedin and Glassdoor. Googlers also can compare and confront each other ideas and suggestions in the casual environment of cafes and play areas at Googleplex or from social groups which have been formed based on the google variety of its employees. Through them people can collect complaints and suggestions to be referred to their directors. 2.4 Customer relationships The relationship that Google has established with their employees is definitely one of the key of the company’s success. The main outcomes produced at Google are new creative ideas and brainstorming is basically what Googlers are in charge of. Clearly we are not talking about a standard manufacturing company, with a hierarchical structure. At Google there are not middle managers, everyone one has the chance to communicate, share ideas, discuss with everyone; the company presents a flat structure, focusing on multiple small workgroups that may have a project manager overseen by committees. The basic concept inspired by the founders is to maintain an entrepreneurial culture and just as Larry Page and Sergey Brin did back then, when they had this idea of “organizing the world information” and they eventually made it happen, all the teams at Google are also considered sort of start-ups, and everyone has the possibility to come up with new ideas or to give any kind of contribution. Therefore, how Google interacts with its employees is clearly based on trust. Instead of using incentives to maintain employees’ motivation, Google provides anything that can foster creativity and innovation. The wide range of benefits offered by Google is what any worker could ever wish for and the service department works hard to make sure that Googlers are always happy, healthy and productive, the three basic condition that Google thinks will let them accomplish their goal. Besides those extrinsic rewards, what really differentiates the culture at Google are more the intrinsic ones. Google let their employees being independent and entrepreneurial, giving them the right ! environment to maximize their creativity and bring the best out of them. They are allowed to work independently on their personal projects for 20% of their work time, and the rest is committed to teamwork; an innovative way of managing the personnel, that prevent Google to be identified a company neither based on an individualistic approach nor on a collective one. On the Google website there is an article written by Laszlo Bock, leader of Google’s People Operation, where he discusses about the three components that really make their company culture different from others, apart from the great perks received by the workers: MISSION, TRANSPARENCY and VOICE. By mission he means that the mission statement of the company is not just nice rhetoric but rather a “bottom-up encapsulation of what excites Googlers”, therefore new ideas and inputs that are meant to lead to a change, they all come right from Google’s employees, because they are given a right environments and tools to be able to “effectively contribute in ways a top-down manager couldn’t anticipate”. ! The second point was transparency: any information, new projects and ideas are all shared in the company. This is again related to the trust-based approach used by Google. Workers go weekly to !8 ! a all-hands meeting hosted by the two founders to have an overview of the company’s activities during the week, and be able to ask any kind of questions. Googlers are trusted to keep the information confidential. Last but not least characteristic is voice, which stands for the importance of workers opinions, ideas, level of satisfaction,… That is why Google provides specific channels for expression and conducts surveys in order to get feedbacks. The result of this collective approach where employees have access to so much information and have such a loud voice is a robust, data-driven discussion that brings the best ideas to light and even though there might be who dissent from some decisions taken, enough context is provided to make those understand and appreciate the rationale behind. ! 2.5 Revenue streams The returns on the activities provided by People Operation at Google are, in terms of organizational objectives, innovation, high product quality and high labor productivity. The fact that HR managers give employees flexible working hours opportunities, part time work options and the possibility of working at home through telecommunications, allows employees to maintain the best labour productivity pace. The most innovative investment that People Operation decided to make at Google is that of giving employees the possibility of taking 20 percent of working time, which is equal to one day a week, to develop their own creative ideas. The returns on this investment are the innovations generated during these hours. As a result of this employees have come up with application such as Google Talk and Gmail. ! Another important administrative objective, that they seek to obtain through their activities, is to reduce the bureaucracy level of the organization, this is achieved by the problem solving activity which focuses on cutting the number of layers inside the hierarchy of the company. ! From the point of view of people objectives, the returns are based mainly on employees satisfaction which is obtained by offering them a lot of benefits and most important, by giving them them a compensation that is made on personal achievements and growing. In this sense employees satisfaction is created not only by money rewards but also by career rewards. ! An objective that Google is still trying to seek to gain is low turnover rate. According to payscale.com, Google is one of top companies with the highest turnover rate. This is because it operates in an industry in which human talents “go like hot cakes”. ! Nowadays tech companies steal from each other human resources by offering them higher salaries than those offered by the firm they work for, so trying to keep employees inside their own companies is the most important issue for this firms. In this sense the hiring process at Google aims at recruiting people interested more on personal achievements rather than on money rewards, who are willing to work for them for the long term. ! 2.6 Key resources As already mentioned, the Human Resurces are called People Operations at Google. According the company structure based on teams, People Operation is also a team made up of HR professionals, former consultants and analysts who are all in charge to find and bring to Google the world’s most innovative people. Of course the key resources in this case are the members of People Operations themselves, who not only do they have to recruit and select the next Googlers, but also provide the ! !9 ! specific programs that will help them thrive. In order to manage the employees, People Operations team relays on its main partner which is the People service operation function. While during the recruitment process, they also have other kind of key resources which are specific tools used to find “the Googler”: those tools bring strictness as they are based on a data-driven approach, and Google believes that being rigorous in finding the right people and providing them the right solutions and environment to give their best, is definitely the way of success. 2.7 Key activities People Operation department is considered the most important strategic partner of Google. Its value proposition requires several innovative activities needed to deal with googlers. ! The hiring process focuses on looking for high talented people willing to work at Google in a long term perspective. To ensure that this activity is fair and aimed at finding true talents for the entire company, and not only for individual managerial short term needs, the hiring process is made through consensus. Applicants are subjected to more than one interview and the hiring decision is made after an independent committee collects feedback from the different interviewers and potential teammates and peers. Candidates are tested on the four basic characteristics that are essential for a google employee: leadership attitude, multi skills, smart thinking and googleyness which can be translated into passion, collaborative nature and team oriented personality. ! Another key activity is personnel administration. Google developed a new kind of people management called “People Analytics” which is closely based on data. This is intended to provide employees decisions based not on merely opinions and assumptions, but rather, on scientific data and metrics. To increase labour productivity, the PiLab, a special subgroup only present at Google, conducts experiments on effective approaches that improve employees performance like “the type of reward that makes googlers the happiest” and “the right proportion of calories that canteen meals should provide to employees to stay healthy”. People Analytics includes also a retention algorithm that calculates which employees are most likely to become a retention problem and an hiring algorithm which evaluates the candidates that have the highest probability to succeed during their job career at Google. People Operation department uses data to analyze performance reviews and feedback surveys filled by employees twice a year about their managers. In this way they find the right bundle of values and attitudes that employees ask to their managers in order to solve their problems and to motivate them. ! People Analytics is linked also to the training process. The managers that receive the best valuations are taken by the company as teachers and role models for the next year, while the worst ones receive an intense coaching support which helps 75 percent of them to get better within a quarter. At the starting of their career employees are asked to do a minimum of training and development session that offers them opportunities to learn and grow through classes of team workshops, delivering feedbacks, content development ecc. An important training course for Google employees is called “Search Inside Yourself”. Being part of an organization whose core purpose is innovation and that maintains an “healthy disregard for the impossible”, as co founder Larry Page said, means very grueling work paces that might cause employees stress, pressure and professional crisis due to possible failures. ! ! !1 0 ! This is basically what S.I.Y. course is trying to solve by providing employees with attention training, self knowledge and self mastery training and by teaching them how to keep mental stability. ! The problem solving activity is not less important than the other. The firm flat dimension allows employees to approach any manager at any level to discuss a problem. The company suggests employees to reach firstly an HR manager in order to find a possible solution, if not satisfied, they can continue the process with the successive levels up to the CEO. Specifically at Google, problem solving is made through what they call “computational thinking”. This process includes three steps: firstly the problem is decomposed in many smalls pieces, then they use pattern recognition in order to identify similarities and differences and finally, through an algorithm design, they create a step by step strategy in order to solve the problem. ! Last but not least the compensation organization activity focuses on rewarding employees for strong performances in proportion to their level of leadership and responsibility. Google employees are considered the most underpaid employees in the industry, this is because the company prompts employees to work for long term objectives rather than short term monetary returns. ! 2.8 Key partnerships One of the reasons of Google success is that it has a deep culture and HR objective is to collaborate with partners to preserve this particular aspect. Each year thousands and thousands of applications are delivered to the recruiting team and are processed by the company. Google manages the entire selection, recruiting and training of its employees. Hence there are no external partners who collaborate with Google’s Human Resources. This internal management of resources ensures a reduction of the risk of hiring an employee whose personality doesn’t agree with the company’s specific and particular culture and requirements. Nonetheless HR has some partners, but they are internal. In fact, the Human Resources collaborates closely with three Google departments: Finance, Administration and Real Estate & Workplace services. In particular the last one is to make the workplace enjoyable and engaging. For these reasons, it can be considered the main Human Resources partner. The department of Finance is essential for the planning of both HR and Real Estate & Workplace services activities and to cover the costs incurred. They are also responsible for the creation of the forward-thinking analysis necessary for the steadiness of the company’s culture and for HR operations. The Administration’s fundamental function is to help employees in the administrative and operational issues and other working process problems in order to smooth their ways allowing them to carry on their tasks without distractions. 2.9 Cost structure Google has a value oriented cost structure. Factors like a work-life program, a constructive attitudes of employees (“googleyness”) and a high level of work satisfaction ensure Google high returns. The Work-Life program consists of services in the proximity of the Googleplex. Services of the Day Care “Woods” are a great example of what Google can offer to its employees. !1 1 Examples of services offered by Google inside its complex are employee’s wellness facilities, such as gyms, swimming pools, volley ball courts and a medical care center. In this way Google tries to get flexibility in the working process. Indeed employees can align their personal needs to the company objectives. All these behavior costs are necessary to avoid work absenteeism and to increase the work life experience and job satisfaction in the long run. An example of fixed costs that Google has to bear are the higher than the average salaries offered to its employees as part of the benefit package given to its employees in return of high quality job performance. Moreover a huge amount of funds are needed to provide glooglers updated abilities and skills that are extremely important to sustain the changing and competitive environment of the tech industry in which it operates. For all these reasons, a big slice of the costs incurred by Google is due to training activities and to the improvement of the quality work life of its employees. Other costs are turnover costs, Google’s employees are very talented and often they are asked offers from other companies. All things considered, Human Resource costs structure is particularly relevant for the overall company management costs. But they are all costs spent well because people at Google are the key resources and without them there would have been no company. 3. Conclusions After a brief overview of the company, we have been talking about how Google creates and manages its workforce, focusing on the fundamental role of People Operation, where the path towards success starts from; indeed the company’s key resources are actually its people and it is the responsibility of the Human Resources to “find them, grow them and keep them”, as stated on Google website. Therefore it is clearly evident that the way people are managed is as innovative as the company is meant to be. Innovation has been in the organization’s DNA ever since the two funders started building this empire with a goal that has truly changed the way that users deal with the Internet. At Google the usual code is informal, at Google you can eat for free, bring your dog, hang out with your colleagues. At Google you are free to do whatever makes you feel comfortable and helps you to get inspired and come up with great ideas. Those are just few elements out of many that belong to the innovative strategy implemented by Google in order realize its mission and keep being successful. People Operation has applied an innovative approach just as much, already by using a different name to address its function. Its most noticeable innovation is the data-driven approach that has completely reinvented the human resources field. However, it is interesting to notice that in a way Google seems to have sort of switched the role of formality, especially with respect to typical forms of organizations based on hierarchical levels. While inside the company the atmosphere is completely informal under any aspect, the whole process of recruiting and hiring is really strict and meticulous, with specific procedures to follow; it usually takes ! !1 2 quite a longer time than it does in other companies, and only the 0.04% of the millions of applicants will eventually succeed. A Googler can check in at work later than he/she would be supposed to do, without having anyone say a word about it. Applicants instead have to go through this endless recruitment process, knowing that the hiring bar will not be compromised. This is actually the optimal strategy in order first to really screen out who will not work out and find out real talents that the company is constantly looking for. Secondly, once those brilliant minds have been found and have become part of the organization, Google offers anything to satisfy its employees, make them productive and ,above all, retain them. 4. 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