McKinsey Quarterly

How Ericsson aligned its people with its transformation strategy: An interview with chief HR officer Bina Chaurasia

| Interview

It’s been more than a decade since Ericsson relied on its own mobile-phone production, and nearly four years since it sold its stake in the Sony–Ericsson joint venture. In 2010, Ericsson embarked on a journey to reframe its strategy and become a leader in telecom services, software, and hardware.

This strategic shift brought with it a talent challenge, as new markets and priorities required different capabilities. In this interview conducted by McKinsey’s Simon London, Bina Chaurasia, Ericsson’s chief human-resources officer, describes how the company has revamped HR in response—increasing its agility, coordination, global scale, and ability to leverage data analytics.

The Quarterly: What was the business context for the organizational changes human resources has been driving over the past few years?

Bina Chaurasia: When Hans Vestberg started as CEO six years ago, he decided to get out of the remaining consumer businesses and grow the software and services segments, which now make up about two thirds of our total operations. The idea was to leverage the core network-infrastructure business to develop new growth areas, including TV and media, cloud services, and support software—what you might call telecom IT solutions. At the time, it was very clear to Hans that you couldn’t accomplish this vision without transforming the skills and capabilities of our people across the organization.

The Quarterly: What were the company’s biggest organizational strengths and liabilities in pursuing this new strategy?

Bina Chaurasia: Our culture was our strongest asset. It’s a culture of collaboration and innovation; people are used to working with colleagues across the globe or taking assignments in other locations. Our employees are also very clear about our deeper purpose—we are ultimately creating technology for good. We go where no one’s gone before, and we build communications infrastructure that makes a difference in communities across the world.

At the same time, we were incredibly decentralized. We had 23 regional groups that are now consolidated into 10. Every region had their own way of doing things. We had no clear systems in place. From an HR perspective, we had scattered processes and tools.

We had to tackle the problem in three simultaneous waves. One, we needed a single people strategy that was fully aligned with the business strategy. Two, we needed an integrated IT platform for HR. You can’t run an efficient global company with disjointed IT tools. We’re now on an integrated platform that can be used by both managers and employees, where our data can be centrally gathered and analyzed. And, three, we had to globalize our HR processes, with the criteria that each one should be simple, user friendly, and business focused. For example, we created global learning programs that our employees can access virtually on our Ericsson Academy portal from anywhere in the world.

We also had a larger vision to build an HR team with the knowledge and skills to partner with our leaders on implementing strategic shifts in the business. So we had to clarify roles, promote from within, bring in some strong external talent, and provide everyone with thorough training that included business acumen, financial analysis, and data analytics.

The Quarterly: What kind of insights have you been able to glean from the data analytics?

Bina Chaurasia: It’s incredible. It’s a guiding indicator in a variety of areas for the business as a whole. We can pool and crunch data from all over, not just from recruiting or performance. For example, in 2014, we did an extensive data analysis across more than 52,000 job applications for over 2,000 open positions in the US. We saw that more female candidates were applying to jobs posted by female managers. So we started looking at what might be the cause. Is the wording in the female managers’ job descriptions different?

We decided to use an app to do a “gender bias wash” of job descriptions, removing male-focused references. Overall, we have now increased the percentage of external female applicants to one of our key global job portals from 16 percent to 21 percent in just the last 9 months. We have similar analytics insights into our learning programs, which enable us to develop and deliver those programs to our employees that best enable knowledge transfer on the job. It’s essentially provided us with an ROI that we had not previously seen.

These kinds of stats are great, but the key is to move beyond data reporting and basic analytics to true predictive analytics—make the data a parameter in decision making. And you can’t have that kind of analysis across the whole enterprise, if you don’t go through the initial pain of bringing everyone onboard with common platforms and processes. And, of course, we build flexibility into our processes as needed to ensure that we are fast and relevant across our business lines and regions.

The Quarterly: How did you go about tackling your new people strategy?

Bina Chaurasia: From a business perspective, it was important for us to identify the skill gaps that we would need to fill in order to succeed in our targeted growth areas. And a big part of that is building a competency model that we could use as a framework. So, we literally took every single function in the company and all of its roles, mapped out the stages of each job, and laid out the competence needed for each one. That took a couple years, as you might imagine, getting every functional area into the framework. At that time, many in the company thought it would be impossible. Today, every position in the company is mapped out.

At the same time, we had to ask ourselves, “How do we get an aggregated assessment of capabilities across the entire organization?” Our answer was to tie in the gap-identification process with our annual strategy review. Every business unit, every region develops their annual operating plan and their three-year plan. We then analyze the competencies needed to deliver those plans, and determine how we’ll fill the gaps. The aggregated information creates clear demand signals for our learning and recruiting teams. They know exactly what competence will be needed by which date, and in which country. And how you fill those competence gaps is equally important. You can’t just go and hire all of them. You have to have a clear idea of what talent to hire, what learning programs to develop, and at what scale. It has always been very important to us as a company to focus on developing our employees’ competence instead of just relying on hiring from the outside.

The Quarterly: How do you manage your talent pipeline?

Bina Chaurasia: Hans and I meet annually with every member of our global leadership team, and their HR partners, to review their talent and succession plans. The executive-leadership team then calibrates our top talent as a group and this talent-planning process culminates in my presentation to the board of directors. Over the years, our talent pools have been extremely healthy for any position. So when we look externally, it’s because we want to, not because we have to.

The Quarterly: Have you put any directional targets in place when it comes to geographic presence or diversity?

Bina Chaurasia: Along with many leading Silicon Valley tech companies, we publicized our diversity figures. We weren’t happy with the reality, so we put down a milestone—by 2020, at least 30 percent of our global employees will be women, up from 22 percent in 2014. It starts with the tone from the top. Hans has changed the makeup of his own leadership team. Before, there was one woman on the executive team; now there are four. If employees don’t see it from the leaders, then it won’t happen across the board. I’ve also been very clear in communicating our philosophy: Not only do you have to send the right signals from the top, but you have to make it organic so it’s not about a quota system; naturally embed it into your hiring and talent-review process. Finally, make it locally relevant.

The Quarterly: What role have social tools played in the transformation, internally or externally?

Bina Chaurasia: We’ve invested a lot in collaboration tools for our internal learning programs. It’s increasingly the way people want to learn, particularly millennials. We created Ericsson Play, a video learning model, where any employee can upload their own videos. Today, we have over 30 video channels with over 450,000 video views. We also launched Ericsson Academy Virtual Campus, which makes online training available to all our employees, and we’ve included mobile programs as well so people can learn on the go.

Externally, we’ve used social to build the company’s employer brand. When I joined the company, we asked an outside firm to evaluate our employer brand and in their words it was “an incredibly well-kept secret.” So we tried to change that, and our employees have been our best advocates on social media. We started winning in rankings for great places to work.

The Quarterly: Looking back, is there anything you would have done differently?

Bina Chaurasia: I would have focused more on change management. I would have prepared the organization more by saying up front, “This is going to be a year of transition.” I kept the unit heads apprised, and the next level down was also engaged, but I could’ve done better to ensure communication all the way down the line. Building enterprise-wide tools and processes, and an HR department engaging on a strategic level, was a big change. But if we hadn’t done that, we would not be able to transform Ericsson’s capabilities, or contribute fully to the people side of our business strategy.

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