The People Pipeline

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Of all the interesting and valuable things Tony Hsieh says about managing people in his book “Delivering Happiness” for me, one concept stood out.

That was “The Pipeline”.

Hsieh makes the point that, unlike many companies, Zappos doesn’t believe that (individual) people are an asset. They think of a pipeline of people with varying levels of skill and experience as the asset.

Here’s why I really like this approach.

It Solves 3 Fundamental Problems

First, traditional thinking is that people are a company’s greatest asset. But if an employee leaves, the company has lost an asset.

The second problem (which we see all the time) occurs as a company grows, an employee who was considered valuable, or even outstanding, at an earlier stage of the company’s life begins to disappoint and become a liability. It’s usually a result of the employee not developing or upgrading his or her skills as the company grows.

The third problem occurs when the company deals with the other 2 problems by bringing in someone from outside the company.  The new person may bring the right skills and have great experience – but they don’t fit the company culture.

The “People Pipeline” Solution

  • Bring almost all new hires in via entry level positions. This offers two benefits.
    • If they aren’t a fit for any reason the company faces the least expense and disruption by making another quick change.
    • Entry level positions will likely attract people with limited experience. The new employees are more likely to be open minded about adopting the company’s processes – and culture.
  • Provide a comprehensive training program and mentors for the new hires. Then offer a series of courses, either internally or at local colleges, which cover the skills the employees will need in order to progress in the company.
  • Make the route upwards quite clear.
    • Set expectations around when employees can expect to achieve each level.
    • Make completion of certain courses a pre-requisite for promotion.
    • It helps if a company is growing at the rate Zappos did (and is doing) – that generates lots of new positions in the org. chart. However, positions further up the organization will become available as people move on (natural attrition). At this point a business owner could argue that all of the investment in that person has been lost. That’s possibly true – but every company loses some employees (e.g. they move to another city, make a change in career).
    • By investing in training and offering a career path a company may keep those who would have drifted away for much longer.
  • With the pipeline there is always someone ready to fill the shoes of the people who do leave, who have been training for the opportunity and who know the culture.

A Couple of Points to Consider

When Hsieh arrived at Zappos he was an experienced, successful business manager. And he brought one or two key management team members from his previous company – most notably his CFP – with him. So at least some members of the management team knew each other’s strengths and weaknesses and that they could work together.

On the other hand, one of the original Zappos team, Fred, joined as a buyer and rose to become a senior executive.

The pipeline can only be used when a company reaches an appropriate size. A start-up doesn’t have the resources.

If you enjoyed this post you’ll like 10 Strategy Tips from Tony Hsieh.

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Tags: asset, business owner, company, Culture, expectations, experience, investment, Jim Stewart, mangement team, mentors, opportunity, organization, processes, ProfitPATH, skill, strengths, the pipeline, Tony Hsieh, training program, weaknesses

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