11. Talent
Arthur Andersen was, or tried to be, the best in the world to work for (the best place to work) when no other company was thinking that way. However, it was that only for the best people (the best people in the best job).
The bid for Talent, so much talked about in companies, was real at Andersen. The best people was found after a strict selection process, they were thoroughly trained, they were given respect, responsibility and trust from their first day, they were generously paid and evaluated with rigor periodically. The best ones wished to become partners. Those who did not reach the required level were invited to leave the Firm, helping them to find a new job with the best reference: to have worked with the best and learned and absorbed a culture of effort and quality in service.
Anybody working at Arthur Andersen would know that he was in a very competitive environment between the professional elite, that he had the opportunity to show his professional quality and was evaluated on that basis. Respect for meritocracy was practically total.
Though on one side that caused tension, on the other side it reaffirmed the pride in belonging and the superbly high rate of efficiency. Every “Arthur” knew he belonged to the best, was surrounded by the best and that they were able to face any challenge and do the best work a customer could expect from a professional services firm. This conviction helped drive the Firm forward.
Very soon, from the beginning of his activities, Arthur Andersen was convinced that the Firm he fathered would have success as long as he could hire young professionals with development capacity. In his academic role, as Professor and Director of the Department of Accounting in Northwestern University, he personally took care of the first recruitment processes between the best students in his classes.
The definite Firm’s bid, all along its later development, for the quality and competence of its professionals is one of its most easily recognizable hallmarks. That bid can be clearly identified by three differentiating elements:
The strict application of these criteria can also be considered determinant in the process of creation of a powerful Firm in Spain. Besides the fact that during the 60s and 70s, neither Arthur Andersen nor the auditing profession had much reputation within the student population, the Arthur Andersen’s bid to hire the graduates with the best qualifications in the most prestigious universities consisted of offering, more than an attractive salary, the opportunity to learn the internal functional mechanisms of companies and the development of a prestigious professional career, leading up to the opportunity of becoming a partner.
These “baits” succeeded in attracting an excellent group of young professionals that, on their turn, saw how the Firm backed its bet for professional development of the natives. The candidates could also perceive the professional opportunities opening with the huge needs of professional management in the Spanish companies, living then fully the open democratic transformation of Spain.
On the other hand, the view of the professional auditor as somebody with a wider vision that the application of accounting principles, somebody who should have solid knowledge about the economic, financial and organizational fundamentals governing the business world represented an additional incentive, attractive to the best professionals.
On top of that, the Firm became soon in Spain an excellent school of practice for executives that, either continued their professional development in the Firm to the partner level, or found many employment opportunities in an economy that demanded more and more professionals, well trained in modern management techniques. This phenomenon, produced very naturally, had also a double positive reinforcement, since:
We all take today for granted that business organizations must bet on what is known as “talent management”. Mentioning this concept as a principle is almost a must in all corporate declarations on vision and values. It is however more difficult to find practical, operating, daily examples of this principle’s adoption.
In Arthur Andersen’s case, the idea that managing the quality of the workforce had to be done through its recruitment, training and professional development materialized in a very wide ensemble of practices, policies and procedures that affected all professionals from their first working day (even before) and all along their career. This included, but was not limited to, examples such as:
To sum up, we could say that talent management (recruitment, training and professional development) was inoculated intensively throughout the organization and was an integral part of daily work.
Is this particular and intensive way of understanding talent management causing any harmful effects? It seems clear that the benefits obtained exceed their eventual contraindications, but nevertheless if they exist it is convenient to take them into account.
On the one side, such a demanding selection and continuous evaluation mechanism impacts the professionals, either those not accepted on selection, or those accepted but invited later to leave the Firm because of the tough evaluation process. Furthermore, in spite of the systematic and professional standards applied to these processes, there can be mistakes in their application. Hence a possible negative effect in leaving the “wounded on the way”, which generates groups who reject the brand.
The “up or out” philosophy is not without a certain aggressive component in its implementation; true, the termination processes used to be given time and organized support to facilitate an adequate employment of the affected professional, but also true was that the situations could contain humiliating elements with an obvious negative load, such as those called “PT” or “pending termination” , implying the person was on his way out of the Firm, or the dis-assignments in “planning” that left the professional without any client assignment and without any specific work to do, seated in the office staff room (space for common use of personnel without an assigned space).
True, however, that “up or out” was not a capricious practice. The career and the system required it. The career was designed so that every level (assistant, senior, manager, partner...) was reached with a certain age. Seniors over 30 years old, or managers over 40, had no sense or place in the organization. On the other hand, the career of assistant, senior or manager was designed to last about 2-3, 2-3 and 5-8 years, respectively; he who would not pass to the upper level over that time was displaced by the system itself.
In the end, the bid for meritocracy as fundamental element of professional development can also in its practical application present drawbacks, that generally can be associated with a somewhat imperfect execution and with the collateral damages that could be produced to those professionals who did not see their own expectations properly fulfilled. Nevertheless, at least in the experience of the co-authors of this book, that did not imply a rarefied atmospheres or an unhealthy competitive spirit that could degrade or harm an environment of cooperation and comradeship.
In conclusion, to bet for the best people and treat them with respect, to give them real development opportunities and to pay them well are indispensable requirements to achieve solid and consistent success in a company.
The evaluation system
The Talent column in particular and the whole building rest on the evaluation system. This system has to be perfectly in line with the principles because that’s what makes them credible.
Principles are valid only in so far as they are applied, and the only time when each professional sees if they are truly applied is when he is evaluated and finds out that the basis of the evaluation process are the same ones of the value structure he has been sold. Were it not so, the whole building would come down.
Evaluation closed the circle. Well done, it reinforced the model; badly done, it shattered it. Guidelines, advise on how to carry out the evaluation and what to consider in each case were important, but the most important were the persons, those making the evaluation. They had to have the same values and to give them due importance. It was not, it is not, easy; but making it possible is what it is all about.
Those who carried out the evaluation process (partners, managers, seniors...) were to be unbiased and know how to transmit, mainly setting a good example, the Firm’s “message” and especially the seven columns.
The problem starts to get serious when one of the persons (or all of them) in the management summit lack the moral fiber needed. When, so to speak, they laugh at the Firm’s principles.
Light and shades of internal coaching
Andersen used to follow a practice that we consider very advisable for every company: professionals, from their first years, were assigned to a tutor or coach. Usually he was a manager in the group they were assigned to. And the managers were assigned to a partner.
The guidance and support that the professionals received from their tutors was hugely valuable and capitally important to retain the best professionals and keep them motivated in their career to the partnership.
Even a young partner had his own mentor. Normally he would be the partner in charge of the group he belonged to. The help from the more senior partners was a decisive support for their career and allowed them to climb the steps to higher positions in the Firm’s organization chart.
Reaching that positions meant to win additional units (indicator of worldwide profit quota for each partner), and therefore a higher remuneration, a higher recognition (ego) and more power inside the Firm.
The dark side of coaching was that sometimes showed a tendency to turn into a power game in which the more powerful partners defended their pieces like in a chess game, causing confusion, dependency and blind loyalties, which are never healthy.
In due time, the Firm tried to correct these problems by setting up the tutor figure out of the hierarchical line, but it never worked fully.