Cisco gets digital

Think computers are too impersonal? Stephen Finch and David
Morrison look at how total digitisation keeps Cisco’s people happy

 

We can’t live without our computers. But our systems seldom
give us the warm internal glow that many see as the hallmark of enlightened HR
management. Yet Cisco Systems, a corporation that admits to depending more on
its ever-growing workforce than anything else, has put all its HR operations
into an overall digital business model that is proving fundamental to its remarkable
success.

 

If "remarkable success" seems the usual bland term
for a business that is doing fairly well, how about increasing sales 15-fold in
six years to a record $18bn É and still rising? Perhaps more impressive, how
about hiring an average of a thousand new employees every month? If that rate
of recruitment makes you wonder how good Cisco is at keeping people, be
reassured: against an information technology industry average attrition rate of
16%, theirs stands steady at around 8%.

 

Much of Cisco’s success has been due to the early lead it
took in enabling the linking up of corporate computer networks, which has
culminated in the ever-widening use of the Internet throughout the business
world. To keep that lead has meant continuously recruiting the most talented
people to drive a constant flow of new products. That is no easy task in an
industry where unemployment is low, competition is fierce and you have a
publicly declared policy of employing the top 15% of the best talent.

 

Cisco’s success in meeting its target owes a lot to its
digitisation strategy. Eighty per cent of the firm’s incoming resum‚s are
managed electronically, and the "profiler" on its Web site pulls in
thousands of job-search hits every month; over 100,000 electronic profiles were
received last year. As a result, Cisco’s cost-per-hire is $6,000 compared with
an industry average of $10,000. Just as important, the cycle time for
recruiting candidates is minimised.

 

A key factor in this is the large number of employees who
volunteer to join the "MakeFriends@Cisco" programme. This links
potential employees with people working in the actual area of the business that
interests them. More than half of all new employees come in to Cisco through
this route. Moreover, current employees can earn a $1,000 bonus for each
successful referral they make – and that’s included in the low cost-per-hire
figure.

 

Training is another area where Cisco’s computers are better
at delivering an up-close and personal service. Cisco operates in a field where
technology is changing rapidly, talent is scarce and new product lead times are
constantly being shortened. So training and education has a vital role in
Cisco’s business strategy. But as good employees hate spending time away from
their work, they tend to give relatively low priority to scheduled classroom
sessions. This was one factor that started Cisco on shifting the focus of its
training activities on to the Internet.

 

Admittedly, production costs for good materials are high.
But if the quality and content are good enough to make people log on when they
want to learn something new, it pays off. To start this process, Cisco first
installed video servers in 25 of its global sites. Getting 10% of training
on-line was expected to give payback on that investment. What actually happened
surprised even the distance-learning enthusiasts. Within a year, 25% of Cisco’s
training had moved on-line and by December 2000 the figure was approaching 50%.
The goal is to get this up to 80%.

 

The flexibility of being able to dip in for a convenient
half-hour apparently results in a training experience that is actually more
effective than the usual, arbitrarily timed, two-hour classroom session.

 

Cisco estimates that it saves as much as $58m a year by
using digital technology directly on HR tasks like these. But equally
significant in human terms is the impact of the rest of the company’s overall
"digital business design". Every effort is made, for example, to
automate repetitive tasks, not just physical tasks, but those where brain power
is involved as well. The typical Cisco employee goes into the company’s
internal Web sites, on average, 30 times each day. Everything from purchasing
and invoicing to time and expense reporting is handled electronically.
Employees thus spend their time doing much more challenging work, which keeps
them at the cutting edge.

 

Cisco claims above-average levels of morale and job
satisfaction, and this pays off by making operations run more smoothly in
nearly every part of this massive business, dispelling the all-too-common
assumption that going digital makes work somehow less satisfying.

 

It might seem like going overboard on computer systems, but
it’s proving to be the lifeblood of Cisco’s success.

 

Stephen Finch and David Morrison are senior partners at
Mercer Management Consulting, based in London and Boston respectively. David
Morrison is also co-author of How Digital Is Your Business? (published by
Nicholas Brearley).

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