A Case Study of Facebook’s Simply Amazing Talent Management Practices, Part 1 of 2

Sep 9, 2013

Screen Shot 2013-09-05 at 10.33.24 PMAlmost everyone is aware of Facebook. Usually that knowledge comes from either using its social media product or by reading about its CEO. However, the unique aspects of the firm that almost no one is aware of are its distinct and powerful talent management practices.

In most cases, it takes literally several decades to develop an exceptional company that has a unique set of talent management practices that produce phenomenal business results. But occasionally there are exceptions. Apple became exceptional again in little more than a decade after the return of Steve Jobs. Google developed exceptional people management practices and business results in much less than a decade. But Facebook has gone from a college dorm room idea to an undisputed social media dominance in literally less than a handful of years. I’ve previously done case studies on the amazing talent management practices of both Google and Apple ) and now it’s time to cover the amazing talent management practices at Facebook that result in breathtaking workforce productivity levels.

Here within 15 months of its IPO, the average employee produces over $1.3 million in revenue and $120,000 in profit each a year. The firm’s global product reaches over 1.2 billion users, its stock price has been on a tear, and it has successfully shifted from an exclusively PC web-based platform to one that instead relies on the rapid growth of the mobile platform. Glassdoor has rated the firm No. 1 for employee satisfaction and its employees rate its CEO No. 1 with an almost perfect 99 percent approval rating. If your firm would like to learn from what I can only call simply amazing and results generating talent practices, read on.

The Top 45 Most Unique and Exciting Talent Management Practices of Facebook

I’ve been visiting and studying Facebook since 2008 (I have no financial relationship with the company). During that time I’ve compiled a list of management and talent management practices* that it has implemented. Most are unique and many have clearly not been directly copied from talent competitors like Google, Twitter, and Apple. My primary contribution in this case study is to provide insight into the business reasoning behind each of its unique practices. The 45+ features are separated into 10 different categories. As you scan through these best practices, see if you don’t agree that they are unique in that they push the envelope.

Employees are a high value corporate asset

  1. A powerful business case — of all of the things to remember about Facebook, it is that someone in HR or lower management convinced executives to fund and implement each one of the “crazy” and unique things that you will read about in this case study. Remember that Facebook is no different than any other firm; crazy ideas go nowhere unless a compelling ROI business case is first made to executives.
  2. Quantifying the value of employees — nothing spurs executives to focus on talent management like quantifying in dollars the added economic value of having top-performing versus average ones. Facebook (along with Google and Apple) has taken the time to put a dollar value on its employee assets. For example, Facebook’s Director Of Corporate Development Vaughan Smith has estimated that when recruiting, “Engineers are worth half a million to one million” (each). When a single engineer is worth up to $1 million, you strongly invest in recruiting and in increasing their productivity, and you certainly don’t focus on the relatively miniscule cost per hire that it takes to recruit them.

WOW features that provide employees’ amazing choices

  1. Extended six-week boot camp onboarding with a choice — most corporate onboarding is a relatively simple and often boring one day “form filling out” exercise (Facebook instead provides the needed paperwork to the employee before they start). Its approach is unique because it is extended over an industry-leading six weeks. And during that time, rather than watching videos and hearing lectures, employees actually work on teams that spend their time working on multiple real projects. And to demonstrate its trust in new hires, during this time boot campers have full access to the complete computer code behind Facebook. Each employee is assigned a mentor. But the most powerful part of the onboarding is that at the end of the process, each employee is asked, “Which team and project within Facebook would you like to join?” This is powerful because when you apply for a job, you really have no way of knowing which team or project would be a best fit for you. I know of no other organization on the planet that gives new hires a team choice.
  2. Hackamonth self-directed internal movement — at most organizations, getting approval to move to a new job is a complex often political process where the employee has little control. However Facebook’s Hackamonth process is the opposite because it is a self-directed internal movement process. It allows employees who have worked on a project for a year to select their own next project team and after working with them for a month, if they like it, they can stay.

* Note: just like at any firm, benefits and features are continually changing; however, unless noted otherwise, those listed here were current at its headquarters as of August 2013.

It doesn’t just have free food, it offers amazing food

  1. Free ice cream and cookies is a life-changing experience — Google is justifiably famous for publicizing free gourmet food, but Facebook wins the award hands down for the most compelling food. With a relatively young and healthy employee population that doesn’t have to overly worry about its weight, what could be more compelling than a free ice cream store and bakery? A dozen varieties of ice cream, low-fat yogurt, milkshakes, sundaes, as well as cakes, pies, and the absolutely essential cookies, all unlimited and for free. After one visit and without hesitation, I classify this as the No. 1 most compelling “fun” company features on the planet.
  2. Free barbecue — even though the Silicon Valley isn’t in Texas, who doesn’t love barbecue? Facebook’s open-pit barbecue is particularly compelling because it is centrally located, and as a result, the smoke from the barbecue waffles throughout the campus making employees think of barbecue. You simply can’t miss it. Of course the barbecue is free but the best feature is that the BBQ shack is in the middle of an open courtyard, where employees can collaborate while in line and then sit in the California sun and eat on picnic tables and chairs.
  3. A global array of food keeps employees on campus — because its 3,000+ employee population includes a large number of younger people from all over the world, it makes sense that it offers food day and night that fits every “global fast food group.” The last time I was there I had sophisticated French food that was as good as I eat in Paris, and like the French it also bakes all of its own bread on site. But it also offers hamburgers, pizza, and tacos as well as an espresso bar and unlimited snacks throughout the day. Being in California, it of course also offers health food including a salad bar, a juice bar, and sushi, as well as vegetarian and vegan options. Employees clearly take advantage of the free food because its roughly 2,400 employees at headquarters eat an average of 7,200 meals a day. The Facebook Culinary Team accepts food requests from employees and it lets employees know what’s on the menu, using of course a Facebook page.
  4. Happy Hour every Friday — one of the features that seem to startle most corporate people outside of the Silicon Valley is the availability of alcohol at Silicon Valley firms. At Facebook it is available on Friday happy hours and during employee-generated special events. A reason for allowing it at firms is that management simply can’t be credible when it says that it “trusts its employees” if it doesn’t trust its employees to be reasonable in the use of alcohol.

Its management approach focuses on speed and risk-taking

  1. Speed is essential, so “move fast and break things.” — Facebook isn’t unique in that speed is critical to being first to market. At Facebook, management proactively encourages employees to move incredibly fast, even though it will obviously result in some failures. Many firms have slogans, but Facebook goes to the extreme of painting corporate culture slogans larger-than-life on walls throughout the facility, and one of Facebook’s most prominent slogans is “Move fast and break things.” The concept follows the CEO’s idea that “If you never break anything, you’re probably not moving fast enough.” At Facebook, “We’re less afraid of making mistakes than we are of losing opportunities.” Another slogan emphasizes the importance of getting things finished and implemented rather than waiting until they are perfect, and that slogan is … “Done is better than perfect.”
  2. “Be Bold” and take risks — most corporate cultures are risk adverse, and in many cases, to the point where everyone is afraid to fail even once. Facebook is the complete opposite; its culture encourages bold decision-making and risk-taking. Its approach is illustrated by these less-than-subtle slogans: “The riskiest thing is to take no risks,” and “We encourage everyone to make bold decisions, even if that means being wrong some of the time,” and “In a world that’s changing so quickly, you’re guaranteed to fail if you don’t take any risks.” In a world where going first and being innovative is of course full of huge risks, you have no choice but to find a way to convince your employees to avoid the more common and natural conservative approach.
  3. The strong culture enabled a 180-degree shift in direction — the real strength of any company culture is its ability to change and shift the focus of its employees when the market requires it. The Facebook product has always been a website-housed product that was accessed through a PC. However you have to credit the CEO and the company culture for quickly realizing that the smart phone would eventually become the dominant platform. And in a period of less than two years, the company made a successful shift so that its product is now primarily accessed through the mobile platform and the smart phone. To make the 180-degree shift even more impressive, the advertising revenue from the mobile platform is now becoming a larger part of Facebook’s profit. The culture has also survived the loss of significant revenue from the decreased popularity of Facebook-based games from Zynga.

A focus on excellence in recruiting

  1. It is ranked the No. 1 employer brand — Facebook excels at spreading its “best place to work” employer brand image. In 2013 Facebook was listed as the No. 1 employer brand by Glassdoor for having the most satisfied employees. It was No. 1 because its employees are “Challenged every day to do your best work” and “The company’s leadership truly believes in Facebook’s mission to make the world more open and connected.” My research reveals that “doing the best work of your life” and “changing the world” are the top two factors that attract and retain innovators and top performers at any organization. They received an amazing 4.7 rating out of 5, where the next closest employer is rated a 4.5 and talent competitor Google received a 4.3.
  2. Acqui-hiring is a unique corporate practice — I haven’t found a single firm that can match Facebook’s signature recruiting practice of acqui-hiring. Acqui-hiring is where you acquire (usually smaller firms) primarily for their talent, rather than for their products or customers. Until its recent Instagram purchase, almost all of Facebook’s acquisitions had as a primary goal to acquire technical talent. The added advantage of this practice is that you get a whole “intact team” that if integrated correctly, can be productive almost immediately. “Acquiring the firm” may be the only way to capture “startup/hacker mentality” talent that wouldn’t on their own ever consider applying for a job at a large corporation, even one as exciting as Facebook.
  3. Obviously it can’t require a college degree — because its obviously successful CEO is a college dropout, it would be glaringly inconsistent and perhaps a little embarrassing to require a new hire to have a college degree. As one of the recruiters put it, “It would be weird for us to require a college degree.” So instead, its recruiting focus is “If you can build awesome stuff and have big impact, that’s all we’re really looking for.” Not requiring a completed degree gives it a chance to land top talent long before other firms, which must wait until after they graduate.
  4. Contest-based recruiting reveals what a prospect can build — Facebook, like many other Silicon Valley firms, relies heavily on Internet-based technical contests to find hidden or “non-obvious” talent from around the world. These relatively inexpensive contests have simple names like “The Facebook Hacker Cup” but they allow the firm to find people based on the problems they can solve, and what you can build is a major corporate focus. Because contestants are initially anonymous, the winners who are targeted for recruiting are selected because of their work and not as a result of their degrees, experience, gender, or where they reside. Facebook also recruits at algorithm coding contests sponsored by others including TopCoder and Kaggle.
  5. Hackathon college recruiting — each year Facebook visits more than a dozen college campuses and while there, challenges self-selected teams to come up with solutions to real technical problems. The finalists are brought to the Facebook headquarters for “Camp Hackathon,” where their solutions are judged and the winners get a small prize and an offer of a summer internship. The students get to keep their ideas in case they want to develop their own startup around it.
  6. Its CEO as its chief recruiter — most organizations dream of having its CEO occasionally involved in recruiting but Mark Zuckerberg takes it to the next level. He assumes the role of chief recruiter by periodically speaking publicly about the firm and by visiting college campuses in order to directly attract potential recruits from among faculty and students.
  7. Employee referral “Ninja Hunts” — Facebook, like most other Silicon Valley firms, relies heavily on employee referrals to identify top recruits. One of its creative approaches for generating names are called “Ninja Hunts,” where recruiters typically ask a gathered group of employees to think about all their friends to see if some of them would be great engineers for Facebook (where Ninja is their name for an exceptional engineer).
  8. Overall recruiting and retention success — overall, Facebook seems to excel at recruiting as a result of a combination of its powerful product and employer brands. In fact, Mark Zuckerberg recently stated that “We’re doing really well against the hiring goals that we have.” My sources also tell me that Facebook has been able to largely protect its staff from raiding, resulting in a single-digit turnover rate.

Economic rewards and employee benefits

  1. Facebook offers unlimited sick days — most firms would never even consider offering unlimited sick days, but if your work is truly exciting, your teammates count on you, and you are rewarded for performance, there are few who want to miss much work for frivolous reasons. There are also few better ways to demonstrate your trust in your employees than to offer them unlimited sick days. Facebook also offers 21 days of paid time off each year (essentially a month off) for even new employees.
  2. Amazing benefits for new parents — Facebook, like most tech firms, struggles to hire and keep women engineers. So it offers close-in reserved parking spaces for those who are pregnant. It also offers “four months paid parental leave for both spouses, reimbursement for some daycare and adoption fees, and $4,000 “baby cash” for a new arrival.
  3. Rewards are based on performance — the goal is for employee rewards to be differentiated based on performance results and from data from its comprehensive coworker feedback process. One internal source estimates that the reward differential between a bottom and top performer at the same level can be up to 300 percent. Nothing sends a clearer message to employees that performance matters (over status and tenure) than a large percentage differential between top and average performer rewards.
  4. An opportunity for wealth — although the firm appears to offer competitive salaries, the prime economic incentive are Restricted Stock Units, which keep employees focused on producing business results. And that business results focus also encourages cooperation and sharing with among employees. Everyone seems to agree that employees get generous RSUs as part of their regular pay package and as bonuses. Obviously many employees got rich as a result of the IPO; however, the opportunity for wealth still exists because the stock now exceeds the IPO level and its value has been growing at a rapid rate.
  5. It encouraged workers to drop by at any time — one of the most compelling work-increasing “benefits” that I have ever come across occurred at Facebook in its early years (2008 – 2009). Facebook paid its employees $600 each month extra for living within a mile of Facebook headquarters. The goal was to subtly encourage employees to live close by so that it was easy for them to casually drop in for free food but also for extra work and collaboration. The unintended impact on dramatically raising rents around its Palo Alto headquarters was one reason for eliminating this practice in 2009.
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