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 / Second Quarter 1997 / Issue 7(originally published by Booz & Company)


The Triumph of People Power and the New Economy

Competitive realities are already inducing companies in some industries to move toward the New People Partnership. High-tech companies have shared an accelerated urgency to forge a new relationship with their employees. Phenomenal growth has accentuated the need to come to different terms with employees. These companies provide some leading-edge examples of where, ultimately, all must go.


The Intel Corporation was one of the first companies to move toward the concept of the New People Partnership, believing that maximizing job satisfaction and career opportunities for employees could bring higher productivity. The new concept is aptly explained by the chief executive, Andy Grove: "The only thing you can rely on is your ability to end up where the invisible hand of the economy wants you to be. Our phrase for it is, 'owning your own employability.' "

Intel realized it had to rethink the traditional relationship when the decision to exit the business for producing dynamic random access memory (DRAM) forced the company to cut its work force by 30 percent and shut down eight plants in 1985. Since that time, Intel has emphasized its "own your career" philosophy, believing that people development has to keep up with changes in business technology.

Innovative processes and programs have been designed to meet business requirements, support the new philosophy and establish a balanced relationship. First of all, the company committed to open communication. Employees receive an update on the state of the business every quarter. It commences with a video explanation of the most recent financial results, a fairly open and detailed discussion of the market and challenges looking forward and a summary of the marching orders for the next 180 days, presented in the context of changing skill requirements.

The chief executive is involved in the delivery of the corporate part of the message. It then cascades down into the organization, rather than getting distributed centrally. To reinforce the importance of the communication process, a survey is sent out every quarter asking each employee to evaluate the video, the corporate part of the presentation, the length of the presentation and the effectiveness of his own manager's presentation.

Intel also accelerated its investment in training, so that it now spends 6 percent of its annual payroll on programs that range from technology and management issues to corporate values and culture. A stunning 2,800 courses are provided, and senior managers get up before the blackboard and teach at least once every quarter.

The company, which added 9,500 people to its rolls in 1995, has an extremely active internal posting program to help employees evaluate career options. Almost all jobs are posted and accessed on computers. Employees can get their names in the hopper simply by sending an E-mail to the job owner. Guidelines have been established, and an employee is encouraged to tell his or her manager that he or she is applying for a particular job. The current manager can overrule a move because of critical skill requirements, but this doesn't happen very often. Managers don't want to see good people leave the company, so they support the program voluntarily.

At Intel, each employee receives a formal annual review. During this review, individuals are told three things:

1) how they rate against expectations of the job -- outstanding, successful or improvement required;

2) how they rank against others performing similar work -- top, middle or lower third;

3) how they are trending -- faster, equal to or slower than others. If there are sustained performance problems, a corrective action plan is developed with a timetable of three to six months. Feedback on a 360-degree basis is given to everyone, even the C.E.O.

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