Category: Archive

Talk to employees. Treat laid-off ones well. Keep investing in training. Try to redeploy your talent. Have top executives share in the sacrifice.

    These are among the key steps companies ought to take when reorganizing their firms, says University of Colorado business professor Wayne Cascio. Companies that do these things typically end up with better long-term financial results as well as a better reputation, says Cascio, who studied corporate overhauls for the U.S. Labor Department and wrote a book titled Responsible Restructuring: Creative and Profitable Alternatives to Layoffs.

    By failing to take employee views into account “you can move a lot faster, but you may lose a lot of creativity in the process,” Cascio says.

    Cascio is part of a broader debate about how companies ought to handle workforce matters when they come to a crossroads, such as financial trouble or heightened competition. Such turning points are becoming commonplace as the pace of business picks up and many firms face volatile swings in their fortunes.

    Among the companies going through a restructuring is computer chip giant Intel. In response to falling revenue and market share, Intel over the past 20 months has revamped operations and shrunk itself. It announced 10,500 job cuts from the 102,500 employees it had in mid-2006. And thanks to attrition and other activities, including the sale of business units, the company expected its headcount to get down to 86,000 by the end of 2007.

    Despite decades of calls for leaders to act “strategically” with respect to the workforce, most companies still lack consistent and logical methods for making the best choices, says John Boudreau, management professor at the University of Southern California.

    In the absence of a “decision science” for optimizing the workforce during a restructuring, technology industry companies ought to be careful not to ignore the long-term effects of job cuts or training reforms, Boudreau says.
“In times of crisis, people tend to revert to their fundamental operating models,” he says. Tech firm leaders in a crunch may “tend to make decisions about their ‘people’ issues through a technology and money lens, but those frameworks can often miss vital considerations.”

    One aspect of Intel’s restructuring that has come under scrutiny is the way it cut 1,000 managers by late July 2006. Intel had too many managers and some of them were blocking ambitious lower-level employees, says a former Intel manager who lost his job in the management cutback. But Intel ended up ousting many managers who were skilled at people development, says the former manager, who spoke on condition of anonymity out of concern that his current tech-industry firm could be harmed by his comments about Intel. One of the criteria used in deciding who to cut, the former manager says, was how well managers had prepared their direct reports to move up in the firm.

    Intel declined to comment on his claim. But an internal Intel document shared with Workforce Management indicates the company realized it was losing quality employees in the 1,000-manager cut. It also indicates Intel did not try to move any of those laid-off managers to non-management roles.

    The memo, intended to help managers speak with their teams about the layoff, includes a series of questions and answers, such as this one: “It seems as if we promote our best ICs [individual contributors] to management positions, and now we’re letting 1,000 of those people go. Why not move them back to being great ICs? Aren’t we losing some of our best talent by doing this?”

    The memo’s response is this: “We know we are losing good people in this move. But we have too many managers, and this manager reduction is necessary to improve our decision-making and communication and to resize the company. In addition, since we need to become a leaner company and are limiting job openings, redeploying their skills, as individual contributors or as managers, is not a reasonable option.”

    Intel declined to comment on the memo.

    Some authors have argued against mass layoffs as a strategy. Louis Uchitelle’s 2006 book The Disposable American makes the case that layoffs often backfire for individual companies and erode the quality and even the mental health of the American workforce. Writing in 2006, MarketWatch columnist Herb Greenberg was skeptical about Intel’s big job cuts. “Maybe, just maybe, large layoffs are a sign of failure, not success,” Greenberg wrote. “… These layoffs signal the end of Intel’s great run. Its monopoly grip is loosening, and its leaders and circumstances behind its early growth are gone.”

    On the other hand, David Wu, equity analyst for investment firm Global Crown Capital, says Intel’s job- and cost-cutting was needed to help prepare it to serve low-income markets such as India. Those rapidly-growing markets are a key to Intel, which launched a “Discover the PC” initiative in 2006 to help make computer technology affordable to “first-time computer users in emerging markets.”

    “I don’t know if they cut the right people,” Wu says, “But the slim-down was overdue.”

    In its restructuring, Intel has taken some steps that are considered smart. Employees who lost jobs in the overhaul say Intel provided generous severance packages, which sends a positive message back to remaining workers. The company also has ramped up spending on training even as it cut overall HR costs by nearly 40 percent.

    But there are other areas where Intel may have run counter to the best restructuring practices. Among the charges from ex-employees critical of the firm is that Intel did not do enough to ask employees about their interests during the overhaul. Intel executives counter that managers routinely check in with subordinates about career goals, and employees had to be reassigned based on the company’s new strategy.

    Total compensation for the five highest-paid Intel executives fell from $43.7 million in 2005 to $34.4 million in 2006, and Intel chief executive Paul Otellini saw his total pay drop from $12.2 million to $9.8 million. To rank-and-file employees, though, giving up a couple of million dollars of a multimillion-dollar package may not seem like much of a sacrifice. Ken Iverson, former CEO of Nucor Steel, took a 60 percent pay cut during a reorganization, Cascio says: “He was saying, ‘We’re all in this together.’ ”

    In the 1990s, Cascio considered Intel among the top corporations when it came to restructuring. He was impressed by Intel’s redeployment program, which gives employees affected by downsizing a chance to find new work at the company. Intel still in many cases offers its redeployment program, in which employees have eight weeks at full pay and benefits to seek a job at Intel or elsewhere.

    Cascio, though, no longer puts Intel in the top strata of restructurers, saying the company over the years has done less to find ways to preserve and redeploy its talent. “The firm has resorted to widespread layoffs,” Cascio says. “Intel seems to have changed its philosophy over the past decade or so.”

    Intel spokeswoman Gail Dundas says the firm doesn’t always have openings for workers in the redeployment program. But, she says, the program amounts to a better deal than what many other companies offer. “It continues,” Dundas says. “The spirit is still there.”

One of the questions swirling around semiconductor giant Intel is whether its legendary culture is alive and kicking.

    That culture, associated most famously with former CEO Andy Grove, is centered on principles including risk-taking, fairness and “constructive confrontation”—the ability of any employee to challenge any other regardless of rank.

    Intel’s track record of success over roughly 40 years has been attributed in part to its system of beliefs. Company officials say the Intel way continues to thrive—and point to a financial rebound in 2007 as well as product innovation. But early last year, Intel came under fire in a book that claims the company’s culture has deteriorated.

    That point is echoed by some ex-employees who were laid off or left Intel during its major corporate overhaul of the past 20 months. In addition, some results of an internal employee survey indicate worker dissatisfaction and suggest a less-than-lively climate of innovation.

    February 2007 marked the publication of Losing Faith: How the Grove Survivors Led the Decline of Intel’s Corporate Culture. Ostensibly written by a pair of ex-Intel employees using pseudonyms, the book made the claim that not all people are treated equally at Intel. It also told of a “mammoth bureaucracy” at the company, “whose elite members are entitled to repeated failures without consequences and decision authority without accountability.”

    Asked to comment on Losing Faith, Intel spokeswoman Gail Dundas said she would let Intel’s results speak for themselves. Revenue for the third quarter of 2007 grew 15 percent year-over-year to a record $10.1 billion, while net income was up 43 percent to $1.9 billion. Last year, Time named Intel’s 45-nanometer Core processor one of the best inventions of the year.

    “We’re continuing to innovate,” Dundas says. “Our results are good.”

    Still, a number of former Intel employees who left or were laid off during the company’s restructuring perceive a corporate culture in decline.

    Marleen Lundy, who lost her job managing leadership development programs after spending seven years at Intel, says “constructive confrontation” has gone by the wayside at the company. “It’s lost the freedom to speak your mind and actually take risks,” she says. Last year, Lundy co-founded a consulting firm, Magna Leadership Solutions, along with two other ex-Intel employees.

    Intel’s Dundas responds that “risk-taking is alive and well at Intel.” As evidence, Dundas points to the $5.7 billion Intel expected to spend on research and development in 2007, and to 16 new products unveiled January 7 at the Consumer Electronics Show in Las Vegas. Speaking at the event, chief executive Paul Otellini outlined a major push by Intel into the realm of consumer electronics.

    But Intel has stumbled in that arena in the past. Its failed forays into digital televisions and audio players get at another major complaint from ex-Intel employees, some of whom say the company has not held senior-level executives accountable for mistakes over the past several years.

    A former training specialist says Intel’s top management not only gave up ground to rival Advanced Micro Devices in processor chips, but did not succeed in diversifying the company’s products. He points out that a much-touted digital TV effort petered out, and says the company missed opportunities to get its semiconductors into cell phone cameras and to promote a well-regarded digital music player, the Intel Pocket Concert Audio Player.

    “The people who got us into the mess are just shuffled around,” the specialist says. “People several layers below are paying for it.”

    In recent years, Intel’s upper-management echelon, its corporate officers, has experienced significant upheaval. Of 34 people listed as corporate officers in the company’s 2002 annual report, just 17 remained in that category in the 2006 annual report. Those 17 made up only 59 percent of the firm’s 29 corporate officers as of February 26, 2007. Extensive turnover among corporate officers can indicate a company has quietly moved out poorly performing senior leaders.

    Dundas declined to comment on changes in the executive ranks. She concedes the company has made mistakes. But she argues that’s a part of risk-taking. “We’ve tried to learn from those and move forward,” Dundas says.

    Still, some results of Intel’s “Organizational Health” employee survey done in August point to an ailing culture. The results indicated that just 55 percent of Intel employees are satisfied with their career development opportunities at the firm, and that 44 percent of employees would leave the company for a job elsewhere with similar pay and benefits.

    Asked to respond to the statement “At Intel, informed risk-taking is valued regardless of the outcome,” only 50 percent agreed. And asked to respond to the statement “I believe that action will be taken based on the results of this survey,” just 48 percent agreed.

    Intel declined to comment on specific employee survey questions. But it says the overall results of the survey were flat compared with 2005 and an improvement from 2000.

    The company also points to recent honors that reflect well on its culture. Intel ranked fifth on the 2007 list of the 100 Best Corporate Citizens published by Corporate Responsibility Officer magazine. In that report, Intel got the highest score of all 100 companies in the category of employee relations.

    Keeping the Intel culture alive has become more difficult as the firm has grown in size and spread across the globe, says Robert Burgelman, a Stanford University business professor who teaches several courses a year on strategic thinking to Intel senior managers. Burgelman says his work with Intel executives convinces him that the company continues to preserve free-flowing debate, regardless of rank, and to practice another key Grove concept: Employees commit to the chosen strategy even if they disagree.

    Part of what convinces Burgelman that Intel is on the right track is that top officials are keenly aware that they have to keep working on the company culture. “It’s my sincere feeling that it’s still there,” he says.

Kevin Gazzara and Ali Lakhani didn’t plan on leaving Intel to start a leadership consulting business. They say Intel all but pushed them into it.

    Gazzara spent 18 years at the computer chip maker, much of that time as a leadership development specialist. Up until December of 2006, he ran training programs for first-line and midlevel managers at Intel. Gazzara also has taught at the University of Phoenix for more than a decade.

    Lakhani worked at Intel for 17 years. Although originally a semiconductor engineer, he took an interest in leadership development and earned a doctorate of management in organizational leadership from the University of Phoenix in 2005. Gazzara was his mentor.

    In late 2005, the pair began pitching a new leadership assessment tool within Intel. Dubbed the Cross-Cultural Leadership Inventory, it was designed to link leadership behaviors and characteristics to organizational performance and business results across 70 nations.

    The inventory was based on Lakhani’s research and involved examining the leadership performance and business results of about 200 Intel managers. Gazzara says the Cross-Cultural Leadership Inventory was unique in providing a tailored, measurable view of how well a particular executive would perform in different parts of the world.

    As Gazzara and Lakhani tell it, they found numerous Intel business unit leaders interested in the tool, but got stuck at the door of Richard Taylor, Intel vice president and co-leader of the firm’s HR department. Taylor heard them out last year but declined to move forward with a proposed pilot of the tool, Gazzara and Lakhani say.

    According to Gazzara and Lakhani, Taylor considered the inventory a typical 360-degree assessment, which is a diagnostic tool that takes in feedback from a variety of co-workers. But, they say, Taylor’s view missed the crucial way their tool measured cross-cultural leadership and predicted business results, grounded in Intel data.

    Taylor declined to go into detail about the decision regarding the inventory. But he defended Intel’s choice in a statement:

    “There are many systems for assessing and developing leadership, all of which have pros and cons and none of which are totally perfect,” he said. “We are satisfied with the approach we are taking and will let the results of the company and its people speak for themselves.”

    Having suffered a 9 percent revenue loss in 2006, Intel rebounded financially last year. Its third-quarter revenue rose 15 percent to a record $10.1 billion, and net income for the quarter jumped 43 percent to $1.9 billion. Intel also has introduced a variety of new products in the past 12 months or so, including a processor named by Time as one of the best inventions of last year. What’s more, the company has received high marks for its leadership development practices, and its corporate culture is famous for encouraging employees to pipe up with good ideas and challenge executives.

    But Intel’s approach to leadership training has come under fire amid a major corporate restructuring over the past 20 months. And some ex-Intel employees claim the culture has atrophied.

    For Lakhani, Taylor’s reaction was in stark contrast to the informed risk-taking he was used to seeing in Intel’s design engineering. There was an “aversion to trying new things” in the realm of people development, he says.

    For Gazzara, the decision added to the frustration of getting transferred to a job he didn’t like and not having a say in the move. In the course of the company’s overhaul, Gazzara found himself designing one-off training courses even though his passion lay in broader leadership development and employee engagement programs.

    He and Lakhani survived job cuts during the restructuring, which involved chopping some 10,500 positions from a workforce of 102,500. But they both resigned after the meeting with Taylor. Lakhani left the company in May; Gazzara’s last day was in June 2007. That same month, they started a consulting firm to pursue their vision of smarter leadership assessment and development. Along with another ex-Intel employee, Marleen Lundy, they formed Magna Leadership Solutions.

    The three say they’ve built a new diagnostic tool that connects cross-cultural leadership behaviors with business outcomes. Dubbed CALIBER (for Culturally Adapted Leadership for Inspired Business, Excellence and Results), it is based on additional research Lakhani did with non-Intel subjects.

    So far, Magna has snagged business from clients including Cisco Systems and Avis. Gazzara and Lakhani plan to release a book this month that highlights leadership principles using a Wizard of Oz analogy.

    Despite their frustrations with Intel, Magna’s founders say they hope for the best for the company. Gazzara, Lakhani and Lundy may have traded the blue Intel logo for a black Magna one, but they say they still have a little “Intel inside” them. “We will always have Intel-blue blood running through our veins,” Gazzara says.

Intel portrays its dramatic restructuring over the past 20 months or so—which includes some 10,500 job cuts—as a corporate upgrade. Done in the face of falling revenue and market share, the reorganization has made the computer chip giant leaner and more competitive, Intel says. Better financial performance and new, groundbreaking technology are apparent proof of the restructuring’s success.

    But behind this rosy picture are signs the overhaul included glitches that may cause Intel problems down the line.

    What’s at stake is the potential loss of an Intel that has long been known as a place that prizes fresh ideas, frank talk and employee engagement. It is a company that for years could be found among Fortune‘s best places to work. But now a number of former Intel employees say the firm botched the restructuring

    in ways that have harmed morale, employee development and long-term leadership quality. In addition, some results of an internal employee survey point to worker dissatisfaction and suggest a less-than-thriving culture of innovation.

    Intel’s restructuring raises questions about how organizations should go about handling people issues when faced with financial trouble. The company also may offer a cautionary tale about the business world’s push to rely more heavily on quantitative workforce data and to categorize employees according to highly defined skills or competencies.

    Wayne Cascio, a University of Colorado business professor who has researched corporate reorganizations, touted Intel as among the best companies for responsible, effective restructuring in the mid-1990s. He no longer considers the chip maker in that upper echelon of firms, saying Intel has resorted to widespread layoffs. Despite Intel’s financial progress of late, it may not be clear for years whether the company’s recent restructuring was sound, he says.

    “A lot of times there are delayed effects,” he says. “Your financial numbers can look good in the short run. But you also have to worry about things like institutional memory and the ability to innovate over the long term.”

    Effective managers and top training specialists left the company amid the overhaul, a number of former Intel employees say. In interviews with a half-dozen former Intel employees, other criticisms surfaced—including charges that Intel disregarded employees’ passions in reorganizing, squandered the talents of HR specialists and unwisely shifted leadership training efforts from lower-level managers to upper-level executives.

    Critics say problems in Intel’s reorganization are part of a broader erosion of its culture.

Intel’s corporate overhaul may have badly damaged employee development, morale and the company’s culture of innovation— offering a cautionary tale of how employers should handle workforce issues amid a major transformation.

    “Several levels of management have stopped listening to the people who are doing the work,” says Kevin Gazzara, a former program manager in Intel’s learning and development group who says he quit the firm in sadness and frustration last year. He had been at the chip maker 18 years. “Intel could have done it so much better.”

    Workforce Management obtained some of the results of Intel’s August Organizational Health Survey, which indicated that just 55 percent of Intel employees are satisfied with their career development opportunities at the firm, and that 44 percent of employees would leave the company for a job elsewhere with similar pay and benefits. Asked to respond to the statement “At Intel, informed risk-taking is valued regardless of the outcome,” only 50 percent agreed.

    Intel, which at times has touted its leadership in the area of workforce management, declined to comment on specific employee survey questions. But it says overall results of the survey were flat compared with 2005, and an improvement from 2000.

    Patricia Murray, Intel senior vice president and co-leader of the firm’s human resources department, says Intel is aware that its esprit de corps took a hit during the restructuring, which dates to April 2006. “We just lived through a very hard time. Our morale is down,” Murray says. “And this is the time to do something about it.”

Financial turnaround
    Founded in 1968, Santa Clara, California-based Intel is the world’s largest semiconductor company. Intel’s culture has been lauded as one of the most effective and employee-friendly in the world, and for years the firm has been known as a corporate training leader.

    But the company’s revenue fell 9 percent in 2006, to $35 billion, and its net income dropped 42 percent, to $8.7 billion. Reports said Intel lost market share to arch rival Advanced Micro Devices for periods of 2005 and 2006. During the dot-com boom, the company’s stock price had soared to nearly $70, adjusted for dividends and splits. But Intel shares hovered around $25 in 2005 and dropped below $20 for much of 2006.

Intel’s HR department is aware that esprit de corps took a hit during the restructuring. “We just lived through a very hard time. Our morale is down. And this is the time to do something about it.” —Patricia Murray, senior VP and human resources department co-leader, Intel

    Faced with this weak performance, Intel in April 2006 announced its intent to restructure. And in September of that year it revealed plans for an overhaul designed to reduce costs and operating expenses by $2 billion in 2007 and $3 billion in 2008. The reorganization was expected to trigger savings in merchandising expenses, capital, materials and labor costs. Intel said it would cut its workforce to 92,000 by the middle of 2007. That is 10,500 fewer positions than it had in mid-2006.

    “These actions, while difficult, are essential to Intel becoming a more agile and efficient company—not just for this year or the next, but for years to come,” Intel president and CEO Paul Otellini said in a statement at the time.

    In November 2007, Intel said its headcount would likely get down to 86,000 by year’s end. Intel spokeswoman Gail Dundas said the additional downsizing is a result of “normal attrition and other business activities.”

    Intel’s financial performance has improved. Revenue for the quarter ended September 30, 2007, jumped 15 percent year over year to a record $10.1 billion. Net income was up 43 percent to $1.9 billion. Also last year, the company unveiled new processor chips designed to stem electricity leakage, a nagging problem as circuitry grows smaller. Time named Intel’s 45-nanometer Core processor one of the best inventions of the year. Intel shares recently neared $28 before settling back around $22.

Key managers ousted
    Critics, though, say Intel’s gains may be short-lived. Ex-Intel employees interviewed for this story generally agree the company was bloated and needed an overhaul, but they take issue with how Intel executed the changes.

    Among the jobs Intel eliminated were 1,000 management positions trimmed by late July 2006. During that cut, Intel wound up sacking many leaders skilled at people development, says a former Intel manager who lost his job in the reduction. The manager, who spoke on condition of anonymity out of concern that his current techindustry firm could be harmed, says one of the criteria used in allocating those pink slips was how well managers had prepared their direct reports to move up in the firm.

    “If you had a well-run organization with a lot of bench strength—in other words, you were a good manager—you were deemed expendable,” he says.

    Intel declined to comment on this claim. But an internal Intel document shared with Workforce Management indicates the company realized it was losing quality employees in the 1,000-manager cut. The memo, intended to help managers speak with their teams about the layoff, states: “We know we are losing good people in this move. But we have too many managers, and this manager reduction is necessary to improve our decision-making and communication and to resize the company. In addition, since we need to become a leaner company and are limiting job openings, redeploying their skills, as individual contributors or as managers, is not a reasonable option.”

    Intel declined to comment on the memo.

“Once you measure too much, you believe the organization is a machine. I think the organization is a living organism.” —Lynda Gratton, professor, London Business School

    In addition, former Intel employees say first-rate employee development experts were laid off or left as a result of the restructuring. Among the leadership experts Intel lost in the overhaul is Kevin Gazzara. Until December 2006, Gazzara ran leadership development programs at Intel targeted at first-line and midlevel leaders. Workforce Management featured Gazzara in a November 2005 cover story about globalization training, and his efforts were among the reasons Workforce Management gave Intel an Optimas Award in 2006 for overall HR excellence.

    With a doctorate in organizational leadership, Gazzara has researched how employee performance can be improved by setting up jobs that match workers’ preferences for a certain blend of routine, troubleshooting and project-oriented tasks.

    Given this background, he says it is ironic that Intel leaders dismissed his and others’ interests during the restructuring. Intel assigned him to work on ad-hoc courses based on his knowledge in training design, he says. But his heart and his expertise were in working on comprehensive leadership development and employee engagement programs, where he saw great potential to help Intel. Partly out of dissatisfaction with his new role, Gazzara resigned in June from the company he had loved for years.

    “The managers did everything on paper by the numbers,” Gazzara says. “There were no discussions.”

    Gazzara has since founded a consultancy focused on leadership development with two other former Intel employees. The firm, Magna Leadership Solutions, has done work for customers including Cisco Systems and Avis.

Expertise squandered
    Indeed, Intel’s other HR co-leader, vice president Richard Taylor, says that over the past five years he has pushed to make Intel’s HR department more data-driven. Taylor, an accountant by training, and other Intel officials don’t dispute that HR reassignments were done based largely on competencies. But Intel officials contest the idea that employee preferences were ignored, noting that managers are expected to talk with their direct reports at least annually about career aspirations.

    Intel may have lost some training specialists, but its training investment has increased, officials say. Per capita spending on training has increased 6 percent over the past four years, Taylor says. Preparing leaders has been a key target: spending on leadership development rose 119 percent last year, and is up 50 percent over the past five years, Taylor says.

    Intel also defends the quality of the leadership development expertise that remains at the company. “I am really proud of this HR organization,” Taylor says, adding that his staff is made up of “some of the best, most professional and most skilled HR people anywhere in the world.”

“I am really proud of this HR organization. … [It is made up of] some of the best, most professional and most skilled HR people anywhere in the world.”  —Richard Taylor, VP and human resources department co-leader, Intel

    Robert Burgelman, a business professor at Stanford University, gives Intel high marks when it comes to developing its executives. Burgelman, who teaches several courses a year on strategic thinking to Intel senior managers, says many firms train their executives with a smattering of different courses, coaches and concepts. The result is a cadre of leaders who don’t use the same frameworks for solving problems or setting strategy, he says, which slows them down. “Intel has avoided this by exposing many, many people to the same ideas,” he says.

    But critics claim Intel made poor use of leadership development experts in the course of the restructuring.

    A former training specialist who left Intel last year after more than 15 years with the company says Intel effectively wasted his talents by reassigning him. Before the restructuring, the training specialist created leadership programs for an Intel business unit with more than 4,000 employees. Intel moved him into an HR generalist role, he says, where he often handled entry-level administrative tasks such as helping employees locate company policies. Other experts in organizational development were given similar generalist roles, he says.

    “I told my manager they shouldn’t be paying someone like me to do this job,” says the specialist, who earned more than $100,000 a year.

    Taylor says a number of organizational development professionals were asked to handle a broader array of HR tasks, such as recruiting and compensation matters. But he denies the new work should amount to superficial tasks. Taylor says his HR staff should be deflecting basic inquiries to the Web or a call center, and that their new role allows for increased authority given the larger ratio of Intel employees to HR professional.

    “It may be broader, but it’s hugely more impactful,” he says.

Development revamp
    Intel also used the occasion of the restructuring to adopt a new philosophy on employee development, company officials say. More continuous learning, greater involvement of managers in leadership training and better use of “Web 2.0” interactive technologies are central to development efforts now, officials say.

    “Our focus on developing great leaders has stepped up a notch,” Taylor says.

    Intel employees overall, though, are far from content when it comes to career development, according to the August employee survey. Asked to respond to the statement “I am satisfied with my opportunities to develop and grow at Intel,” only 55 percent agreed or strongly agreed.

    This figure, in addition to the finding that more than 40 percent of Intel employees are willing to leave for a job with comparable pay and benefits elsewhere, indicates Intel may be at risk of losing valuable employees. John Boudreau, management professor at the University of Southern California, stresses he is not personally familiar with Intel’s situation or recent history. But he says research suggests that top performers tend to be particularly sensitive to career development opportunities, and often have the most options if they decide to leave.

    Intel’s Murray says turnover hasn’t risen in the wake of the restructuring. Turnover generally remains less than 10 percent annually, and less than 2 percent for the employees Intel dubs “high performers.”

    Even so, Intel officials say they are taking action to keep employees happy in terms of growth opportunities. In July, the company hired Steve Backers to head up career development programs.

Data-driven
    Whether Intel’s legendary corporate culture has withered is subject to debate. Intel officials argue it is alive and kicking. But another result from the August employee survey hints at significant employee distrust of management. Asked to respond to the statement “I believe that action will be taken based on the results of this survey,” just 48 percent of employees agreed or strongly agreed.

    Lack of confidence that leaders will respond to employee feedback may help explain Intel’s gradually declining performance on Fortune‘s list of the 100 Best Companies to Work For. After finishing in the top 65 from 1998 to 2004, Intel finished 97th in 2006, and failed to make the list altogether in 2005 and 2007.

    That drop-off also corresponds roughly to Taylor’s data push. Analysts agree that organizations should do more to quantify their talent and make workforce decisions more scientifically. But some warn the numbers focus can go too far, and ignore intangibles or impede innovation. London Business School professor Lynda Gratton, for example, warns that companies sometimes pay too much attention to metrics, and that can get in the way of fostering “hot spots” in a firm, where important new work gets done. “Once you measure too much, you believe the organization is a machine,” Gratton told Workforce Management last year. “I think the organization is a living organism.”

    Gazzara says the changes to Intel’s HR operations are part of a broader, disturbing trend of focusing on metrics without serious consideration of the experience, passion and talent of employees. “I really think the `H’ in HR, particularly at Intel, is missing,” he says. “People are viewed as a commodity.”

    Intel officials beg to differ. Murray, for example, says that she read most of the 57,000 written comments submitted by employees in the recent employee survey. And her vision for the company is not one of merely optimizing talent metrics. Intel has a “huge opportunity to say, `OK, we’re changing. Now let’s make this a lively, engaging workplace,’ ” Murray says.

    Not everyone is so sanguine about Intel’s prospects. The training specialist who left the company after more than 15 years portrays Intel’s recent restructuring as part of a rise and fall of smart people management at Intel. In his view, managers were given a great deal of autonomy during the company’s flush times in the 1980s and ’90s, and some invested in effective employee development practices. But as money got tight over the past few years, he argues, senior managers reverted to a technology and finance orientation. Intel effectively sacrificed its people de- velopment legacy in the pro- cess, he says.

    “They killed an essential side of Intel’s soul,” he says.

    Some might call this a naive viewpoint, given how common it is for companies to trim training during tough times. In any event, Intel says it has done nothing of the sort. Pointing to greater funding and a revamped training philosophy, Taylor says the company is as committed as ever to fostering employee and leadership growth.

    And he frames Intel’s approach to the annual Fortune contest as another sign of the company’s commitment to the best people practices. One of the steps in pursuing a spot on the Fortune list is a survey given to 400 randomly selected employees. The results are given back to the firms.

    “We still choose to apply for it,” Taylor says, “because we want to learn from our employees.”

Workforce Management, January 14, 2008, p. 12-17 — Subscribe Now!