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Human Capital Strategy: Cisco Case Study


Introduction/HRM: Gaining Competitive Advantage; Strategic HRM: Structure and Barriers; Diversity and Cross Cultural Workforce

Sandy and Leonard Bosack were the founders of Cisco Company, which was established in 1984 with the sole purpose of linking a network of computer systems. Cisco became the leader in data networking market in the 1990s. Its growth was so immense that it acquired 70 businesses between 1993 and 2000 through its acquisition strategy.

Following a non-productive HRM arm that the company had during its inception, it experienced a downturn in 2000 besides recording a net loss of $2.69 in the third quarter (Chatman et al. 148). Cisco also suffered from recruitment imbalances because the company did not invest in college hires to build its own experts and leaders.

This case was detrimental to the company’s growth since the company did not have the structure and culture of creativity and innovation from individuals who had been nurtured from Cisco adapting to the working culture of the company.

It therefore suffered from lack of diverse and cross-cultural workforce since it picked only those people who had curved their niche into technology. It could not deal with challenges that are not related to this area.

Therefore, to gain a competitive advantage, the company had to embark on a strategic HRM and a structure that was to solve the structural barriers of development by exercising training, recruitment of qualified workforce, rewarding good performance, and employing cross-cultural and diverse workforce.

Aligning Organisational Culture with Strategy/Organisation Change and Leadership

When it came to aligning the organisational culture of Cisco, there was a need to address the way the old Cisco’s culture operated by pointing out the flaws that were evident in a bid to change the unfruitful behaviours to a new fruitful culture. Firstly, the old organisation’s focus was on development of leading technology.

It forgot that the customers’ needs were rapidly changing and that they required high quality and reliable systems that could solve their problems. To change this culture to a new fruitful one, Cisco overcame the situation through extensive training of both the executive and other individuals in the company on business, technology, and customer to ensure that anyone in the company could solve any kind of customers’ technology-based problems thus increasing sales.

The old Cisco was product oriented, which led to a drastic reduction in profits due to a fall in demand for technology. The human resource leaders countered this culture by equipping every employee with experience, exposure, and education (through the 3E leadership model) with the ultimate goal of converting Cisco to a systems-and-solutions organisation (Chatman et al. 155).

This strategy enhanced efficiency, productivity, and cross-functional alignment. Chatman et al. (151) assert that the old organisation focused on revenue increment while the new Human Resource (HR) focused on increasing profits. The solution to this culture was the introduction of the “grow 3 model” culture where each individual in the organisation had the obligation of growing the business, growing team, and growing oneself.

The old Cisco did not create new products but used its financial affluence to acquire both new business ventures and employees. The company solved this problem by shunning the buying talent strategy in an effort to embark on building talent strategy.

The old organisational culture was over dependent on recruitment of employees from their competitors (Chatman et al. 138).

This strategy had both advantages and disadvantages in the organisation in that there was a long run effect of having disproportionate number of strong leaders and high performers who were not necessarily nurtured by the company.

The disadvantage was that the company did not focus on training since all that was required was performing well on the current duty that was delegated.

The solution to this unproductive culture was the introduction of performance management strategies that aided in monitoring and evaluation of all people in the company from the vice presidents to the subordinates thus building of a strong cross-functional team

Planning, Recruitment/Analysis, and Design of Work

Cisco had to strategise in terms of planning and recruitment of qualified workforce as well as coming up with an analysed design of work where each employee was to operate within a specified scope of work for a better yield in the company.

Therefore, there was a dire need for Cisco to acquire external and qualified workforce with the extensive expansion of its product line, which included internet appliances, networking solutions, and network management software.

According to Chatman et al., the number of customers served by the company was increasing tremendously with the company acquiring number one or two positions in any market where it ventured (143).

The company required qualified personnel to ensure that Cisco reaches its ultimate goal of becoming the supplier of choice to its customers by gaining the competitive advantage of being the best in product leadership, market share, customer satisfaction, and profitability.

In terms of design of work, Cisco viewed any enterprise regardless of its size to be in need of global networking as long as it relied on communication and information to develop a network of interactive and strong relationships with its key constituencies (Chatman et al. 143).

This business strategy therefore increased the company’s targeted market at an increasing rate and hence the need for it to provide solutions to all businesses in a bid to dominate the market as fast as possible. The company therefore had to devise a strategy in hiring.

It eventually settled for aggressive techniques of acquiring skilled personnel from its competitors. In support of this step, Chambers stated that the company’s goal was to acquire the top 10-15% of experts in the industry.

It believed that the secret to becoming successful in an industry lay in getting the best people in the particular industry to fit into ones culture that gives it a generous package for motivation.

Cisco used acquisition as the chief method of recruiting its employees. This method of acquiring may not be the best for a company since it originated from an inferior company, and that the company is likely to employ the same tactics that were being used in the previous company instead of adopting the new company’s culture.

This case might lead to its downfall. Chatman et al. indicated that Cisco hired people by targeting the so called “passive job seekers”, which was the group of employees who were satisfied and successful with their current employers (146).

In this case, the recruiters at Cisco held focus group discussions to identify the websites and movies that were favoured by the brightest and best employees. They also visited garden shows and microbrewery festivals with the aim of meeting with the best people in the industry.

More people were also captured by creating a profile that was filled by job seekers depending on their skills. Moreover, a program called “Friends Program” was also used to capture those people who were willing to be friends with people working at Cisco.

In terms of recruitment also, Cisco not only aggressively hired its employees but also employed equal vigour to tactfully retain the employees. These employees were given lucrative rates and favourable working conditions such that the company received the lowest attrition rates in the 1990s in comparison to the other competitors.

The retention tactics included setting of executives offices at the middle of the floors where they could have window areas. It also used a “state-of- the-art day care, which enabled the employees to check on their children without leaving their desks” (Chatman et al. 147).

There was adequate orientation into Cisco’s culture and values for the new hires. Other smaller rewards, which were also meaningful, such as cash bonuses (Chatman et al. 147) were also used. The benefits and salaries given to employees with the intent of retaining them in the company were not the best option for the company.

This case resulted in 8500 job losses in such a short time since a decrease in sales implied magnanimous negative impact on the profit and employee retention.

Competency Modelling/Recruitment and Selection; Employee Development and Training/Performance Management

According to Chatman et al., the old Human Resource managers at Cisco were incompetent since focused on buying talents. In a bid to overcome this incompetency, the new embarked on building talent of its employees.

There was the need for the company to move from selling its product technical decision makers only to expand to selling to business decision makers.

The demand for technology that is more complex and products was in the rising number of customers who were in need of systems that are of high quality, reliable, and ones, which would allow it to interface with other software and equipment.

Therefore, in terms of recruitment and selection, the case required individuals with technical backgrounds, and who knew the customers’ business. Therefore, the human resource had to focus on training to build such employees and managers.

Employee development and training was vital in Cisco. Therefore, in the quest to develop employees’ talent, there was a concern that the company’s strategic HR to focus on developing senior managers through a corporate training program (Chatman et al. 154).

This program was not embraced in the company’s culture because the majority of individuals in the high managerial positions were the backbone for the company. The individuals tried to develop a leadership curriculum that would never survive.

Eckenrod therefore resolved to build global talent, facilitate the transition of existing leaders, and equip people with skills required to embrace change over their career through the strategy of developing the next generation of leaders in the company.

This program was not the best approach for the change that Cisco required since the upcoming leaders would always report to the high rank managers, and would always try to undermine their efforts of taking the company to the next level due to the fear of replacement.

Therefore, Chatman et al. Assert, “a turnaround at Cisco was observed with the implementation of human capital strategy whereby Cisco University chartered a company-wide team that developed a new approach of leveraging and developing Cisco talent” (154).

This long-term viable program brought constraints in that it was a five-year plan that required both the design of the curriculum to be followed while at the same time linking the elements of business strategy used by Cisco besides putting into consideration the constantly changing technology market.

This planning was viable since it encapsulated building talent in both the upcoming and senior leaders. For internal recruitment and hiring, Cisco introduced a Pathfinder software application, which enabled managers to post vacancies in high-growth areas.

Employee Engagement and Effectiveness/Employee Retention and Separation

Employee engagement strategies adapted by Cisco include the general performance development and management process, performance management form (ePM), Talent Assessment Process (TAP), Leadership Review Process, and Leadership Development Feedback (LDF) (Chatman et al. 156).

The general performance development and management process was used to evaluate the employees. This ongoing process aligned employee’s goals with the initiatives of the company besides allowing the sharing of feedbacks with the ultimate purpose of supporting talent development and eventually improved performance.

The process was effective since provided time to formally assess employee performance after which one developed plans for the future.

The employees submitted the performance review on their accomplishments and development plan of the targeted goals and deliverables to the managers who gave feedback after soliciting inputs from the others and or discussing its content with the employee (Chatman et al. 156).

The ePM allowed employees to update their details as they changed positions or increased their initiatives thus creating more dialogue between the employees and their managers. To enhance employee retention, Talent Assessment Process (TAP) was used to assess both the individual contributors and leaders.

It evaluated employees relative to their workgroup peers with regard to alignment, achievement, productivity, and versatility (Chatman et al. 156).

The TAP strategy helped in identification of top managers from leadership and knowledge perspective with the aim of accelerating them besides facilitating dialogue on those who were in need of development in the rest of the population.

TAP occurred in every second and fourth quarters of the year with its focus being to give the necessary feedback to the best performers for their growth and development. The leadership review process was also used.

This exercise was later incorporated into the ePM whereby the employees filled out their personal history in the ePM and the information was utilised by the leadership review process.

The other employee engagement strategy was LDF. LDF was different from TAP in that TAP focused on the entire population, whereas LDF was manager-focussed (Chatman et al. 158).

Some of the rating parameters included creating opportunities for those with top talent to be exposed to senior leadership, coaching employees for improvement and better performance, development of partnerships and collaborations, and treating others with respect among others.

The most successful strategies were ePM and LDF. The ePM was successful because it created rapport between managers and team members. The frequent contact with the managers during evaluations and issuing of feedbacks created loopholes for the managers.

Employees developed strategies on how to achieve the Grow 3 model expectations on Cisco leaders. LDF created a platform to evaluate the high rank managers in the company thus ensuring that every person worked for the betterment of the company..

Pay structures/Employee Benefits/Employee Recognition and Rewards Programs

Leadership development at Cisco was inevitable during the downturn period as it was the only solution to cross-functional alignment and improved productivity. There was a need to address the issue of pay structures of the employee in the company.

Chambers had learnt the hard way that there are benefits associated with a focus on customers being an influence leader working across functions as opposed to being a superstar in one function (Chatman et al. 159).

Cisco introduced a grow 3 model, which was to be adhered to by all individuals in the company by ensuring that their ultimate goal would be to grow the business by focusing on profitability, customers, and improvement of knowledge in business.

Growing the team by leading change, teamwork, building talent, vision and alignment, and growing oneself emphasised adaptability, continuous learning, integrity, judgement and perspective, communication, and influence. The 3E model was also utilised at Cisco during the economic downturn.

The company’s effort was to accomplish a balance of 10% education, 20% exposure, and 70% experience (Chatman et al. 160). Employee recognition and reward strategies consisted of job changes, special assignment, special projects, rotations, and on job tasks.

Education involved e-learning programs, readings, and instructor- led courses. Exposure focused on mentoring, coaching, having role models, visibility opportunities, and regular feedbacks. According to Chatman et al., leadership was further developed through executive coaching in the company (160).

This strategy hastened the development of potential vice presidents and directors in accordance with the new expectations by the company.

The training helped in identification of those executives who benefited from the coaching process to assist in launching the process, gathering data for assessment of executives, observing leadership behaviours, coaching others, giving feedback on performance, and finally measuring the results.

Eckenrod and other Cisco executives also embarked on design and launching of programs known as Cisco Leadership Series (CLS) with the aim of developing the company’s leadership strength to greater heights.

They included the Emerging Leader Program (EmLP) that trained the career managers, Business Leader Program (BLP) that embarked on training senior managers and directors, Strategic leader Program (SLP) for the senior directors, and Executive Leader Program (ELP), which trained the vice presidents (Chatman et al. 161).

Those who attended CLS trainings had a higher chance of benefiting by being promoted to management level.

Managing HR Globally/The Future of HRM

Cisco’s downturn provides a good example of a company that was about to become bankrupt due to focus on monopoly in production but not on cross-functional alignment.

In a bid to manage HR globally, workforce analysis as a human resource planning method is vital since involves a detailed analysis of the current workforce that compares it with the future employment requirements as a bridge to discovery of the gaps or surpluses that exist.

It enables the human resource to plan adjustment of the workforce as needed. A consideration of the employment changes required would enable the human resource to evaluate the existing employee composition therefore ensuring that any future workforce possesses the required skills.

This strategy would help to cut on the training cost as well as introduce a new group of intellects who have the technical and business knowledge hence realising an almost immediate improvement in sales.

The Cisco case therefore gives an indication that human resource as well as leadership training and development play a significant role in the growth and development of an organisation.

Works Cited

Chatman, Jennifer, Charles O’Reilly, and Victoria Chang. Cisco Systems: Developing a Human Capital Strategy. Berkeley: California Management Review, 2005: Print.

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"Human Capital Strategy: Cisco." IvyPanda, 20 Apr. 2019, ivypanda.com/essays/human-capital-strategy-cisco-case-study-case-study/.

1. IvyPanda. "Human Capital Strategy: Cisco." April 20, 2019. https://ivypanda.com/essays/human-capital-strategy-cisco-case-study-case-study/.


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IvyPanda. "Human Capital Strategy: Cisco." April 20, 2019. https://ivypanda.com/essays/human-capital-strategy-cisco-case-study-case-study/.

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IvyPanda. 2019. "Human Capital Strategy: Cisco." April 20, 2019. https://ivypanda.com/essays/human-capital-strategy-cisco-case-study-case-study/.

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IvyPanda. (2019) 'Human Capital Strategy: Cisco'. 20 April.

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