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This is why Tesla needs talent optimization.

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Recently, I posted about leadership woes at Snapchat: executives leaving, low Glassdoor ratings, and a falling stock price. It’s time for Snap to undergo an extreme talent optimization triage to solve their business problems by focusing on their talent.

Let’s turn our gaze to another (perhaps even more visible) company that’s in bad need of talent optimization—Tesla.

A look at Tesla’s business challenges

Here are some facts:

  • Consumer Reports stopped endorsing the Model 3 because of reliability concerns.
  • Executives and senior leaders are jumping ship. (Check out the ridiculously long departures list here.)
  • Tesla is expanding its presence in foreign markets
  • Tesla has faced production problems, delivery problems, and workforce layoffs.
  • And then there is CEO Elon Musk. Beloved for his innovation, and with a cult-like following of “fanboys,” Musk was removed as chairman of the board; had to apologize for bizarre statements on earnings calls; is under investigation by the Justice Department, and is known as having a combative and explosive leadership style.
  • Glassdoor ratings for Tesla are faltering. While internal employees generally still like their CEO (Musk has a 77 percent approval rating), only 57 percent would recommend the company to others. (Disclaimer: this author would like a Tesla despite all of the problems listed above.)   

What’s the root cause of Tesla’s woes? People problems.

Wow—what a mess. Business, employee, and leadership problems all wrapped into one challenging bundle. How can a company that’s so innovative and so revolutionary be so broken?

The answer is a common one. As my colleague Matt Poepsel, the godfather of talent optimization, put it “All business problems are essentially people problems.” For innovative companies to succeed beyond the early adopter phases, they must approach innovation from the talent side first. This is what real talent optimization is about—aligning talent with your business strategy.  

Admittedly, like many companies that are experiencing significant pain—especially those with mercurial CEOs—the problem starts at the very top (in this case Elon Musk). But rather than fire this passionate visionary and create a great upheaval, Tesla would be smart to fan his flames for innovation in a different way: through talent optimization.

Tesla can right its ship with talent optimization.

Talent optimization is a discipline, and for Tesla to right its ship, it needs to do the following:

1. Define and align on the business strategy.

Effective production, delivery, and global expansion require a very different business strategy than the one that helped Tesla deliver innovation to the world. The question is whether senior leadership is truly aligned with this sentiment. If not, it’s full stop because if there’s misalignment on strategic objectives, there will be misalignment through the talent optimization process.

Tesla cars in parking lot

2. Identify leadership gaps.

Let’s assume there’s general alignment on strategy. Before working on the rest of the organization, Tesla needs to sort its leadership team out. We recommend identifying how well the current set of leaders is naturally designed to reach strategic goals.

The activity of evaluating leadership team fit can be accomplished in a number of ways. A good starting point is to use a personality-based behavioral assessment to identify the way team members approach work, make decisions, and communicate. (As a bonus, gathering this type of people data can help Tesla’s senior leadership team be more self-aware, which can smooth out collaboration, communication, and relationships.) Another way to identify gaps is to focus more on skills and competencies; this can be done by employing a 360-degree assessment or a self-competency evaluation.

These tools will show that some leaders tend to be more creative and entrepreneurial but not ready to handle more structured operational work. As such, there may be big gaps between what they’re good at (innovation) and what the company needs (discipline, process, and stability).

The activity of evaluating leadership team fit is as much about understanding the team’s capacity to achieve the strategy as it is about identifying whether a team can stretch and develop to meet the strategic demands—or whether new senior leaders or mission-critical hires are needed to fill the gaps. With Tesla, there aren’t many senior leaders left to develop, so hiring is going to be a priority.

3. Hire and develop talent.

Tesla needs to find top talent to help it get back on the right track. And this needs to start at the top.

Using data gleaned from the first two steps, Tesla will be better prepared to find leaders who are behaviorally wired to attack the strategy in front of them. We recommend conducting a more formal needs analysis to paint a complete picture of the traits, experiences, values, etc. that will lead to success in a given role.

Establishing these details allows the interview team to have a clear focus on what an ideal candidate looks like. It also guides the selection of different tools to help find the right talent—from the behavioral assessments described above to the type of interview questions that need to be asked to probe into any gaps. We also recommend developing a strong culture interview to help identify the types of people who will come in and flourish within the company culture.

4. Diagnose people data.

It doesn’t take a rocket scientist (not even from Musk’s SpaceX) to know that employee engagement and morale are down. Employees have seen layoffs, they’ve watched their product lose street cred (Consumer Reports), and they’ve observed multiple execs jump ship. How bad are things really? Tesla needs to diagnose its people data to find out.

Tesla should launch an engagement survey designed to get at the critical issues. The data it collects will uncover the chronic problems that are killing productivity and leading to turnover. And it will also uncover any acute problems (e.g. plant conditions, bad managers) that impact a disproportionate number of employees.

Most companies try to solve quality issues, financial issues, and production issues through process and operational decisions. But what so often gets forgotten is that it’s people who design and execute these processes. So instead of focusing on trying to find the solutions, Tesla should start with optimizing its talent so the right people are there to make decisions and take actions in the first place.

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5. Prescribe corrective actions.

After Tesla has collected and analyzed its people data, it’s time to take action based on what the data uncovered. Tesla should focus on two to three priorities that will have the biggest lift on employee engagement and morale.

Even though every company is different, the biggest drivers of employee engagement are typically related to the culture. These include trust in senior leaders; the belief that they are playing for a winning team; openness and transparency; and, ultimately, feeling truly valued.

Improving in these areas isn’t just about making employees “happy.” It’s about creating a culture of communication, openness, and a better exchange of ideas. But these are big things to solve, and it can take a lot of time to make an impact.

This means that action needs to happen at lower levels of the organization first. Managers and employees need to have the opportunity to review the results of an engagement diagnosis, identify root challenges, and work on them together. Often, little things like managers paying attention to employees’ growth and development can go a long way toward bolstering employee engagement while some of the more entrenched cultural issues get attention.

Managers who pay more attention to employees’ career growth and learning needs get dual benefits. First, employees feel more valued. And second, employees feel themselves growing and learning and gaining benefit from their hard work. The more these small actions happen across the organization, the more engaged employees become—and the more productive they become. This is discretionary effort—it means employees will give extra effort and oomph for the good of the company. It’s exactly the prescription needed for a company facing quality and delivery issues.

6. Hire and inspire everywhere and every day.

Talent optimization isn’t a one-time event; it’s a discipline. Diagnosis should happen on an ongoing basis both to solve challenges and to proactively get in front of brewing issues. So for Tesla to make the changes permanent, it has to adopt the “talent first” philosophy into everything they do. That means hiring with more rigor and focusing on finding the right fit for the strategy. It also means giving employees and managers tools to help them work better, communicate easier, and execute with more efficiency.

At The Predictive Index, we use our own tools to create better working relationships. We provide employees with Relationship Guides so they can better understand who each person is and how they can work better together. We offer power team analytics tools so members of a team can see how they are similar and different from each other. And we provide both managers and employees with coaching guides and other tools to help build their own self-awareness. The more these tools get used, the more we find people who understand each other, who assume good intent, who work more collaboratively, and who engage in highly productive work behaviors.

Red Tesla

Tesla can turn things around.

Ultimately, companies like Tesla have a choice when they need to turn things around. Tesla’s consumer base are rabid fans. They’re passionate about amazing products. But Tesla risks losing this passion—not because of poor products or bad business, but because it hasn’t approached innovation through their people. Elon: It’s time to go all in on talent optimization (and send me a free Model S).

Greg is a PI alum and former SVP of science at PI.

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