Technology companies are well known for having fun, brightly coloured offices filled with super-intelligent whizz kids, 20 gadgets per square metre and an infinite supply of vending machines. After all, who hasn’t read about the wonderfully appointed Google HQ or smaller ‘fun’ tech firms, such as Peer 1 Hosting (featured in HR magazine last December), which has a slide, of all things, as a mode of transport.
But these types of working environments are not used by all technology firms to attract and retain the brightest talent. Take HCM solutions provider Oracle Corporation, which has little time for gimmicks. In fact, in some of its Western European teams, young employees are in short supply, as years of acquisition and demographic shifts have created new workforce challenges.
Vance Kearney, Oracle’s vice president of HR for EMEA, explains: “We’ve got a weak economy, an ageing population and high youth unemployment. How can we create enough opportunities for young people and deliver the training and education necessary for them in technology?” The European Commission’s removal of a mandatory legal retirement age (although countries can set an age, it is not enforceable) has contributed to youth unemployment and encouraged employees to work for longer. “If everybody works to 65 or 70, that’s five to 10 more years for each person, and it delays a vacancy for people entering the job market,” Kearney says. “It’s been a problem since we acquired Sun Microsystems [in 2010] because it was an older company than Oracle; it’s been around 35 years, so the average age of employee at Sun is about 10 years older than at Oracle.
“If I look at the average age of worker in some of the mature Western European countries, it is pushing 50, but in Romania it is about 26. So I have 2,500 employees in Romania where the average age is in the mid-20s, while I have a similar number of employees in France and Germany where the average age is 15 to 20 years higher.”
To tackle this problem, Oracle is providing early retirement support, while rolling out programmes to hire more young people. For Kearney, who is Oracle’s HR leader for 25,000 staff in 70 countries across EMEA, refreshing the organisation is necessary to ensure new skills and innovation enter the workplace. “You need a minimum staff turnover of around 10% a year just to effectively manage change,” he says.
“We would like to be hiring fairly significant numbers of graduates, but if you don’t have people leaving, there isn’t that growth. So you need [staff turnover] to effect a redesign of the organisation and have a healthy ecosystem through which people can grow and develop.”
To prevent staff from stagnating, Kearney explains that Oracle provides opportunities for employees to move to different positions, product lines and countries, but says there is still a challenge in creating space at junior levels. “We’ve invested hugely in Oracle Direct, where we hire the most young people in the business. Most sales people grow through our own academy,” he says, adding that Oracle’s ‘home grown’ sales force generally have higher productivity than external recruits.
In the 90s and most of the 2000s, Oracle was typically growing by more than 20% each year. But now there are fewer opportunities for organic growth, particularly in mature markets. In the fiscal year 2012/2013, Oracle’s global revenue remained flat at $32.7 billion, although profit increased by 9%. “Public sector IT spending in Europe has probably fallen, compound, 25% to 30% in the last couple of years,” Kearney says. “To maintain our revenue and margin, we’ve had to considerably grow in the private sector to compensate for that.”
Oracle has expanded in Eastern Europe, the Middle East and Africa. In the past couple of years, it has opened nine new subsidiaries in Africa and reported “tremendous performance in Kenya and in Nigeria”. The company is also opening up in Ghana and Mauritius.
In the current fiscal climate, the signs are somewhat better, particularly in cloud-based software solutions and engineered systems, which are fully integrated hardware, software and network solutions.
In its recent Q4 results, Oracle said cloud software subscriptions revenue grew 25% and engineered systems revenue by more than 30% in the quarter.
This movement to new technology provides another HR challenge. “We’ve seen tremendous growth in cloud applications, but at the same time the traditional business of coming to your data centre and implementing an HR system is going down,” Kearney says. “So there are changes in the business as we move from on-premise software to the cloud, and we’re retraining and hiring new people in those areas.” In fact, Oracle has been strategically moving away from hardware. “The corporate server data centre market has reduced by about 35% year on year. IBM and HP have suffered in that market, but Sun did not have the same size market share, so it hasn’t had as big an impact,” Kearney says.
It is Oracle’s ability to tap into new opportunities and innovate on a diverse range of products that is a key attraction for recruits. When asked whether the company offers staff other perks, such as cappuccino machines and games rooms, Kearney scoffs. “There is an awful lot of nonsense talked about bean bags and table tennis being the magic source of creativity,” he says. “It’s not the gimmicks, it’s people having the freedom to work, and managers who allow that. Technical people are turned on by the technology, not their manager or the brand. They are turned on because the stuff they are working on is cool.”
And how to manage them? “You leave them alone,” Kearney says bluntly. “We make sure we hire very bright people; we are very selective. These people are motivated by the work and they are motivated by their colleagues. It’s about having the freedom to screw things up. Most innovation is trial and error.”
Oracle employs tens of thousands of people in R&D across the world, including 2,000 in Europe, whom Kearney describes as innovators or technical developers. For example, in St Petersburg, there are 300 people working solely on Oracle’s server and storage system, Solaris.
Kearney says innovation is in Oracle’s DNA and the company has “probably created more CEOs and leaders of software companies than anyone else”. He cites Salesforce.com EMEA chairman Steve Garnett (profiled in HR magazine’s 2013 technology supplement) as an example. “Oracle has been a powerhouse of generating talent,” Kearney adds.
With an ageing workforce and slowdowns in some of Oracle’s traditional business lines, Kearney knows he will have his work cut out to ensure the company remains a talent factory of the future. And, after Team Oracle’s miraculous come-from-behind victory in last year’s America’s Cup yacht race (Oracle won 9-8 after being down 8-1), it would be foolish to bet against the firm finding a solution for this latest HR challenge.