IN MANY WAYS, working in a joint venture is not like being employed by a traditional company. After all, joint ventures are often designed to have limited lifespans – and, according to our recent analysis, live on average for ten years. While a JV is likely to have a powerful business proposition and assemble distinctive capabilities in novel ways, a JV will also have an authorized product and market scope that is restricted by the legal agreements between the shareholders.
Similarly, JVs frequently assemble talent from diverse sources and under different employment agreements – blending direct hires with shareholder secondees on a two to three year rotation through the venture. Meanwhile, people working in a JV often must work closely with, and receive support from, shareholder company employees – who, by the way, may not be as responsive or respectful as JV employees might hope.
All this triggers a question: If talent management in JVs can be so different from traditional businesses, why do JV boards and senior executives try to calibrate employee engagement levels using tools ill-suited for these businesses? The answer is both simple and sad: Until now, there has been no talent engagement survey designed to reflect the unique issues, advantages, and disadvantages of joint ventures.
Water Street Partners is working to address this gap. We recently designed a survey instrument to specifically test talent engagement levels in joint ventures – for direct employees and secondees, if present. Our survey instrument calibrates a venture on 73 talent engagement drivers – some of which are common to any business, and others unique to joint ventures. (Examples of unique JV talent drivers include: impact of the board and governance system on the employee’s experience, and the importance of training and development opportunities within the shareholder companies on employee engagement.) To start to identify patterns, seven JVs around the world agreed to pilot our new methodology – and we have now collected data from some 400 people working in these ventures.
The early data shows some interesting patterns. For example, we evaluated each talent engagement driver on two core dimensions: performance and importance. When we plotted these drivers, we found that JV employees tend to rate certain drivers as high-importance but low-performance (i.e., the venture tends to struggle to deliver these within its employee value proposition). Two main themes emerge from these “act urgently” drivers found in the bottom right of the matrix.
First is that most people working in joint ventures view the JV structure as “more pain than gain.” Too often, JVs fail to make a compelling argument for the company’s existence as a joint venture. The shareholders’ inability to maintain alignment on the company’s fundamental purpose and scope, to efficiently combine complementary capabilities and assets, to quickly resolve shareholder tensions and disputes, to smoothly run the governance system, and to manage the operational interfaces with the shareholders seriously undermine engagement among employees. “Employees can smell the confusion in the shareholders,” noted one Board member of a liquefied natural gas JV on the eve of a needed restructuring.
The second theme relates to unrealistic target setting and poor performance management in JVs, which further undermines employee engagement. Make no mistake: setting realistic and appropriate targets is not easy in a JV. After all, the targets must somehow reflect the value the JV is creating for the shareholders, not just what appears on the P&L or operational scorecard. Those targets must also realistically reflect how much support, including skills, technologies, and market access, that the shareholders will actually provide to the venture, not just what the shareholders hope to provide. And those targets must avoid the “trap of the highest common denominator” that JV boards too often fly into – that is, the tendency to keep escalating targets until all Board members are satisfied that the goals are sufficiently challenging. Invariably, this leads to targets that are overly ambitious even on the best of days.
Our goal in developing the new JV Talent Engagement Assessment tool is to provide JV Boards, HR Committees, CEOs, and Management teams with a more holistic, accurate, and efficient way to evaluate the core drivers of talent engagement in their joint venture. The assessment allows JVs to calibrate their overall engagement and scores on five dimensions of a compelling employee value proposition, compare them with JV benchmarks, and to the venture’s historic performance. The diagnostic can also be tailored with additional survey modules to explore related organizational issues such as cultural values, or underlying mindsets and behaviors directly related to business outcomes Our ultimate aim is to improve the performance of JVs by making work more fulfilling, productive, and meaningful for the millions of people working in joint ventures today.