We've all seen it before: Company X acquires Company Y . . . and all the talk about supposed 'synergies' dominate the press and analysts. Do the synergies pan out in most cases? Nope, not really (but they sound cool at first and definitely get the shareholders to vote in favor of the desired course of action!) As Human Capitalists, all of us here know that the talent profile of the organization is likely due to change as well - at the end of the day, lives are affected . . . many times on a grand scale if it's a high-profile merger or acquisition anyway.

I admit that I am a Guitar Hero junkie . . . which has little to nothing to do with M&A activity, right? Well, Guitar Hero has quite a few junkies like me out there. Because of GH III's record sales in the last quarter of 2007, Activision had a monster year (~$125+ Million USD in GH III sales alone since 11/07 the last time I checked). For a little history, GH was originally created by Red Octane, who was acquired by Activision in mid-2006. Just 18 months later (December 2007), Activision then merged with Vivendi SA's Blizzard Entertainment Inc. (which leads the market for subscription-based online video games with the World of Warcraft series.)

I don't want to include 'too many' numbers here, so I'll try to keep this at more of a high level. Activision's blockbuster product is Guitar Hero III - if you look at GH III's % of total revenue, it is easy to see where Activision should be allocating its top and most talented resources. A basic rule of business is to allocate your 'best' resources to the areas in the organization that most drive share price and sustained profitability (in large, publicly traded companies, this is absolute . . . while not always easy to execute on, the notion is still correct). It's not enough to just have top talent if they're allocated to areas that are less meaningful to the organization - the goal is having the right talent in the right place at the right time.

My question is this: How do you identify NOT who your best people are, but rather, which positions are most critical to shareholder value, sustained profitability, and/or short-term/long-term business objectives, etc.? Do you begin with identifying which roles support your most profitable (or just revenue-producing) products? . . . or which roles support not just your cash cows and stars, but your question marks as well? Do you judge which roles are most pivotal by looking at EVA of a product line, customer segment, or business unit?

What I've noticed over the last 3 months or so is that as the conversations get more strategic, many Recruitment Leaders and HR Leaders get more and more honest that the volume of active reqs is so high and administrative tasks ('red tape') so daunting that they don't have the time or inclination to stop and take a breath.

As for me, my personal strengths include a knowledge of marketing & strategy, including how we can begin defining profitability per differing customer segments. The more we get into this conversation (i.e. seeing your company as different segments of customers and less as ...), the more we begin to see what customer segments are creating shareholder value versus which are destroying it. As a result, we are able to identify which roles, positions, and individuals within the organization are most closely responsible for creating value through supporting the most profitable customer segments and/or highest margin or revenue producing products & services. We also have situations where there may exist short-term imperatives, like implementing a new SAP module within the Procurement function. Therefore, if SAP Business Analysts, New Product R&D professionals, and/or Mid-Market Sales Professionals are most critical at Company X, we can then begin sourcing efforts (and/or passive recruiting efforts) at these roles which are most crucial.

Will this work in the traditional 'reactive' recruiting organization? No, it will likely not . . . but there is application for certain types of organizations. Now, I'm a 3rd party service provider, so I'm not surprised when some of what I'm saying generates nothing but the sound of crickets in the room at meetings! ("We have 75 open reqs and they're all of the same importance!") For all of you who consider strategy prior to jumping into the trenches and hitting the web & phones, how do YOU go about the process of prioritization?

Original Blog Post can be found at: http://lgexec.typepad.com/lg/2008/01/where-guitar-he.html