Apple\'s human resources strategy

While a high-flying tech company is a great story to the outside observer, inside such a company can be quite chaotic, because the rapid pace of growth places strain on the talent within the company. The human resources department has to keep a rapid pace of hiring, ensuring all the while that it is bringing in the right people to support the mission going forward. Just as important, the new hires have to blend in with the existing organizational culture. This can be a significant challenge when the growth comes as rapidly as it did for Apple in the 2000s. The company's growth trajectory started with an established culture under Steve Jobs, the introduction of the iPod, and then the introduction of the iPhone started Apple on its current hypergrowth course. The new initiatives that the company is working on today may yet signal a future round of hypergrowth, which places significant emphasis on the need for the company to have a strong organizational culture that contributes to its success, and a culture that can be passed along quickly to new recruits so that they buy into the company's mission. This paper will examine the human resource function at Apple, with particular attention to how the HR department fosters the development, diffusion and strengthening of the organizational culture?

Apple is a leading designer and marketer of consumer electronics. The company recorded revenue in the 2017 fiscal year of $229 billion and profits of $48 billion. Apple is one of the most highly-valued companies in the stock market, with a market cap of $870 billion. The company has the world's most valuable brand, as ranked by Interbrand (Beer, 2017). This value reflects not only the reputation of the company and its products, along with its profits, but also the belief from the market that Apple as a company is capable of building on its successes, and being a market leader for the foreseeable future.

The company has 123,000 full-time employees (Yahoo! Finance, 2017). Most of Apple's manufacturing is done by third party contractors, so the majority of its employees work in design, engineering, marketing and sales. The company has a strong retail operation both online and bricks-and-mortar, and those staff are included in this figure. Apple derives its competitive advantage from the brand, which reflects both the strength of its products from a design and engineering standpoint, and the company's marketing, which has fostered a strong brand image, and high brand loyalty that allows the company to lead the market on prices. Apple's strategy really only works if it can continue to deliver engineering, design and marketing at the highest level.

Moreover, Apple has a large supply of cash that it is looking to reinvest. As such, it is becoming involved in a number of new ventures, such as automobiles, where Apple is looking to enter the self-driving car market (Korosec, 2017). This creates demand for the company to attract new engineering talent, either to join new teams in entirely different product areas, or in existing lines while the most talented people move onto these new projects. Either way, the new hiring requires more from the human resources team in terms of identifying talent, hiring the right people, setting compensation, and then training people and bringing them into the organizational culture. This paper will examine the different roles that HR plays at Apple, and how the company uses human resources to support its strategic objectives.

Apple competes as a leader in its field. It produces premium products and charge premium prices for those products. The company competes against the best companies in the world, and by virtue of its location in Silicon Valley that competition for talent is often head-to-head in nature, as the world's tech giants are located either there or in Seattle. The result of this is that Apple not only need top talent in order to continue to execute its business model but it needs to outcompete nearby companies to do so. This drives the company to pay at the high end of market rates, but focus heavily on fostering a strong culture, leveraging the intense consumer brand loyalty and leaning on intrinsic motivation. Thus far, the strategy has been effective, and Apple has remained an employer of choice among tech superstars, despite many competitors emerging to compete for the world's top tech talent.

Apple faces a significant challenge in that it needs to recruit a lot of employees – a constant recruiting cycle, and these need to be among the best and brightest in their roles. Apple needs to have the best engineers and designers because competition at the high end of the consumer electronics industry requires excellence in all facets of the design function. Apple's recruiting function is therefore constantly focused on finding the best talent. To do this, Apple relies on a couple of things. The first is the company's employer brand. Apple's name attracts talent, because the company is a leader, has a loyal following in the tech community, and many talented people feel honored to attach their name to the company. The company's employer brand is said to be superior to almost any other company (Hesse, 2012).

There are several elements to the Apple employer brand. First, the company creates a sense of belonging – it defines the people who work for the company so that new hires immediately feel that they are with their own people. Apple also does a good job of differentiating itself as an employer. This is quite important given the intensity of competition for talented workers in Silicon Valley. Finally, the employer brand is aligned with the rest of the company's branding and marketing. Thus, Apple is literally able to draw from its millions of fans, and many carry the same brand loyalty that they have as consumers over to the workplace. Those who are not Apple fans necessarily still hold the company in high esteem and are generally indoctrinated not long after starting, as they, too feel that sense of belonging, like they have found their home (Hesse, 2012).

The employer brand is basically equivalent to marketing – it attracts eyeballs, but the company still needs to have an active strategy to recruit people, as it would not meet its needs simply by following a passive strategy. The company seeks to attract innovative, creative people with technical talent. It attracts people by allowing them to work on innovative products, ones that can change the world. These are among the attributes cited for attractiveness on Glassdoor (2013). Being able to contribute to something big is a huge draw for workers who need not worry about those lower level needs – the opportunity to satisfy higher level needs is the key draw, which is why that is a central part of the company's messaging.
Drawing in talent is just the first step for Apple, as it must then put the talent through the selection process. This process has been described as "grueling", upwards of ten interviews including a trip to head office (Hein, 2015). The rigorous nature of the selection process is not just to judge the technical ability of the candidate but the fit as well. Cultural fit is critically important - one needs to be dedicated to innovation, have a high attention to detail, and yet be highly passionate about Apple and about making a difference through the development of the world's best technology.

Apple does not set the market for engineers and designers, but rather compensates with a match strategy. The company believes that there are other things that it offers that should entice people to work for them, and work hard. Thus, compensation is more of a total compensation philosophy than a pay and benefits philosophy. Apple offers people the opportunity to make a difference, to work with great leaders, and to contribute to world-changing products. By focusing its human resources messaging on intrinsic motivation, the company selects for workers with a high rate of intrinsic motivation, and is then able to pay them market rates. The company also looks to its star performers to determine what opportunities it can find for them, and clusters star performers on the teams that are going to make the most difference to the success of the company (Vozza, 2017). The company does offer benefits that are superior to what most companies offer, but these are actually not out of line with what any leading tech company offers – though it should be said that Apple was one of the innovators in this regard.

Apple's performance appraisal has three different forms. First, the company offers a 360-degree assessment, and it also does an annual performance review and peer assessment (Chelniciuc, 2017). By having a number of different methods of obtaining performance feedback, the company's managers can do a few different things. First, they can identify the star performers. Since grouping stars together is strategically important for Apple, the company wants to be able to identify those people and put them in the best position to succeed, early on. These talents become the fast-risers, and the company puts the most emphasis on their career development. People of talent with upside are easier to identify when there is feedback from a number of different sources.

The other thing that the use of different sources for performance appraisal does is that it gives more reliable, honest feedback to the individual, instead of just relying on a single manager. Employees may disagree with some aspects of a review, but if everybody is saying the same thing, they are unlikely to have much argument. Ultimately, it is harder to impress everybody and hit your goals, but if that can be done, a person becomes known as a top performer.

Silicon Valley is not known as an especially diverse place. Apple has only recently started to examine diversity, in response to challenges that some other tech companies have faced. Indeed, even Apple's head of Diversity and Inclusion has come under fire, albeit for promoting the idea of diversity of thought, which may be controversial in social justice circles, but is widely discussed in human resources circles (Panzarino, 2017). Her comments were viewed as reflecting scorn for diversity and inclusion, because some critics of diversity and inclusion support diversity of thought – her critics falling victim to the association fallacy.

Apple has since issues its first diversity and inclusion report, which outlines where it stands on the issue in terms of demographic statistics, and the attention the company pays to new hire diversity – new hires are more diverse than the company's current employees. The company has in the past rejected calls to focus on increasing diversity among its senior executive team, citing its policy of focus on diversity of thought. Critics of the report note that it focuses on basic race demographics, and ignores other forms of diversity (Dickey, 2017). It remains to be seen, in the absence of concrete policies to increase diversity, what changes will be made in terms of Apple's approach or outcomes in this regard.

As has been noted, Apple relies heavily on intrinsic motivation to drive its employees. Much of the rationale for the rigorous selection process is because Apple knows that it can attract talented people, but it wants to attract difference-makers. It wants to attract people who have a high level of commitment, in part because it wants its employees to last; turnover is relatively low at Apple in part because of the selection process. But during the company's 20-year run of success, Apple has been able to maintain a high level of intrinsic motivation. Now flush with capital, the company can engage in high-motivation projects such as self-driving cars, so people within the company not only work on great projects, but they know that there are other great projects around the corner as well. This provides people with further motivation. The company can be a good place to build a career if identified as a star performer, as well.

At higher levels, employees will sometimes have their pay topped off with equity, and this provides further motivation. Ownership in the company is a reward that provides strong motivation, not just to see the share price go higher, but as a point of having a sense of belonging. The more people feel like they belong to something – and this is always encouraged at Apple – the more they will work harder in their roles to bring the company to success. Apple leverages this with its most talented employees through stock options and other equity-based compensation.

Apple has been able to leverage a number of strengths in order to remain an employer of choice. In its context, Apple needs to attract the best engineering and design talent, as well as very good marketing talent. There are a lot of draws, and the company has specifically built its employer brand to attract candidates with high intrinsic motivation. The selection process is rigorous and multifaceted – there are interviews to focus on technical ability but also ones to focus on culture. The cultural fit is an important component because Apple employees often work hard on their projects, and the company wants to have a relatively low turnover rate. These components have delivered to Apple a stable, high quality workforce.

Once somebody joins Apple, the company aims to work through a comprehensive talent evaluation process that will help it to identify the stars on its team and then move those stars onto increasingly better teams. Apple has realized that by loading up its best people on the most important projects, it can deliver superior results. This tactic also feeds into the intrinsic motivation –the best people want to work with the best, not carry them. As such, the different elements of the human resources system feed into each other.

There is also high alignment between the company's strategy and its human resources. Not only does it want great talent, but it wants talent that is loyal to Apple, and this helps the company to overcome certain challenges such as long hours and often tedious work. Tedious work on a great project is frequently good enough for people. Moving forward the company still has some work to do in the area of diversity, and there is a thought that with low turnover and a board that is somewhat hesitant to embrace diversity further the company might end up lagging, especially if the rest of Silicon Valley starts to embrace diversity a little more. This may end up harming the company's recruiting efforts at some point but there is no evidence to suggest that Apple is struggling on that front. To date, Apple remains an admired company and an employer of choice, and human resources excellence plays a big role in that.