Talent tree – investing in human capital

20 May 2014

As a major provider of strategy and technology consulting services to the US Government, the name of Booz Allen Hamilton needs little introduction to many. As the group celebrates its centenary, Ross Davies catches up with chairman and CEO Dr Ralph W Shrader to discuss the importance of moving with the times, and why human capital remains the bedrock of its success.

On 2 January, by way of celebrating its centenary, Booz Allen Hamilton was invited to the New York Stock Exchange. As is tradition, the opening bell was rung at 9.30am, by chairman and CEO Ralph Shrader.

A century in business is a red-letter event in any company's book, but for Booz Allen Hamilton, it came on the back of a particularly tumultuous year. In spite of reporting $5.76 billion in revenue for the fiscal year that ended in March 2013, the US security contractor found itself embroiled in the aftermath of the National Security Agency (NSA) scandal.

As a former employer of the NSA whistle-blower Edward Snowden, the man responsible for the biggest intelligence leak in history, Booz Allen has found itself under increasing scrutiny as to Snowden's time at the company, which spanned the early part of last year.

Yet, when speaking to broadcaster CNBC on the same day as his visit to Wall Street, Shrader was in bullish form, stating that in spite of some negative press, the group remained in the rudest of health.

"Actually, it hasn't been as tough as one might imagine," he said. "Edward Snowden was a ten-week interval in the 100-year history of our firm. Our firm is much stronger than that. He doesn't represent us. He was just an aberration."

"Since taking the helm of Booz Allen Hamilton in 1999, Shrader has invested significantly in fostering the group’s talent-management agenda."

When Shrader speaks to Chief Executive Officer over the phone from Booz Allen's Virginia, US, headquarters, he is just as upbeat; business is good, he says. With a purported 99% of the group's revenue now coming from the US Government, its intelligence and digital security services remain in high demand - as highlighted by recent White House concerns over potential cyber-threats from China.

"At the moment, we see an opportunity to expand even beyond the intelligence communities in the federal government to other agencies that are looking at such challenges within the commercial and international world," says Shrader.

"We have such a long history in developing the right expertise, tools and necessary capabilities in this area. Our capabilities have remained the best in the world, but continue to be because we are tested by some of the global challenges out there today, such as cyber-breaches."

Main character

Since taking the helm of Booz Allen in 1999, Shrader - who, in the early stages of his career, was a technical member of staff with RCA's government communications system division - has invested significantly in fostering the group's talent-management agenda.

In particular, he is a subscriber to the "leading from the centre" concept, in which leaders are encouraged to navigate their companies through dramatic change while maintaining essential institutional elements.

As a core tenet of his approach as CEO, Shrader believes that within today's uncertain business environment, leaders must remain in touch with what makes their organisation distinctive from its competitors, while remaining agile and flexible enough to seize opportunities and meet future challenges.

"It's a philosophy that I've tried to follow in the organisation," he says. "One of the benefits of having been around for more than 100 years is that we have seen a lot change. We've seen a lot of products, people, markets and services come and go, but we've tried to evolve our firm, while maintaining a central core.

"This has always really been about being a values-centred, client-centric organisation. That means not just going with the trend of the week, or moving radically in one direction, but instead remaining focused on our clients and how we serve them. I think that idea has served us well, and has helped us to define our success and give us our longevity."

Looking for group

At present, Booz Allen's workforce exceeds 25,000 employees - of whom, 76% have government security clearances. However, according to Schrader, in the 40 years since he first joined the company, the currency of human capital has taken on even greater precedence lately, and now transcends the barriers of the business itself.

"When I look back over my career, and the decades that it has spanned, I am struck by the changing nature of the talent pool itself," he says. "This goes for the mentality of our staff. When I first joined the firm, the focus was primarily on the job and the professional side of things.

"Today, I really think the current generation has a better-balanced view about life. People take more of an interest in their own personal time, and look for other outlets and some diversity beyond the job."

It is the responsibility of those in management positions to harness and promote such diversity, claims Schrader, in order to get the best out of a workforce. In Booz Allen's case, this is directly tied to the idea of corporate responsibility and, over the last decade, it has made considerable efforts to encourage staff involvement in community projects.

"Over the last ten to 15 years, there has been a noticeable desire on the part of our people to be involved in activities outside of work," he says. "We have a robust network of our people supporting community activities, whether it is for a charity, school or neighbourhood. We want our employees to be involved in things outside of Booz Allen, in order to create a supportive environment."

Arguably, it is Booz Allen's philosophy of long-termism that has seen it carve out a reputation as the biggest contractor in its field - its services have been in constant demand from the US Government since the events of 9/11.

"The ability to work in a team is also a highly sought-after skill among recruiters on the lookout for individuals that fit into the group’s overall ethos."

Schrader is also quick to point out the impressive fact that he is only the seventh chairman in the firm's long history, and, beyond the boardroom, staff retention also remains high. What exactly is it that instils such fealty in employees across such a large organisation?

"One of the things that we've tried to really imbue in all of our people is the idea that you are only as strong as the people around you," says Schrader. "This is a key tenet that we try to spread across the entire organisation. You might recognise that some people are better than others, but the ones that are good at certain things; who are able to get out there and lead, develop and bring people along with them; are the ones who ultimately achieve success here in the firm."

Changing spec

Given the value placed on Booz Allen's personnel, it would be natural to assume that a premium is placed on sourcing unique individual talent above all else. However, the ability to work in a team is also a highly sought-after skill among recruiters on the lookout for individuals that fit into the group's overall ethos.

"Put simply, we want special people," explains Schrader. "We are looking for someone who has done something different. It could be somebody who has climbed a mountain or sung at an opera, but we want somebody who challenges themselves to be better, different and unique. But, then what's important to us is how we put them together in teams. The ones who succeed here are the ones that are able to build teams, work together, collaborate and bring the best out of this firm."

Returning to the idea of "leading from the centre", Shrader claims that it isn't uncommon for employees to switch roles during their time at Booz Allen - "the people who are of the most value to me are the ones that are fungible," he says.

There's a certain irony to Shrader's remarks, given that he has held the same position for over 15 years. As we wrap up, I ask him what has kept him stimulated enough to stay in the CEO role for as long as he has.

"I love a challenge," he says, letting out a short laugh. "In dealing with the commercial and government branches of the business, it sometimes feels like riding a rollercoaster in two different cars. In some cases, I haven't wanted the excitement, but you can't predict what is going to happen next week. But as long as the job still retains the kind of challenge I want, it's a good enough reason to carry on."

Dr Ralph W Shrader is chairman and chief executive officer of Booz Allen Hamilton, the leading strategy and technology consulting firm. He is the seventh chairman since the firm’s founding in 1914, and has led Booz Allen through a significant period of growth and strategic realignment.