How Dell EMC is Building a Different, Diverse Company

NEWS ANALYSIS: Dell had become excessively risk averse, and it needed to make a change so that it could again accept reasonable risks in order to advance in the market. Here's how the company approached this issue.

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I’m at Dell Technologies World this week in Las Vegas. One of the most interesting things about the host company is that it went through an almost impossible effort to go private, and then it became public again. Both efforts were incredibly creative in an industry that mostly connects “creativity” with “illegality,” and for good reason. It often seems like the creative financial folks are mostly crooks. While that may be the case, it doesn’t have to be, and Dell showcased that twice.

One of the benefits of being private was the company could invest strategically and not be held to quarterly pressures that have led so many enterprises down the wrong path. Somehow, they attest, their process has left them with the best of both worlds; they are still strategic, but they now have a class “C” stock that can be traded.

Now the reasons are varied, but they include wider access to capital and the ability to provide stock options or shares that have real value but defer taxes until sold, which are very attractive to employees in this post-pension world. This forces a regular update cadence on financial performance that the large technology buyers rely on to help make strategic investments in technology.

Execs Explain Internal Changes to Improve Synergies

This was an on-stage Q&A between Chief Financial Officer Tom Sweet and J.J. Davis, Dell’s new Executive Vice-President of Communications, who just returned to the company (both are well-respected in the industry). Sweet took us through Dell’s structure, which has been going through changes to provide better synergies; many of those changes happened while Dell was private. They saw it as critical to have some breathing room in order to restructure the company to address industry changes. Customers were consuming technology differently, and the cloud was starting to overshadow everything that had come before it. Dell had become excessively risk averse, and it needed to make a change so that it could again accept reasonable risks in order to advance in the market.

In short, if Dell was to remain relevant, then it needed to make some big bets--one of them being the merger with EMC in 2016. The implication is that while much of the major change is now behind them, the company is still adjusting and plans to remain flexible so it can reform as needed to meet the needs of this changing market.

Sweet thinks that the biggest opportunity to create value is to continue to operate strategically, which means Dell will continue to focus on the 10-year-or-so horizon to make sure the firm continues to evolve with the market. He pointed out that the firm gained share across all major platforms, but that its growth remains profitable. You can trade profitability for marketshare, but that is not part of Dell’s long-term plan; they want profitable growth. They will do this with a portfolio strategy that drives the various technologies and businesses together to create what should be unmatched advantages across this large company.

Sweet then pivoted to talk about diversity, an unusual but nonetheless important, topic for the CFO. Dell has employees in around 170 countries; a significant number of them live and work outside of the U.S. In his organization 70% of his folks are outside of the U.S. He believes that diversity drives success and is personally helping to drive diversity in his organization so that the benefits pass to Dell Technologies.

Brian Reaves, Dell's Chief Diversity Officer

Davis said that it is important to know who Dell is and what it stands for, and so she brought up Brian Reaves, the company’s Chief Diversity Officer. When she originally joined Dell, Davis worked on the firm’s diversity effort. Diversity is incredibly important to Michael Dell himself, and his backing has made the firm’s subsequent effort far more successful than it likely would have been.

Reaves pointed out that in a few years, given the rate of graduations, he’ll only able to fill 45% of the open technology jobs that will be available in a decade or so. By aggressively working on drawing in a diverse audience to the industry, he and his team are aggressively working to ensure this shortfall doesn’t happen to Dell.

Dell looks at building and attracting a diverse workforce. It works to ensure retention and that it can scale to a global organization. Dell Career Restart is one of the interesting programs (IBM has a similar program), and in this program the team looks to people (mostly women) who had to leave the workforce and help them come back once the reasons they left have evaporated (kids grew up, etc.). Dell has a flexible workplace policy, and, when it makes sense, it does allow people to work from home.

Davis then highlighted MARC (Many Advocating Real Change). This program focuses on unconscious bias, eliminating stereotypes and understanding the dynamics of privilege. This isn’t a one-shot effort, and there are requirements for recurring training.  

One of the interesting initiatives is Align, in which Dell takes non-computer science majors and puts them on a 2-year path to gain a master’s degree in computer science. They are also working with a number of educational institutions to increase courses in related technology areas and help create a far better-trained, far more diverse, pool of potential candidates. Davis believes there is the skill and will to fill these jobs; its just a matter of pulling people into the industry, and they are working to do exactly that.

They are working with Mercer to integrate AI with their HR process to both improve diverse hiring and advance inclusion.

Wrapping Up ...

This was an interesting coupling, in that finance is all about numbers and often tends to treat people as numbers on an income statement. HR is all about people, but it has, as an organization, drifted to become more about compliance over time to the detriment of the effort (in my opinion). Both men clearly placed the care and feeding of employees very high on their priority lists. This means that HR will get the funding it needs to make a difference, and that finance will help drive those changes through the firm.

Too many CFOs don’t seem to value the firm’s employees, and more often focus on other areas supporting tools–such as layoffs–for employee management as a result. These executives are fighting this ill-advised trend, and both were heavily focused on metrics. This is historically true of this company; it lives on metrics, and if it isn’t measured, it’s not important. Diversity and inclusion are measured, because they realize the future of the firm is tied to their ability to acquire and retain the best employees available to them. They are aggressively working to increase the pool of folks who are available by massively promoting diversity.

Based on some of the questions being asked, it seemed like a lot of the analysts and reporters in the audience suddenly started looking at Dell differently–less as a company they had to cover and more a place they might like to work.

In closing, over the last few months I’ve heard Cisco Systems, IBM and now Dell spend a great deal of time showcasing the massive efforts they are making to deepen the potential employee pool, better care for their employees, drive higher diversity and inclusion and turn their firms into places where they’d like their kids to work. This, collectively, will result in better products, but it will also result in a far better world.

When firms compete to be the best place to work, we all win.

Rob Enderle is a principal at Enderle Group. He is an award-winning analyst and a longtime contributor to QuinStreet publications and Pund-IT.