Jefferies Financial Group Inc. (CSCO) Earnings Call Transcript & Summary

Hello, everyone. Welcome to Cisco's webinar on Human Capital Management with Jefferies. I'm Heather, your representative for today's event. On today's panel, we have Fran Katsoudas, Executive Vice President and Chief People, Policy and Purpose Officer at Cisco. And from Jefferies, we have George Notter, Communications Infrastructure Sector analyst; and Will Atcheson, VP ESG and Sustainable Finance Strategy. In a moment, I will turn the session over to our speakers but before doing so, I have a few housekeeping notes to cover. Please note, this meeting will be recorded. [Operator Instructions] With that, let me hand it over to the Jefferies team to get started.

Hi, everybody. This is George Notter from Jefferies. I lead our firm's equity research efforts in the communications infrastructure sector. So thank you very much for joining the call today. Today, we're pleased to have Fran Katsoudas with us. Fran is the Chief People, Policy and Purpose Officer at Cisco Systems. Fran leads an ecosystem of folks at Cisco comprised of people and communities, corporate affairs, workplace resources, government affairs and country digital acceleration. Fran has been with Cisco for 25 years. And prior to her current role, she's been in a variety of HR functions across the company, engineering, service provider, all sorts of places. So welcome Fran to the call. We appreciate you taking the time today.

Thank you, George.

Okay. Great. So for today's call, yes, the focus here is Cisco. And this year, the company ranked #1 in the rankings for 100 best companies to work for. It's a poll done in collaboration with Fortune Magazine and an organization called Great Place to Work. And you guys can certainly -- we can talk about how the poll works, but we thought it was a great opportunity to have Fran come on and talk about how Cisco had done so well in the rankings and how Cisco focuses on human capital management as a company. Obviously, it's a really important area and certainly, we are very interested in learning more about. Also on the call we have Will Atcheson, who works at Jefferies. Will helps run our efforts in the ESG space, and Will can introduce himself also. But given the firm's efforts in ESG and human capital management, we're excited to have Will and Fran here to talk about human capital management, what it means to Cisco. So the agenda for today, we're going to talk for about 60 minutes or the call is scheduled for 60 minutes. We're going to have, hopefully, time at the end of the call for questions. Folks can type in questions, and there's a chat box in the interface that you used to log into, you can type in questions anonymously at any time, and certainly, feel free to do that. We'll take those questions at the end. So with that, I'll hand it over to Will and Fran, thanks very much, guys.

Great. Thank you, George. Look, let me just reiterate what George said, we're honored to be having this conversation. Cisco has been leading the human capital charge in many aspects. This is an increasingly important topic to investors and corporates alike. So with that, let's dive straight into the conversation. So how does human capital management at Cisco fit into the broader purpose of corporate strategy?

Thank you, Will, and I'm thrilled to be with all of you. I think this is such an important conversation. And I think our understanding of human capital management has evolved, both in the industry and at Cisco. And Will, I'll step back for just a moment and share that the analytics, the insights that we have today are so much better than what we had historically. And they give us insights to the best of human capital practices, the best of people engagement. They help us to understand the connection to purpose, and that allows us to be so much smarter. I think all of us wish that this space was so easy, and there were like 5 things you needed to do. It's not that way because there's such an important connection between your human capital strategy and your business strategy. And for Cisco, I would say that our journey really started about 7 years ago. And it was when we started to put people front and center in everything that we do. And one of the things that we did very early on was we talked to our leaders around their best teams. We wanted to understand where they saw amazing performance within the company. And at the time, they've given us 100 teams, we studied those teams and we studied the control group, and we could see a difference between those teams that we're producing and incredibly effective versus those teams that were not at that same performance level. And what was so fascinating about that was it taught us that leaders that were incredibly close to their teams, leaders that saw the strength in their individuals, teams that had a significant amount of trust and teams where they really understood not only the strategy of the company, but what success looks like on their teams were outperforming in every way. And the other aha for us was those teams also had the best inclusion. And so Will, I think it was one of the most beautiful examples of where your human capital strategy, your approach to leadership and teams intersected with inclusion in a way that we could see that, and what ended up happening was that became the philosophy for a lot of what we do today at Cisco as it relates to leaders and teams.

Fantastic insight. Thank you. I want to dig a little bit more and specifically into how did Cisco rank #1 on the best places to work?

So the reason we participate in Great Place to Work is because the majority of the decision on ranking comes from our people's response to a survey. And it's anonymous, which I like. Great Place to Work also made a very important move about 6 or 7 years ago, which was they started to focus on the experience for all, and what that means, Will, is that if one of your demographics, let's say, women, we're scoring a lot lower than men, that really brought your scores down. And I thought that was really important because what we have to do is be the best, this goes for all employees. And at Cisco so we talk about the full spectrum of diversity and ensuring that all of your people feel like they belong. And so that's why we participate. And so it's our employee's feedback that has really helped that to get to that #1 spot in the U.S. and to really climb. When I first got to this role, I remember, I think we were in the low 90s. And I remember being really worried about the experience and where we were going. When I peel back the layers and I focus on the experience, I think what has contributed to our movement and the improved experience for our employees has really been a lot of the transparency that we have as a company. And remember, back when we were, I think, '92, we had a very transparent discussion with our employees about what we were hearing from them and what we had to improve upon as it relates to our leadership, our communication how we needed to really think through some of the offerings around development. Inclusion was another really important topic. And I think the transparency is saying, "Hey, I know these things are not where they need to be. We need your help to improve," was a big part of the shift for us at Cisco. And those key tenets around transparency and communication and inclusion and just that dialogue, I think, helped us to navigate the last few years in a differentiated way as well, something that Chuck Robbins has been so thoughtful about is just driving the real conversation with employees. And so as an example, it was a few years ago that he sent out his e-mail to employees on mental health. And just saying, "Hey, mental health is health, and we're here for you. And if you need support, please let us know." And what happened as a result of that, Will, was our employees came forward with a ton of their stories, a ton requests around mental health support, which we started to action immediately. But it created a real conversation to that employees could share what they needed personally, but they could also start to share from a business perspective what they saw that wasn't working. The issue that they thought we could improve upon. And I think that's how these things come together to really impact not only the experience, but your business performance.

Great. And look, I wanted to dive deeper into that mental health initiative, right? Because it's something that I think is a little bit unique for Cisco, or at least we're not hearing about as much in other companies. Is there any color you could provide around those? Any that you feel are particularly impactful?

Yes. It's interesting because when I talk to my peers, just to share this, we're all thinking about it. I think we're all worried about it. We have been focused on mental health, I think, on the last few years, something that has been easier for a lot of companies to talk about as well being. And for many companies, when their employees went from working in the office to working at home, the start time and the end time, just started to believe, and you saw people spend a lot more time at their desk working. And we realized that the commute time was something that actually helped us transition at the beginning or the end of the day. And so I think there's been a tremendous amount of learning. And so from a mental health perspective, recognizing the pressures, the stress, having avenues for our people to talk, helping to really ensure that, again, we are talking about what is on our people's minds and to a certain extent, almost allowing them the luxury of focusing on the day-to-day by helping them take care of those things that are quite heavy has been important for us. And so what it meant was from, I think, a capital perspective, looking at the benefits that we provide, ensuring that when someone wanted to talk to a mental health practitioner, they could talk to someone who had shared less experiences. That was something that we started to hone in. What we also have found for our employees was that in many cases, when they were ready to have someone perhaps support their teenager, the wait time for a practitioner lasts 3 to 4 weeks. And that's really painful when your child is in distress. And so one of the offerings that we provided was an advocacy group to really help our people get to a practitioner very, very quickly. And so those are some of the things that we learned. But again, I think the key point here is that you want to have that dialogue. You want your people to be able to tell you, "Hey, this isn't working. We need support. We need the system to see us differently." The only other example that I would share, and I think it's important because there are big things that you can do, and there's little things that you can do that go so far. And so at the beginning of COVID, we did a couple of things. One, we had a mental health practitioner join our company meeting. And Dr. Zane is still with us today. And so in every meeting, if people have a question about stress, mental health, how to handle an issue where the pressures change you there. And what we're signaling there is that there's no separation between your business strategy and questions that you have on the security business and a question that you have about, "Hey, I'm struggling with sleep or how I handle this issue that I'm dealing with." The second thing that we did, and this was an idea that one of our employees brought forward, was someone shared with us that sometimes, it's really hard to step away even when you're on time off. And so the suggestion was maybe the whole company takes the day off from time to time so that we can all step away, and you're not worried about like what meetings are happening while you're gone or how many e-mails are you getting. And so at Cisco, we have something called Day For Me, and the whole company shuts down. I think we've done about 10 of them so far. And it's a great way for the whole company to take a break. But because we call it Day For Me, I think people also think about what will recharge me, what will refuel me, what am I most passionate about, and there's something really beautiful about that thought process for our people as well.

Great. Okay. And it's interesting, right, that commute home and that commuting really did kind of change your mindset. I remember this first 6 months of the pandemic, I can tell you maybe 20 minutes of what I did, and it was all work. Look, so one of the things I think you highlighted, I think, is important is this idea of signaling that this issue matters. Cisco and the company cares. Beyond that, what is Cisco doing differently? There's a lot of companies who are trying to get this #1 ranking.

Yes. The first thing that I would say is that I think you have to question everything that you're doing. I think you actually have to question those things that are working, even, and ask yourself, are they still the practices and the program that will take us forward? Are they practices and programs that will help the company and our people to transform? And so there's a fluidity in this space that, again, I think makes it fascinating and also makes it hard. So these are some of the things that we're doing differently. We introduced the concept a few years ago called Conscious Culture. And it was a belief that every single employee owns the culture. And as the Chief People Officer, I don't own the culture more than anyone else. And the same is true for every member of the executive leadership team. When you have that belief set, it's everyone's role to really focus on how we are better in our day to day, how we are better within our teams. And something that we realize in Conscious Culture is that you have to focus on the environment, you have to focus on your values and your principles, and you really had to focus on the real day-to-day experience. And the realization that we had is you can talk about your values. But if your day-to-day experience with your leader in your team isn't there, it's not meaningful. We thought it was really important, when we talk about the environment, to drive a different level of transparency. And what we did, which I think is still rather provocative in the industry is that we shared with our employees all of the data regarding the employee relations cases that we have as a company. And so our people could see how many cases came forward on topics like harassment and discrimination and negative behavior. And then we shared what we did in those situations, how many people were coached, how many people had a formal warning, how many people were exited and why? And it was a way for us to really drive this dialogue to be clear with our expectations, also to share that we're all learning. And in some cases, there was negative behavior, but with coaching and really transparent dialogue, a leader or a team member could learn and move forward and have a great career here as well. I always remember the day that we shared our employee relations cases, our Head of ER shared, of course in an anonymous way, specific issues that had come up. And I remember in that moment feeling almost the shock in the system that we were so transparently sharing this information. And after the meeting, I remember a leader came up to me and he said, "I saw something yesterday and it's the second time that I've seen this occur in leading, and it's not right and I'm going to do something about it. And I'm going to have a conversation." And that's something, Will, where I feel like -- it's a heavy lift. There's risk associated with this as well. But I think what our people see is the level of transparency. Yesterday, I had an employee come forward to me, and via Webex chat, say, "Hey, I don't think my manager is living the values, what should I do? I said, "Okay, this is who you can talk to about that. Thanks for bringing that forward let's step forward and just kind of figure that out. And that's what you want in your culture, it makes you better. And so that's an example of something that we're doing that is pretty different. And I think it's important, again, to just say that our people feel a lot of our best ideas. This concept of Conscious Culture came from an employee who saw a situation where she felt we could be better and you want that channel. And that listening and that transparency, I think, is the heart of a lot of what we're doing today.

We're not joking about the transparency there. That is fantastic. And it sounds like there's a lot of psychological safety at Cisco, and I applaud you for trading that culture. Look, so we've talked a little bit about the transparency, how you're doing this. Can we talk a little bit about how you might measure this or track progress? Specifically, how do you use employee engagement surveys? How to use culture consultants and other potential resources?

Yes. So it's such a great question. And I think all of us in the industry right now are listening in different ways, and I think that is really, really good. If you go back in time, I don't know if you remember this, but it's really funny, a lot of companies would have the annual survey. And you put the annual survey out, and then it would take like 1.5 months to get the survey back, and you'd read the survey and then you're trying to remember what was going on when the survey went out, and it's just wasn't moving as quickly as the business. And so the most important thing now is that your listening has to be always on. This is also a beautiful example of where technology can help. And so at Cisco, we have a multipronged approach to listening, to your question, really the measurements that help us understand where we are. And so some of the things that we do, in every meeting that we have with our employees, we're able to take, as an example, chat, we're able to take questions. We're able to run it through sentiment analysis. It gives us a good understanding of what are the emotions, where are our people at? I can go into a meeting knowing, "Gosh, our people are hopeful, they're annoyed, they're worried." And that, as a leader, is so wonderful because I can say, "Hey, I know you're worried, let's talk about what's going on." From a measurement perspective, something that we have done at Cisco for over 5 years now is that our employees check in with their leaders on a weekly basis. And when they check in with their leaders, they share their priorities for the week that connects us on the work. They share their love and their loads from the previous week. And they share the extent to which they're playing to their strength and the extent to which they feel valued. We measure the number of employees that are checking in. A measurement that I think is even far more important is when an employee checks in, does their leader read the check in? That attention. And leader attention is everything, well, I can correlate attention to retention. And so if a leader is not reading their employee check-in, there is a very high probability or a higher probability that, that employee will become a retention risk. And when you can connect the dots that way, it really drives behavior. The other thing that we look at, we have a survey that we do on an ongoing basis called Real Deal. It helps me to understand how our employees are viewing key issues around the way in which we operate. It allows me to understand their connections, how they're feeling about their work. That's something that I can measure and correlate to performance as well. The other thing that we do is every leader on a quarterly basis runs an engagement survey. This is different, and people ask me, "Why don't you just have the engagement survey go out to the entire company at the same time?" There is a difference when your leader says to you, "I want to know how you're feeling about our team. Do you feel there's trust? Do your teammates have your back? Are you optimistic about the mission of the company? And so we do that. That's something that I can measure as well. And so I hope that what you're hearing is that there are so many different ways that we listen, that we correlate some of the listening to either performance, to inclusion, to overall engagement, that really guides us, and it's just something that has to always be on.

Got it. Thank you. And look, you've highlighted a lot of the importance of leader attention, the idea that people should be reading and engagement. And since COVID, we've really had a change in how companies operate, right? There's remote, there's hybrid, there's in-office. Can we talk a little bit about your perspective on those? And how does that play into human capital management?

Yes. It's so interesting because I think we, across the industry and across the industries, I think we've had this really fascinating dynamic, which is it's still binary. Are you hybrid or not? And it doesn't work that way. And I think what we have to look at first is the work. I think the more sophisticated we can be about the different types of work, and then the ways in which we do that work best will get to the solutions that are best both for the business but also for our people. And so as an example, what we did at Cisco over a year ago is we provided our leaders with the tool kit so that they could talk to their teams about "Gosh, how have they been doing fully remote? What are some of the learnings that they've had about the work? What's better? Perhaps, what isn't as good in the way that they're working? Are you a warning person? Are you an evening person? How do you want to work? How do we get the best from you? And from that dialogue, teams figured out how they wanted to work. And what that means is that at Cisco, there isn't a prescription around how teams work. There is a request for teams to have this discussion to really look at the impact and then reassess and continue to tweak and learn from all of these different phases of work. And what we're finding is that over the last 2.5 years, very different behaviors and habits have formed, and some of them are really good. Some of them, not so much. And so we just have to figure out how do we navigate through that. And so something that we've been seeing recently is that being remote for 2 years thought us that you don't actually have to come in to work to work. And so it leads to a really important question, which is, "Well then, when do you come in?" And I think now at Cisco, every single leader is an event manager. And these event managers have to really think about is the team connecting, do they need to be face-to-face and by hearing from everyone, how do I bring the team together. And so these are the things that we're doing. And then I think the other thing that I would say, and this is a really cool example of what we're doing not only from a Cisco perspective, but for our customers as well. In Webex, as an example, there's an area called Personal Insights. And within Personal Insights you can see the number of meetings that you're taking on a weekly basis. You can put in, "Hey, on most days, I'd like to take meetings from 8:00 to 3:00, and then I'd like to use a few hours to do some work. And based on that, you can see how you're doing. You can also see when you set up meetings outside of someone else's work time. You have the ability to see who you spend your time with. When I'm coaching people, a lot of times I say like, "Who are the people that you need to be spending your time with to be most effective in your role? Take a look, is that where you're spending your time?" And so I think the tech is also making us so much smarter. And so my thoughts here are focused on the work, focus on what brings out the best in your people, know what brings out the best in yourself and then you use insights to hold yourself accountable. And so that's how we're navigating through. I will tell you, it is not perfect. I think there's a lot of discomfort in some cases, around the fact some of our leaders want to see their people more, and we're just navigating through. But I think if you focus on those big questions at the top, you're going to figure out the right way to do it.

Great insight. And it's interesting to me because a lot of people went to at-home potentially making mid-level management slightly less valuable, but it actually sounds like it's the opposite, they have to be engaged. They have to be tracking. They have to proactively reach out to people. I think that's a great insight and very differentiated from what we're hearing. So look, let's talk a little bit about best practices for training and development of your work force, right? The human capital asset, we're constantly told it's the most valuable part of the company. How do you make sure you're getting the most out of it?

Yes. So the first thing that I would say is that I think before, a lot of people felt like, you go to school, you get your education, you start working and you're done. You may change roles and you may grow, and there's something we have to break here. And that is, first of all, there's going to be different paths into the company. There are some people that will come in straight from high school. There are some people that will come in without a college degree. And that's going to be okay because in this new world, training and development is going to happen all the time. And I do believe that it has to feel a lot more bite size. I do believe it has to be something that the business prioritizes, and I'll talk about that here in just a moment. I think we all know how it is when we hear about all of the great training and development offerings that our companies have. And I think we all feel this way, and you see an e-mail coming out, talking about this great session. And you struggle to figure out, can I do this? Can I make time? I think there's even some people that wonder like, "Is my leader okay if I step away for a couple of days and do this work." And so something that we are experimenting with, and we started this last May, is a concept that we call [ Alumnae ]. It is where we actually set aside approximately, I'd say, about 12 hours at the start of a quarter for the entire company to go through training. And the cool thing about it is that you get to choose what it is that you take. And it's everything from leadership skills, it can be going deeper into your specialty. It can be some work from a team perspective. When I think about some of the sessions that were really popular this last May, growth mindset was something that was really important. We did a session on purpose that I think was really meaningful for our people and talking about company purpose your own purpose and how they come together in a very meaningful way. So making the decision for the company that we're going to do this week makes is okay for everyone to take some time to focus on their development. And you're signaling something that is really, really important. What we plan to do as we move forward is to tie that training to the business cycle. So as an example, Cisco's year-end is occurring in about 3 days. And so the next session that we will do in September is going to be really all about some of the planning that we do as an organization, some of the motions that we're going through in helping our leaders really raise their proficiency and helping our teams understand why we do a lot of what we do. This, to me, is a very different approach. I think it's important. I think the only other thing that I would say, of course, is that all of us have to become so much more focused on skills. And I think from a human capital perspective, we made skills too far, and we created ways too many of them. And as a result of that, what would happen is a company would go through a skill set assessment, you finish it and then you feel like skills have moved. I mean something that we're realizing is that our business is transforming so much faster than our skills and our capability to understand what's coming. And so the more that we can simplify skills, the more that we can use technology, we're moving in this direction at a Cisco perspective, we're going to create amazing career path we for our people. And I think there's a nice win-win there, too.

Yes. No, look, we're halfway through this and it's already become clear that this is a very thoughtful -- it takes time, it takes resources, and again, we get to be very thoughtful for this. And I think some corporations or some companies are missing this. But look, you've created this great human capital. You have great management practices in place. And then you couple that with the idea that there should be a lot of skills trained while you're working. So how do you go around hiring? How do you source talent, right? Is this blind hiring? Are there assessments? What are tools you use to make sure that you don't ruin the secret sauce that you've created?

Yes. And I think against the backdrop of the great resignation, most of us are doing a bit more hiring than we were in the past. And what you realize is that on the one hand, it's intensive to be hiring, even if that's just 2 or 3 more percent than you had in the past than what you had planned as a result of attrition. But the second thing that you recognize is my goodness, this is a transformation lever and this was an opportunity. And if you're attriting -- and I'll use Cisco data, I think this year, we'll attrite probably about 12% of our employees. If you're attriting 12%, it's an amazing opportunity to really think about the skills that you need for the future and look at this as potentially a great way to leapfrog as a company as well. And so I would say this is another area where the level of experimentation always has to be on. We are a believer in blind hiring. Specifically, we had tremendous results in Asia Pac on blind hiring. And what it did for us was it helped us to understand some of the skills and capabilities that were a little bit more transferable than we understood. It helped us to understand that there were some companies that we never thought would be great pools of talent that actually we learned once we removed universities and names, that's what blind hiring is, from resumes, that there were new motions that we could build. And so I would say, one, that was incredibly helpful. And especially in a technology area where what you really want to understand are really some of the raw skills and the capabilities. And so that has been helpful. The other thing, and I think startups do this really well, is that in startups, you find that your leaders are always out there understanding who is the best and brightest. And they're not just relying on recruiters to do that. And so something that we have done at Cisco is we've asked our leaders to really be thoughtful. In a startup, if there's only 25 people, 50 people hundred, every hire is so significant to your success. And I think even at scale for Cisco, like that mentality is important. So how do we help our leaders build their skills and capabilities around networking and those places where they can also meet amazing talent. The other thing that we're doing is we're going after skills and talent that honestly, we never saw before. And so we're part of a great coalition called OneTen that helps us to get to black and African-American talent, and we have made a commitment as a company to really increase our hiring. This was a huge opportunity for us. And what we're seeing is that some of the talent that's coming in, as an example, is coming into our technical assistance center, which becomes an amazing pathway into an engineering role or other services roles. And so really looking at different pools of talent, I think, makes Cisco better. And so you have to have this always-on motion, you have to remove some of the requirements like college degrees and know that you're just going to get the best and brightest. It does mean that you as a company has to invest more in helping people because this could be their first role where they're learning how to work in a corporation and on team, but we can do that. We know how to do that. But I do think, if I look at all of the areas from a human capital perspective, this is the one where in 5 years, I think we have gone through 3 pretty significant evolutions, I think. And it's important, I think we will continue to do that. Something that we're doing at Cisco at the moment is we're trying to build a little bit more of a muscle around that internal movement. And so right now, we're working and having our recruiters put more focus on helping internal people get to their next role at Cisco. And so I think that, together with really going out to diverse pools of talent, will be a game changer for us as we move forward.

Got it. Got it. And look, we've talked a little bit about investing in employees, training retention, et cetera. On the human capital management side, one side that we've been traditionally focused on as investors is compensation benefit, stock-based compensation. Can you provide some perspectives or color around how that works into your human capital management?

Yes, absolutely. So the first thing that I would say is that I think I saw a study. I think it came from Gallup. That said, and I'll bring the number down because I want to make sure I'm getting it right, that it says something like 85% of Chief People Officers felt really unprepared in the compensation area with the dynamics of inflation and the great resignation going on. And so it's interesting because while your levers are pretty consistent, the thoughtfulness in how you leverage those levers and understanding what your people want, I think is so important. So let me start by saying there's an important role here from a listening perspective. And maybe I'll start at the employee level, and then I'll move up to the executive level. From an employee level, the always-on listening, I think, is incredibly important. What we've heard, as an example, from our people at the beginning of the year was that, "Hey, cash in hand at this moment with inflation is really more important to us." Together with our people, we made some tweaks to our levers to get them some of the cash a little bit faster. That was something that 85% of our employees said was really important to them. And so we're always thinking about the behaviors that you drive. You always want people invested in the long term. You want them focused on their current performance, and you want them to recognized for exceptional work. And so those are some of the tenets that we look at. I do think we can be a lot more flexible in this space. And I think that's a little bit of what we demonstrated to our people. And we had a leadership meeting 2 days ago, and my team was laughing because when you have a meeting on compensation, typically no one is satisfied on compensation. Everyone is going to want more. And I think our people just really appreciate the direct conversation about that. Now as we move into leadership, what you want from a compensation perspective is you want to ensure that you are compensating your people against the biggest goals that you have as a company. And so as an example, our leaders all have an inclusion plan for their organization. And so it only makes sense that our leaders now are held accountable to, are they meeting those goals? Are they meeting the goals that we have around sustainability as a company? This is newer for us. But again, I think it's a really important motion, and we constantly work to try to get the balance right. I think our people appreciate knowing too what we are holding our executives accountable for. One of the areas where we took, I think, a really big step forward, and I'm so proud of the team, is around our social justice actions. And we published our social justice actions, our commitment, and as an example, within those commitments, what you see our commitments around representation, around hiring, what the organization should look like. And I'm really happy to say that at this moment, we're outperforming all of those goals. And so what we're doing is we're changing some of the systems. Compensation is one of the levers in how you do that. It's not the only lever, but I think it's important for us to talk about it that way as well.

Yes. Great insights. We always want more, but it's not the only lever as you highlighted. We found the same thing in our research. So look, you already touched a little bit on the great resignation. But I was wondering if there's any additional perspective. And then also, as you're looking forward, right, are you adjusting your human capital management because of this great resignation? Or are you leaning more into your already existing very thoughtful, very well-liked approach?

I think you always have to evolve. I think the great resignation challenges us. And I think it's hard, but it's good for us. I think it's really good for us to constantly challenge whether or not our practices will be sufficient as we move forward. And I want our people, not just my team, to constantly pressure test that. Yesterday, I received an e-mail from an employee coming off of the compensation meeting. That was so thoughtful and the like 8 or 9 points that he had about how we reinforce some of the behaviors, and I feel like maybe you should join the team, but that's what I want. I want everyone thinking about it that way. So if I look at the great resignation, there were so many different dynamics. I think what we saw, especially early on, a lot of employees were asking like is it worth it? Like with everything going on, how do I want to work? Where do I want to be? Well, I do think that was a moment in time. I think then what happened was the market became so hot that people were receiving offers that were so compelling that it gave them the opportunity too to really question where they wanted to be, what their goals were from a compensation perspective. What we found at Cisco, and I think this is still very important, was that the attrition could have created an opportunity for more people externally to come into those roles and/or it could create an opportunity for us to promote our own people and to take a bet on them and to recognize that if we don't take a bet on them, the market will. And so what we saw during the period of the great resignation is that in 1 year, 30% of our people were promoted. That is a significant increase for us. I would do that again and again and again because you're betting on your people, you're giving them a chance. Maybe in some cases, that promotion thing a quarter before we thought we were going to do it. But I think what it does is it keeps your people committed, it keeps them growing, it creates this amazing environment of people that are looking at the work in new and different ways. And so to me, that was one of the big takeaways of this era is that you're going to have to bet on your people. The other thing that it did was it reinforced the basics. So I mentioned earlier, if your leader isn't paying attention to your team, the data tells us, and I think we've all had this experience, we know this, your people are going to feel like they're not a priority. They're not valued. And so we were able to go back with our leaders and just help them and remind them that with all of the things that they have on their plate, this is one of the most important things that they can do. I do think it also created an environment, I think this is an opportunity for us, where we have to do a better job of having the career discussions with our people, not just about the next quarter or 2, but 2 years from now, where they want to be. And I think those conversations are everything. I think this work has helped us a lot. Last year, our attrition was 9%. And the tech average was 19%. This year, I think we'll end at about 12%, and the tech average is about 22%. And so that's meaningful. That's meaningful. I want us to stay below because 12% is still a lot for us, and I think it puts a lot of pressure on your leaders. And it's something that we'll continue to really learn from. But I think those takeaways about the basics, those takeaways about making bets on your people and career are the biggest takeaways.

Got it. And fantastic delta there relative to the tech community. So bravo. Look, so we've already kind of hinted at this but we're trying to understand what does Cisco collect to really measure and evaluate human capital engagement, inclusion, retention and as you pointed out it's so important, leadership attention.

Yes, that's absolutely right. I mean, those are the key levers that we look at. Something we haven't talked about as much is the role of purpose in all of this, Will. And so one thing that we have recognized as a company is that the focus on purpose, I do believe, brings a level of engagement of our people. This year, 82% of Cisco employees participated in giving back to the community. That is an incredibly high number. And what that does is it creates, I think, an environment where our people are, looking at the communities, I think it gives some context. I think when you do that, I think you have bigger perspective. It creates this element of servant leadership, which I think is so incredibly important in the environment. And when you have those things, I think you create an environment that is low ego, which is so incredibly important for the work because when it's not about me, when it's about the work and how I can be best for my team, you produce so much more. And so yes, to your point, we look at all of those factors. We look at the extent to which our people are volunteering and participating because we understand there's power there as well.

Great insight. Look, we've gone through the 10 questions. We've had a couple come in, though, so I'd like to highlight a few of these. And I'm just picking on order because we're running out of time here. What is Cisco's #1 challenge with human capital management?

Yes. I think our #1 challenge, and we see this in the Great Place To Work survey as well, is that people want to understand more and more, what do I need to do to get to the next level? And so I think that focus on promotion velocity is good. I think we need to be more clear with our people what they need to do from a performance perspective and then the roles that they can move to. I think this is one of the next big opportunities for us. And it's a bit of an unlock. So as you would imagine, if I'm an employee, I don't know what I need to do to get to the next level. If someone calls from the outside and says, "hey, we have this role at the next level," it becomes so attractive. I think we owe it to our people to drive more clarity around promotion velocity. So I think that's one of the biggest opportunities we have.

Yes. No, that would be incredibly important as a worker myself. Look, the other thing -- the other one that's come in is what -- if you could list a couple of quantitative metrics that you'd like the SEC to require to be disclosed by companies, what would they be?

That's such a good question. I think right now, where we are focused is really on some of the key metrics around sustainability and some of the work that is going on right now. I think you know this, but we have made a commitment to get to net zero Scope 3 by 2040. We're so proud because recently, our plan was just reviewed and the science-based approach basically said, "Yes, good plan," and we want that. I think for us, for the planet, the more that we can look consistently in this space, I think it is incredibly important. As you would imagine, the other place where I just feel like the more that we disclose and share, the better we're going to be. It's really around our diversity. I think that has driven a lot of tremendous improvement across the industry, and we have so much more to do. And so again, company by company, we speak different languages. We talk about different metrics some of the consistency that I see now, I do believe we'll make the workplace such a better place. And then when you look at sustainability, really have an impact on our future as well.

Got it. Yes. And we would agree -- obviously, I focus on ESG and sustainability, so we would agree. Look, everything we've -- I just want to wrap it up. We're running really on almost an hour here, but out of everything we've discussed today, what is in your view the #1 driver of you being ranked #1 in the Great Places to Work list and then, what has you very excited for next year you think it's going to help continue to drive this?

If I had to net it out, I would say direct, transparent 2-way communication is at the heart of the progress that we've made and the progress that we have to continue to make. And I will tell you, Will, I always am worried about, like, for us keeping on this trajectory of improvement. I think it's so incredibly important then. It's a funny feeling when I was talking to one of my peers a few days ago. We're ranked #1 in the U.S., and I still see that there's so much we have to do. And I think one of the gifts of being in this place has allows us to ask the question, "How does a best company respond to this issue?" And I think the more that all companies can ask that question, it pushes us to increase our expectations, our baseline maybe to even challenge what we once viewed as a good-enough metric. And so that's what I would say. But I will tell you, I stress a lot about, "Okay, we've done well, how do we just continue to drive that improvement?

Yes. And look, for what it's worth, we spend a lot of time on this issue, human capital, human capital management, and you are clearly a leader. So congratulations. Look, we're wrapping up on the hour. So I just want to take the time to thank all of our participants and thank you for your time, Fran. So with that, I'd like to hand it back over to Heather to make closing remarks.

All right. Well, I'd like to thank everyone for attending the session. We hope you found it informative and valuable. A special thanks cost to our speakers today. Again, please take the survey, which will pop up as you exit. I hope everyone has a great day, and goodbye. Thank you.