At a series of four breakfast roundtable discussions held in October and November 2002, members of the tri-state area human resources community shared their experiences and views on how they expanded their presence within their companies from being reactive and administrative to being included in strategic activities.
TMP Worldwide invited HR leaders from the community to speak from their experience. Fourteen panelists and over sixty New York HR professionals, ranging from senior VPs to HR managers to recruitment professionals, came together to share their views with their peers. The interactive and dynamic discussion revealed practical steps that any HR executive can take to become part of the strategic arm of their organization. These are the results.
Aligning HR with the Senior Management´s Objectives
Romy Encarnacion, a global HR Consultant and former Vice-President HR for Colgate spoke of the essential need for HR executives to align their initiatives with those of senior management.
Romy states that the President´s job is to grow the business and increase the earnings per share. These drivers include the need to increase revenues, margins, and income, to expand advertising and promotions, and to lower overheard and working capital/inventory.
To achieve the President´s objectives, the business must develop and sell new products, drive sales, manage the distribution of these products, and grow their margins. Romy asks, "How can an HR executive influence the job of building and selling products?"
The Need To Understand The Business
Romy states that an HR executive cannot be truly strategic if he/she does not understand what the business is all about. By understanding the business, the HR executive can have more influence in orchestrating the business execution.
At Colgate, Romy was able to orchestrate the business by talking with the business leaders to learn where the problem areas were. He then proposed strategic solutions to address these problems. For instance, while their key account strategy changed dramatically with the rise of retail chains like Walmart, their sales force had not. The sales force was comprised of executives who were familiar with working with "mom-and-pop" stores. They had built personal relationships with the storeowners over many years. Selling to Walmart required an entirely different type of sales executive. By identifying the business need through discussions with the field management, he proposed a two-pronged strategic approach - a) train the existing sales reps and b) recruit new reps who came equipped with the necessary skills. The key for Romy was to listen to the business leaders and then orchestrate ways to change the business to reflect the changing needs.
Peter Carley, Vice-President HR for Euro RSCG Healthview, a pharmaceutical advertising company states that "you must know the business and talk the business...as much as each of the functional heads." Every company and every industry has its own jargon. When he joined Healthview, he was not familiar with the pharmaceutical advertising business. He tapped into both trade magazines and those focused on the business functions (such as CIO and CTO). Whatever his leaders read, he would read.
In addition, he asked to be included in the new business pitch process. He wanted to see the sales force in action. He asked to be on their email lists. He admits that he was soon inundated with emails but his finger was now on the pulse of the business. He knew exactly what was in the sales funnel and what talent would likely be needed.
Peter recommends that HR executives join in on the client presentations. He counsels, "Invite yourself to them. It may take some finesse but its essential in understanding the business."
Lew Sears, a Senior HR Consultant with over 30 years´ experience heading HR for Fortune 100 companies, including Citigroup, tells HR executives to avoid HR jargon when working with business leaders. If you start your discussion from an HR functional orientation, then you are further away from being able to influence the person at the table. He cautions that if you only represent the HR function then you will be relegated to representing the small HR budget, defending costs and improving HR processes, rather than influencing the strategic development of the business.
HR Is A Business Function, It´s Not The Business
Lew reminds the HR community that the human dimension of business is not HR. The quality and depth of talent, how well the organization works, labor costs, labor productivity, critical skills - these are all human dimensions critical to the business but not of HR.
When Lew speaks of HR, he speaks of the HR function. How innovative is HR performing their function? What are the HR processes? Are they optimized? How is internal customer satisfaction? What is the HR budget?
Elizabeth Wood, Business Consultant with Breakthrough Productions and former VP HR for a leading retailer, cautions that you cannot move people toward more strategic roles unless you change the work that they are actually doing. There´s a big risk in saying, "OK, HR is now going to become strategic" when everyone is still doing the same job they were doing before.
In Elizabeth´s experience, HR is internally focused. HR worries about what HR should worry about and does not look at other external factors. In her case, when her department was faced with external pressures such as how to develop the organization to be an employer of choice or how the global market was impacting its staff, they were forced to look outward.
In her last position, she helped her HR organization to become more strategic by training the store managers and district managers to have those "difficult" conversations about performance management with employees that they had previously passed on to HR. She brought in a consultant to train the employees in having these conversations. The result was a freeing up of her staff´s time to focus on more strategic activities. She valued the consulting services so much she joined the company.
Elizabeth states that if you are an HR leader wanting to be more strategic, you must bring the whole team with you. That may mean hiring HR staff with different skills and changing some of the HR organization´s personnel, as well as automating or outsourcing some of the HR functions. Her big realization was that even though HR´s role had become more strategic, the work that HR had done before had not gone away.
Elizabeth says that it doesn´t make sense to go out to the field and tell the management that HR is now going to be strategic - this will only set the HR organization up for disappointment. She believes that you must change the HR organization over time and allow it to organically become a business partner. If you, as an HR executive want to become a business partner, then you must realize that the business leaders will want HR only as a "new partner" and not as the "old HR."
Building HR´s Credibility
Scott Klein, TMP Worldwide US Director of HR, states that it is essential to "Say What We Do and Do What We Say." It is all about building credibility.
While this may seem obvious, he says that his team is careful not to over commit. In a company that has changed so dramatically as has TMP, it´s tricky. "Most HR professionals are service professionals - all they really want to do is say yes and then before they know it their plate is overflowing."
Scott says that even though his group has made progress in being part of the strategic team, they are not always "invited to the table." In those cases, it´s important to maintain the right attitude. When something comes up where HR is not initially invited, he suggests that you get a strategy together and ask the line manager for a meeting. Talk about how HR can make a difference or how HR can facilitate in making the business more cost efficient or eliminate pain. Do not go in with an attitude such as, "you left me out!" Just step in as if nothing´s wrong.
As an HR executive in the Professional Services arena, Don Gaile, Vice President Human Resources for Xansa, a UK-based consulting firm, suggests the following: "...continue building key relationships and trust. Because we''re in the people business and many of our solutions are not mathematic in nature, we need to rely on the strong relationships and trust we''ve built up within a company. Once we''ve succeeded with senior leaders, they are more likely to trust us as we suggest and recommend tactics to try something new."
He also reminds HR executives to stay focused on ROI. "As much as possible, HR professionals should attempt to translate a benefit into a bottom line benefit. Senior leadership''s first priority is with the numbers and if your solution doesn''t benefit the bottom line, chances are it won''t be implemented. This is where cause and effect rationale is useful. If you want to implement a training program or development tool, it will improve productivity thereby decreasing your costs and increasing profits."
More on Building HR Credibility
Rose Rappaport, former Vice President HR for BMG Music, needed a year and a half of relationship building before senior management was ready to implement some of her organizational development initiatives.
AT BMG, HR was considered the emergency room. If there was a problem, HR would react and fix it. She built credibility as an advocate for employees as a manager who held a mirror up to senior management. She became an HR coach and initiated internal customer survey work developing a rapport with the field. She worked with a business leader who had a reputation for being an intimidating "benevolent dictator." She spent time out in the field meeting with his troops. She had the courage to speak directly to this leader about the business issues and would bring to his attention issues that were festering in the field but were not being addressed.
She told the field staff that when she went into his office she attached a bungee cord to her belt so if he would yell or scream, she would be safely bungeed out of his office. She called this the "bungee cord procedure". Her colleagues began asking her to be their liaison since she was not intimidated by this individual. Her bungee cord reputation grew. One day she went in to his office and he asked her if this was "a bungee cord question." He had heard about her "procedure" from other colleagues. From that point on, the leader and Rose were able to work more closely together, and she became his coach on behalf of the field.
The music retail business became increasing difficult in the late 90s with new forces such as Napster impacting the business. Based upon her experience in the field, Rose now proposed several initiatives to help the retail stores deal with the new threats. Because the leader felt he could rely on Rose, he agreed to support her initiatives. She was able to implement these strategic initiatives because she had developed a strong relationship with him.
Outsource or Reorganize HR Functions to Maximize the Internal HR Talent
Bill Allen is the Senior VP Human Resources for Altas Air. For the past five years, he has been their top HR officer focusing on managing HR issues within the air-freight industry. Bill speaks of the need for HR to be lean and focused in order to gain credibility with senior management.
He identified what his HR organization´s core competencies were and then outsourced the other functions. In his case, labor relations was their expertise so he and his team focused on delivering these services and then outsourced the compensation, recruitment and training. The firm had grown from 400 to 1600 employees within a few years and the business had significant labor relations issues. By focusing on the value-added service that his internal HR organization was able to provide and then by outsourcing others, he has been able to develop strong relationships with line managers and become better aligned with the business.
Introducing the Board To A Role HR Can Play
When John Gillespie, Sr. VP HR for Pepperidge Farm, was an HR consultant, he was asked to help the Board of a public manufacturing company address the significant changes undergoing the business. The company had been a regional manufacturer of paper goods and was unable to grow beyond a certain level. The Board brought in a new CEO whose mission was to sell off the regional business to raise capital and then acquire similar businesses overseas, completely transforming the business. This charismatic CEO had been on board for six months and was accomplishing this objective. In his wake however, the company was becoming more susceptible to risk since the new businesses being acquired had different customers and a completely different risk profile. They were not just evolving this organization, there were in a revolution.
John assessed the situation and offered the board a strategy for bringing the business into line. He thought a lot about how to talk to the Board, which wasn´t sophisticated in organizational theory but understood business models. He took them through a simple model showing companies that were going through change. He showed them in a chart how the company´s risk profile had changed and what the consequences of this new risk were.
All of the Board members were familiar with business models and financial models. John used the business model approach to introduce them to a fairly simplified concept of an organization transformation model. John states that organizational transformation is as complex as financial transactions but like financial transactions they can be understood if they are plotted out.
He asked the Board questions such as, "How do we organize? Do we need new titles?" Senior leadership worked on these issues including the underpinning of HR and IT which were key enablers to driving the model.
He presented the Board with a study by Booz Allen, which documented companies which were undergoing strategic rollups and had been successful at it. Booz Allen had found that in those companies where the Senior Management had aligned with the organizational issues (such as linking IT and HR with the business goals) the companies succeeded( Strategic Rollups: Overhauling the Multi-Merger Machine, Kocourek, Chung & McKenna, strategy business, Issue 19, second quarter 2000. Found at http://www.boozallen.com). By coaching the Board on what the company´s issues were (beyond the financial numbers) and how HR could help guide the firm through its changes, the Board began to rely on HR´s strategic direction.
Learning from The Dot.Com Crash
Jim Craven, SVP Human Resources, and Tom Kucinski, Director, Global Compensation, for VNU, (a Dutch firm with over 38,000 employees in over 100 Countries) spoke of being HR executives riding the Internet boom and bust. During the boom times, their biggest problem was attracting and retaining talent and paying them appropriately (the Internet brought the age of stock options and huge stock evaluations from competing firms).
They were able to "take a seat at the table" by judiciously proposing relevant solutions to this business challenge. They learned how to be proactive in identifying solutions for their current challenges while acknowledging how essential it was to get the basics right. They educated senior management on the need to work differently since the "we always do it this way" attitude was not helping them to overcome their challenges.
Building Relationships Between Departments
The bubble burst and so did their dot.com challenges. The experience taught the VNU HR Team that by implementing a "Silo Busting" strategy they could drive collaboration from one of their organizations to another thereby gaining more value from their organization´s broad reach. The implementation of this strategy and its effect on the business is still in process.
As the overseer of compensation plans, Tom knows that people will do what they´re paid to do. So while people see the value in selling outside of their particular business silo, they will only focus outside of their silo until they are motivated (i.e. paid) to do otherwise. The early results of the silo busting activities continue to be encouraging.
Romy Encarnacion of Colgate says that HR needs to make certain that those in marketing and product development understand project management and team building, because often marketing, sales, and manufacturing don´t talk to each other - and they need to in order to grow the business. An HR tactic for orchestrating this kind of change can be initiating by leading team-building sessions.
He took the initiative to engage in team building exercises which brought together marketing, sales and manufacturing. He admits that he´s been to countless team building events and that they rarely work. In his experience the only team building meetings that have worked are those that are targeted at very specific objectives. For instance, aligning the overall budget with each separate group´s objectives. For example, the budget for this year is x, how are we all going to achieve these targets together?
Taking The Initiative (Learning How to be Pre-Active)
Michael Berman is not an HR executive. However, as a Principal with C-Path Solutions (a turn-around consulting firm) he´s worked closely with many HR executives in helping companies turn around quickly. He spoke with passion of the need for HR to take a leadership role within companies. What he´s seen is that internal issues always put HR in a reactive mode. We have to cut costs, help us lay people off, and fix problems.
He states that in a dynamic organization, the connective tissue in the organization is HR. They are the ones who can build bridges between sales and marketing and marketing and manufacturing and distribution and product development. HR is a trusted voice because it doesn´t have an agenda.
Michael sees highly successful HR executives as being able to be "preactive." He defines proactive as the ability to respond to today´s challenges and to deal with them today. He defines preactive as the ability to anticipate what will happen if one continues down a certain path.
He suggests that HR executives who have a desire to be strategic remember that it will require them to be "front line and center" in the business. They will be much more visible than they typically are today. It´s a leap for many HR executives and he knows that it´s not right for everyone.
Developing Training as a Strategic Initiative
During the late 90s, Jerry Whelan, US HR Director for OCE USA, a $3.2 billion global corporation with 22,000 employees, had a significant challenge within his sales organization. Not only were his people unable to transition from transactional selling to solution selling, but they were also leaving the company to take higher paying jobs. With over 1,000 sales executives in the US, this constant churn impacted the company´s ability to maintain and grow its revenues.
His solution was to introduce a learning culture to the organization. He proposed putting a dollar amount on training to incent the sales executives to take training programs over a three to five year period. The HR organization went out to the sales organization to find out what skills they needed in order to be successful at their job and came up with a list of core competencies.
They then established an individual development plan for each sales representative with a schedule for how they would complete their training over a twelve-month period. In addition, they asked their sales people to develop an action strategy to meet these plans, ensuring that the plans were attainable, realistic, and timely.
By taking the training and achieving over 75% of their sales goals, the reps earned additional bonus dollars. These bonus dollars were paid out as part of a retention plan, so the reps would receive these monies after a three-year period.
Developing Training as a Marketing Initiative
Jeanne Meister is not an HR executive, but she´s worked with countless senior HR executives. Her background is in marketing and then training with Citibank. She has written two books on the subject of training and built a company called Corporate University Exchange. Through her research into training services, she identified that 50% of all Chief Learning Officers within organizations report to HR.
She echoes our other presenters that HR needs to align its services with business needs. Training is one tool in HR´s arsenal. Jeanne presented a case study of the Iams University. This virtual on-line university is not only offered to Iams employees but also used as a marketing tool to train the entire Iams´ "value chain." The site is available for free to train veterinarians and pet store owners while always promoting the Iams´ product line. This innovative use of the technology and information is helping Iams´ HR organization become an integral part of the company´s business marketing.
On Becoming More Strategic
The consensus among the HR executives is that there is a gap between HR´s current role and their ability to offer strategic guidance. They identified that becoming strategic starts by taking the initiative to establish your credibility. HR executives gain credibility by getting to know the business. As the HR executive gains an understanding of the business, develops and strengthens relationships with business line leaders, and uncovers and identifies and reports the business needs to Senior Management, he/she de facto joins the other business leaders in steering the business toward greater growth and stability.
Roundtable presenters:
Oct. 2nd
- Jim Cravens, Senior Vice President, Human Resources, VNU (AC Nielsen)
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- Tom Kucinski, Director, Global Compensation VNU (AC Nielsen)
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- Don Gaille, Vice President, Human Resources, Xansa
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October 16th
- Jerry Whelan Director, Human Resource Operations OCE USA, Inc.
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- Romeo Encarnacion International Management Consultant Formerly Colgate Palmolive
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- Mike Berman, Principal, C-Path Solutions
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- Peter Carley, Vice President, Human Resources, Euro RSCG Healthview
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October 30th
- Lew Sears, Principal Consultant and Former Vice-President HR Citigroup, Lantern Assoc LLC
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- Rose Rappaport, Former Vice-President, HR BMG, Consultant
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- Elizabeth Wood, Principal Consultant, The Breakthrough Group
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November 13th
- John Gillespie, Vice-President, HR, Pepperidge Farms
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- Scott Klein, Vice-President, HR North America, TMP Worldwide
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- Bill Allen, Sr. Vice President, Human Resources, Atlas Air, Inc.
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- Jeanne Meister, CEO and President, Corporate University Xchange
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Eight Actions an HR Executive Can Do Today To Become a More Strategic Presence
- Decide whether you have the desire to move into the "front line and center of the business" before charging in
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- Invite yourself to business pitches
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- Ask to be included in different email groups
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- Read the trade magazines that the company business leaders are reading
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- Align HR´s business objectives with the Boss´ commitments
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- Avoid using HR jargon when working with business management
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- Propose relevant solutions to current business issues
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- Include your team with you in the strategic environment.
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