Developing Future Leaders

It’s the responsibility of the Human Resources Director to push a CEO into thinking about leadership capability within an organisation. While there may be operational fires to fight and short-term targets to hit, a chief executive must set aside time to reflect on whether the mix of skills in a business is right for the strategy.

Attendees at Criticaleye’s fourth Human Resources Director Retreat, held in association with Legal & General Investment Management (LGIM), agreed that if a CEO is genuine about achieving long-term success, they must identify and develop leaders as a priority.

Andy Clarke, former CEO at Asda, told the audience that when he first stepped into the hot seat he prioritised staff development. “We needed new thinking and diversity, yet still had to develop a strong core of talent from within,” he said.

“I was also extremely mindful of the lack of diversity, so I managed to build a leadership team that was 50 per cent female. The level of debate differed – and I’m not just saying that.”

However, when two of those females were promoted, Andy realised there wasn’t a strong enough pipeline to continue that diversity. As a result, he spent a fifth of his time identifying and developing individuals both internally and externally.

“I did that in conjunction with the HR Director and it was impactful; we were a combined team,” he continued. “At the end of my tenure there was a much greater number of people coming up from within the company.”

Devyani Vaishampayan, Group HR Director at BSI, described how she is concentrating on the talent agenda as the assurance and compliance solutions company looks to double in size over the next two to three years: “The focus of the past was on operational execution – it’s why the leadership team has been successful – but we know we need more strategic skills within the business.”

She then advised: “You need to drive through a message to focus on the gaps that you see in regards to the forward strategy.”

The knock-on effect

As HR Director at Equiniti, Nicky Pattimore is also engaged in developing internal talent within the technology and investment services company. It floated in 2015 and the current leadership team are locked in with equity until October 2018.

“The board are now looking at future succession and we recognise that they can’t all be external appointments,” Nicky explains, noting that several people within the organisation have been identified as possessing senior leadership potential.

This ‘leadership group’ is expected to spend a quarter to a fifth of their time on some of Equiniti’s biggest projects, collaborating with those on the graduate and ‘rising stars’ programmes. “While this group work on these challenges, they must also look at their teams and use them to fill the gaps created when they step out of the day job,” she added.

During the course of the discussions, Charlie Wagstaff, Managing Director at Criticaleye, emphasised the importance of alignment between the CEO and HRD on this issue. “The HR director needs a comprehensive view of the capability within the organisation and how individuals can be upskilled for the future. To think only about the here and now, rather than the next phase of a business, is a mistake,” he said.

CEOs and senior executives have a responsibility to constantly improve their skills and knowledge, while also empowering and developing those around them. Benny Higgins, CEO at Tesco Bank. He noted: “The beating heart of any business is its people; they are the responsibility of everyone, not just the HR director.”

Matthew Dearden, former President for Europe at Clear Channel, built on this point and said: “Unleashing human potential is an inherent leadership responsibility. You can’t delegate or outsource that – although, you should look to the HR director for support.”

Problems occur when executives are overly egotistical, or become complacent because of success. “If you think you’re perfect, you’re done, because you’re doomed to never be better than you are today,” Matthew commented. “You need to embrace being imperfect and be honest with your colleagues, so you can support each other.”

Although it may take time, you should build people up to follow your lead and, eventually, take the baton from you. “You need to cherish, rather than worry about the fact that people are fine without you – that’s a sign that you’re building a good team and organisation,” Matthew concluded.

These views were shared at Criticaleye’s fourth Human Resources Director Retreat, in association with Legal & General Investment Management (LGIM).

By Dawn Murden, Editor, Advisory

Workforce Planning in the Digital Age

Digital is plunging HRDs into numerous quandaries. How can they predict what new roles will arise and which will disappear? How can they train staff accordingly, and where will they find talent to plug the gaps? These questions are putting greater emphasis on data analytics and the role of strategic workforce planning.

“As well as the impact of a contingent workforce, we’re seeing a rise in remote working – which can potentially offer 24/7 online capacity. This approach to flexible working will change the nature of the workplace,” says Mark Spelman, Member of the Executive Committee at The World Economic Forum (WEF), who has spoken at a number of Criticaleye events on global changes to the workforce.

“We’re also about to move into an era in which everything is connected, online and real time. We’ll be in a hugely different place. I’m not sure our workforce strategies are focused enough on the exponential disruption of technology,” Mark adds.

In a world where digital innovation regularly makes the unpredictable a reality, how can businesses successfully plan their workforce requirements?

Find the right person for the right role

As Executive Director for People Advisory Services and Data Analytics at EY, it’s Nathan Sasto’s job to find practical solutions for tomorrow’s talent dilemmas. One of which is how best to access the gig economy – a pool of specialist employees who can drop into a business to deliver a specific, short-term project.

“The trend towards the gig economy is certainly one of the major impetuses we’re seeing from a client perspective. We’re doing a lot of work in financial services on this, helping them to understand which roles are feasible for them to outsource,” Nathan says.

Crisis, a charity that offers temporary accommodation and support to the homeless, is one of the many organisations to regularly tap into the community of temporary workers.

Jane Furniss, Criticaleye Board Mentor and former Deputy Chair at the organisation explains: “Crisis employs around 10,000 volunteers each autumn to run their Christmas events. Choice and having control over when and where they work is a huge factor in whether they come back to volunteer again. Because they aren’t paid, they need to feel engaged and be happy with the team they work with.”

Engaging an unpaid workforce means offering roles uniquely enticing to each volunteer – and that requires a lot of data crunching. Nathan knows all too well how complicated, yet rewarding, that task can be.

When he joined EY in 2012, Nathan’s first project was to plan the volunteer workforce requirements for the London Olympics. “They needed 70,000 volunteers to run the Olympic and Paralympic games, covering 3,500 jobs ranging from medics to drivers,” he explains.

“The HR Director at the time compared it to building a Fortune 500 company in three months and then tearing it down – that was the scale of the problem.”

To address this, Nathan and his team built an artificial intelligence-based matching system, comparing over 500 million data points on languages, skills, experience and preference to reach an optimal workforce distribution. He explains: “Once we were up and running, a HR allocation task that previously took 13 people one month to carry out, took a single person just four hours.”

Analytics such as this allow organisations to map their staff requirements against a pool of talent – be that internal or external – and do it in a way that caters to different personalities, desires and skills.

Train your staff to be digitally fluent

Another critical dilemma for HRDs is the need to re-educate the workforce for tomorrow’s employment landscape.

“One of the issues we face is in retraining for digital fluency. We must work out how to move people who were trained to work in one way into a digital world,” says Mark. “Half of the people coming into the workforce today will live until they’re 100. Life-long learning will be critical going forward. I’d argue that the ability to keep your top 30 per cent of staff will depend on your long-term corporate training.”

David Grounds, who supports corporate business leaders in his role as Relationship Manager at Criticaleye, says: “Continuous learning is becoming an economic imperative, it’s no longer enough to come into an industry with a qualification and think you’re the finished article. I see that need at a senior leadership level and right through the business.”

“While constant self-improvement has always been a worthy pursuit, the rate at which technology is changing the business environment means it’s now a priority.”

According to Nathan, a common problem is predicting where best to invest your efforts. “We talk about digital skills a lot but it’s quite a challenge to take that esoteric concept into practical measures, roles and functions,” he explains.

Again, data can help. Analytics capabilities similar to those used by Crisis and the London Olympics to map talent, can be employed to determine what skills will be required for newly developing jobs.

“Imagine all the available roles were on a platter and you could see what skills and attributes were needed for each – you could tell very easily which you’re suited to and what you’d need to do to move between those roles. That’s changing the vertical succession plan and really empowering people to plan their careers effectively,” says Nathan.

Address the fear of uncertainty

This kind of insight can help protect individuals from what the WEFs predicts will be five million job losses due to automation by 2020. HRDs must play their part in supporting staff through that uncomfortable process, quelling concerns and retraining where possible.

As Mark says: “When looking at strategic workforce planning we need to recognise that it’s not just about opportunity and the upside, it’s also about managing the fears associated with the downside.”

Jane warns that if businesses fail to address these insecurities they may see their talent drain away. “Fear of uncertainty about job security can lead some of your best people to go. You can end up with people who either don’t understand the change that is happening or aren’t able to get jobs elsewhere,” she says.

“Your worst case scenario is that you lose the really good people who can obtain jobs elsewhere, while retaining the not-so-good who can’t.”

These thoughts were shared during a recent Criticaleye Global Conference Call on Making Sense of Strategic Workforce Planning.

By Mary-Anne Baldwin, Editor, Corporate

Don’t miss our next Community Update on the importance of apprenticeships.

The Great Leadership Taboo

Plenty of CEOs and senior executives scoff at the idea of having anything to gain from leadership development. After all, if you’re running a business or a division of a corporate, you’re evidently accomplished in your role, so why would you need a guiding hand?

It’s an old-fashioned way of thinking and one of the reasons that over half of the Fortune 500 have either burned out or faded away in the past 15 years. As volatility and uncertainty across the business landscape have become the accepted norm, there’s no room for complacency and blind-spots in the top team.

The Human Resources Director is uniquely placed to understand where an individual executive, or the whole ExCo for that matter, may require additional support to help them achieve their goals faster.

With this in mind, Criticaleye polled a selection of HRDs on whether enough is being done to sharpen leadership skills among executives. The results show there is a gulf between how organisations are set up and what HRDs believe is required.

According to the results, 86 per cent identified a lack of leadership capability as a barrier to growth. Thirty-nine per cent said that their existing framework for reinforcing leadership skills is inadequate, while just over half (52 per cent) want to improve what is currently in place.

Matthew Blagg, CEO of Criticaleye, says “the figures clearly suggest that CEOs and leadership teams are not doing enough to ensure they have the right expertise in place for the future”.

Saying the “L” word
So, is there some kind of taboo around the question of leadership development for senior executives, including the CEO?

Orlagh Hunt, Group HR Director for Allied Irish Banks, Corporate Banking, Ireland, comments: “It is difficult to tell people they are not as good as they think they are, and also to get senior executives to focus on development.

“They should see life as a learning journey; no matter what your experience is you should always seek to learn and develop.”

A degree of openness or, to use a popular term at the moment, ‘curiosity’ is not always easy to find. Simon Laffin, Chairman of FlyBe Group, gives the example of trying to persuade a CEO to take on a mentor. “CEOs tend to have large egos…You are totally reliant on the CEO being open to having a mentor or not. I personally would encourage it but some don’t want it,” he says.

Yet our survey identified external mentoring and experiential learning as the most effective tools to support senior executives in performing at the highest level. These were followed by executive coaching, partnering with business schools and external courses.

Elements of a high-performing executive team
Organisations fixed on a hierarchical model are going to struggle in the current environment. An overly directive approach results in poor communication, inflexibility and an organisational culture where information and knowledge are withheld, rather than shared.

Such an environment won’t appeal to the best talent and everything seems to point to successful businesses adopting an agile model. According to the survey, the most important elements of a high-performing executive team include trust, constructive challenge and collaboration – all components of a flat hierarchy.

Another key element identified was a common purpose. Nicky Pattimore, HR Director at Equiniti, comments: “The leadership team has to be aligned with the purpose… we ran workshops with all the senior management team to ensure this. Consistency of messaging is critical and you have to have regular touchpoints with employees across the organisation.”

Difficulties arise when executives pursue their own agendas too aggressively. Indeed, the survey found that a lack of alignment over strategy is the primary reason for senior executives quitting.

Ian Cheshire, Chairman of Debenhams, suggests that the top team must genuinely agree where the future of the business lies. “Alignment comes when people have had the chance to work together and own the strategy. You can’t just hand them a to-do list,” he comments.

The HRD and CEO can create the right degree of openness and collaboration within the executive team, provided they’re willing to make the effort. “There will be moments as a HRD when you are standing alone,” says Orlagh. “All the pressure will be on you to tell the CEO about the issues within the business, largely because the other executives won’t raise it themselves.”

Ultimately, there can’t be any sacred cows or taboos in the executive team, especially when it relates to talent. “Some CEOs don’t find managing individuals within the team and the team dynamics that easy, [whereas other] leaders accept challenge as a natural part of a healthy team dynamic,” adds Orlagh.

“Even if you find it tough, as the HRD, it is important that you are willing and able to challenge. It is important that your relationship with the CEO is such that they know that you are doing it from a desire to enable their success, not from a point of ego.”

What are your thoughts on leadership development? If you have experiences and opinions that you’d like to share, please email marc@criticaleye.com

This article was inspired by Criticaleye’s recent HR Director and CEO Retreats
Find out more about our upcoming Asia Leadership Retreat or read more on Strengthening the Executive Team

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Strengthening the Executive Team

The HR Director mustn’t shy away from assessing the capabilities of the top team. They should hold candid conversations with the CEO about skills, succession and whether senior executives are genuinely aligned, or if they are just a loose collection of individuals with competing agendas.

At Criticaleye’s recent Human Resources Director Retreat, the focus was on how to strengthen the capability and cohesiveness of the leadership team. After all, unless senior executives are working together, how else are they going to create an organisation that’s customer-focused, agile and driven by a clear sense of purpose?

Here are some highlights from Day One of the Retreat:

Don’t Get Comfortable

The steady build-up of silos, bureaucracy and legacy-thinking will inevitably result in a business slowing down and becoming estranged from the customer.

Andy Griffiths, Advisor and former President for UK & Ireland at Samsung Electronics, was unequivocal about the need for businesses to quickly adapt to changing markets.

He explained: “We tried to bring Samsung together as one big organisation, but how do you do that when you’ve got nine big silos? We decided to talk about the externalisation of the business as it’s a common mistake for companies to be too inward-looking.

“This entailed talking to the end users and distribution partners to get their perspective. The danger, when it comes to assessing performance, is to just keep looking at the numbers again and again.”

People must have the space to understand the context they’re working in, Andy noted. “The atmosphere, in some ways, has to be one of organised chaos so people don’t get comfortable – complacency is a killer. Each year, you need to tear up the previous business plan and start again,” he added.

Matthew Blagg, CEO of Criticaleye, agreed: “It’s increasingly important for leaders to not be insular. If they’re going to successfully navigate a fast-moving and complex business environment, they must have external reference points in order to draw on a diverse ecosystem of skills, expertise and experience.

“It’s this that will shape the talent agenda of the future and it is why, as a leader, you need to accept that you don’t have all the answers.”

Devise a New Purpose

The notion of organisational purpose is increasingly on the radar of employees, customers and other stakeholders.

Stephen Pain, Vice President of Sustainable Business and Communications at Unilever, commented that it stems, in part, from a loss of trust in big business. Now, there is greater pressure on organisations to be more inclusive and to act with transparency.

“People are much more aware of sustainability as an issue and this is also amplified through social media,” he commented.

It’s up to the senior leadership team to respond to these expectations and not just focus on business as usual. Steven Cooper, CEO, of Personal Banking at Barclays, noted that “creating a sense of purpose galvanises people and enables them to overcome a shock to the organisation”.

At Equiniti, there has been a concerted effort to create a new story for the business as it’s grown. Nicky Pattimore, HR Director at the payments provider, described two attempts at establishing such a narrative: “We devised a new purpose for the organisation to bring the different elements together. HR focused on internal engagement, and marketing concentrated on communicating to external stakeholders; it was quite a powerful message in terms of being a more solutions-based business.”

However, Nicky explained that the leadership at the time didn’t give the support that was required. “In 2014 the business underwent refinancing,” she continued. “After that, the leadership team were reviewed and this resulted in about 70 per cent of the top 40 leadership roles being changed. That was a catalyst for transformation.

“The new team that came in was aligned and we created a clear purpose that was supported by the business’ strategy.”

Don’t Just Pay Lip Service to Succession

Current frameworks for top-level succession planning tend to be inadequate at best, especially when it comes to the chief executive role.

Simon Laffin, Chairman of airline parent company Flybe Group, said: “Succession planning for the CEO is difficult. For one, corporate governance puts pressure on boards to look externally, at least to benchmark. I have seen as many issues through external candidates being appointed as I have internal ones promoted.”

According to Matthew, boards often assume that the answer to CEO succession lies externally, rather than internally: “There tends to be a view that the external person is bright and shiny and will solve all of the problems within an organisation.”

It remains a difficult area for HRDs and boards. In many instances, an organisation’s appetite for succession planning at the top level depends on the CEO’s attitude and openness to discussions about tenure.

“Most organisations pay lip service to succession,” Matthew warned. “From the point of view of the board, they need to be strong in dealing with succession – sooner or later it will be an issue they have to confront.”

Put the Business First

If a HRD is to behave as a true business partner to the CEO and other senior executives, they need to speak the language of the board.

Simon urged HRDs “to put the business first” when talking with executive and non-executive directors. “If you’re describing people development, that means describing it in the context of the business need,” he explained.

He added that it was important for HRDs to bear in mind that boards, out of necessity, tended to be task-oriented. “There is a lot of time pressure at a board meeting and it’s not often a place for much emotional intelligence,” he said. “I would suggest a HRD tries to talk to directors in advance, particularly the remco chair who is often, in effect, the non-executive HRD.

“Also speak to people afterwards and get feedback, not so much on how they thought you did in a board presentation but how they think you should move forwards.”

At the same time, HRDs shouldn’t be overly deferential. “One of the problems is that CEOs don’t always recognise the importance of the HRD,” said Matthew. “Allied to that, I’m not sure HRDs always understand the power they have, or that they’re unwilling to wield it. After all, it’s easy to forget that they have the ability to fire the CEO.”

Next week, we’ll be covering Day Two of the Retreat, which explored how HRDs and senior executives are preparing for the workforce of the future.

Read more on trust and alignment in the top team here.

Or, read about creating passion and purpose here.

A Picture of Good Health

Promoting health and wellbeing in the workplace can be a tricky task. Aside from getting staff to actually use their gym memberships, leaders are increasingly aware of the psychosocial risks encountered in the world of work. With an ageing population and continued economic uncertainty, real attention should be paid to establishing programmes which can help people across an organisation, from frontline employees to the most senior executives.

According to a poll by the European Agency for Safety and Health at Work (EASHW), over half of workers in Europe (51 per cent) believe that cases of work-related stress are common. In a separate piece of research conducted by the EASHW, it was estimated that the cost of work-related depression alone is €617 billion annually. This was made up of costs resulting from absenteeism, presenteeism, healthcare, social welfare and loss of productivity.

The good news is that more companies are realising that a healthy, happier workforce should make for a better business. Tom Wright, Group Chief Executive for charity Age UK, says: “Wellbeing has such a big impact on staff satisfaction, absence, retention, participation, innovation and organisational agility… The costs of not managing wellbeing are substantive but never well articulated. It’s not just reduced productivity, it can also affect the outputs, such as the quality of service.”

John Lewis, Chief Operating Officer for communication services provider Airwave Solutions, makes a similar point: “There’s a whole range of business performance metrics that it can affect. For me, we’re a very customer-focused organisation and if you have individuals who aren’t on top of their game that can often be reflected in the customer relationship.”

A welcome development from companies is that mental health is now being discussed more openly. Maria da Cunha, Director of People and Legal at British Airways, comments: “A lot of people think about wellbeing in quite narrow, physical terms, but psychological wellbeing, to my mind, still remains largely untapped [and] is equally important… It needs to stop being a taboo because it has such a big influence on people’s performance.”

Each year at energy company E.ON UK, an area is selected for its health and environment planning and in 2014 the focus was mental health. Dave Newborough, HR Director, says: “We’re aware of a growing incidence of absence due to mental health and it was also highlighted in our diversity survey feedback with our people feeling it impacted their development opportunities.

“Senior executives have been running workshops on sites entitled ‘Time to Talk’, giving people the opportunity to talk about mental health challenges. Increasingly, we find face-to-face discussions about mental health are well received among our workforce, whereas not so long ago there was a stigma attached to discussing openly mental health and stress-related issues.”

It shows how progress can be made. “As you can imagine, our ancestry is from engineering, power generation so safety is paramount in our culture,” says Dave. “But over time health has taken its place alongside it, rather than one being more important than the other.”

Adam Hodges, CEO for amusement and games concern Playnation, says: “We’ve introduced employee schemes, such as social committees, relaxation and breakout areas in the office, flexible roles, and… benefits such as discounted holidays and gym membership… We also have an Employee Assistance Programme which is a helpline that employees can call about work or personal issues.”

At British Airways, a wellbeing website or portal is due to be made available for employees. “It will help [them] take responsibility for their own wellbeing,” says Maria. “We can push messages out, and staff can do things like measure their health age [which is estimated through alcohol consumption, weight and other factors], or get nutrition advice. It’s also a place they can go to for advice. We’ve got about 80 people who volunteered to be wellbeing advisors.”

Back to basics

There is now greater emphasis on education for employees at all levels. Matt Stripe, Group HR director for food concern Nestlé UK and Ireland, explains that encouraging people to understand the benefits of a healthy lifestyle is important: “Wellness is about ownership, it starts with the individual… It starts with getting people to care about themselves.”

Tom from Age UK says: “If you look at some of the long-term conditions that people develop, such as Type 2 diabetes or high blood pressure… the risk is raised by a lack of exercise and poor health. Those can be improved by encouraging people to exercise more and have a better diet.”

The onus is on companies to promote awareness, both as a duty of care to employees and, on a more strategic level, to gauge the impact on the business. Matt explains: “In 2014, 10 per cent of our employees developed a life-changing illness, while 2 per cent were diagnosed with cancer. That’s out of 9,000, so that’s 900 people battling a life-changing illness. It’s a frightening statistic.”

Aside from putting programmes in place and encouraging people to talk openly, line-management and leaders need to reinforce this messaging by setting the right example. “It has to start at the top of the organisation,” adds Matt. “If those at the top don’t behave as role models then nobody will believe that it’s important.”

Adam of Playnation agrees: “If you don’t lead an awareness of health and wellbeing from the board, executive board and senior management team, it will never get introduced across the business. The regional and area managers won’t necessarily believe in it and it won’t filter down.”

While more needs to be done to help companies develop methodologies and approaches to gain a clearer view of the cost and impact of work-related stress and psychosocial issues, there are plenty of programmes that can be put in place to raise awareness of problems relating to physical and mental health. In some ways, it should be seen as part and parcel of managing enterprise risk.

As Dave says: “It’s one of those areas that we ignore at our peril… Wellbeing has to be a top table discussion and recognised in the context of overall organisational resilience.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

 

Reinventing the Role of the HRD

In the face of new technology, shifting demographics, the need for greater diversity and international competition, the boards of global companies expect a lot more from the Human Resources Director (HRD). While process and compliance matter, the fact is that the HRDs which provide the most value are the ones who understand why the talent and people agenda must be mapped to the business plan.

Matt Stripe, Group HR Director for food company Nestlé UK & Ireland, says: “The transactional element of the function can’t be ignored. You have to undertake performance development reviews, pay rises and so on, but that’s not the stuff that adds value to the organisation.

“What businesses are really looking for now, and I think line managers and business leaders are far more people-savvy than they’ve ever been, is for HR to participate in determining and shaping business strategy.”

Yetunde Hofmann, former Global HR Director for Imperial Tobacco, agrees that the “traditional terrain of HR” of policy, well-being, employee relations and health and safety, are not going to disappear. At the same time, because of HR’s critical role, it will need to align its agenda so it’s simultaneously operational and strategic.

In essence, it’s having the ability to facilitate the development of an organisation’s capabilities and culture in order to deliver on strategy. Debbie Hewitt, Chairman of retailer Moss Bros, comments: “HR Directors are increasingly around the top table… If you’re having the debate about whether they should be, you’re 20-years’ behind. Great HR Directors have a huge contribution to make in many places across the business.

“The challenge for a HR Director is to make sure they’re not at the board table just for HR. I take it for granted [that] they will do a brilliant presentation on talent, succession and HR strategy. Where I get massive added value from a strong HR Director is when they contribute to issues other than those specific to HR, such as if there’s an acquisition to be made or an investment – they can bring a unique perspective.”

Stuart Steele, Partner for Human Capital Consulting at professional services firm EY, says: “Chief HR Officers [CHROs], HR business partners and subject matter experts need to understand context… [and] have an appreciation of the organisation’s strategy, its competitors, [the wider] economic trends and how these are forecast to impact [the] current and future workforce. I meet practitioners who demonstrate this capability on a daily basis – however, they are probably still in the minority.

“Interestingly, we are increasingly seeing the appointment of CHROs who have not come from the HR function… In part, I believe this underlines the importance being placed on understanding business strategy and operations. As good leaders, these individuals are expected to be able to mobilise the HR function to develop and execute people initiatives in direct support of the business strategy and plan.”

Deborah Cooper, Director at search firm Warren Partners, says: “The strongest HR directors have had experience outside the HR function… They tend to have more business credibility and ask different questions, rather than having a narrow skill-set purely through HR. Those who are rounded and have broader business experience tend to be meeting demands more effectively.
“The most effective HRD is one who can bring strategic thinking, real enterprise vision and business understanding and not one who’s necessarily technically strong in siloed skill-sets.”

The role will continue to evolve in this manner, especially as the more process-driven elements of the function become easier and cheaper to outsource. For many HRDs, the question has to be: Unless they are involved in harnessing capabilities and culture to deliver against strategic goals, what value are they really adding?

A person of influence

The use of data and proper information management are a prerequisite for efficient HR functions. For Matt, the insights provided by technology to enhance performance need to be watched closely: “It’s exciting to think what analytics will give us in a very short period of time – we have bits of it, so I can pull off good information now but in the future, and we’re probably only talking a couple of years, you’ll be able to look at so much more.

“It won’t just be whether a business leader is delivering on their results; you’ll be able to add the 360 degree evaluation to that, plus some others tests to check on emotional and social intelligence, including an ability to measure employee stress levels. It will be a lot more holistic.”

Nicola Pattimore, HR Director for business process outsourcing concern Equiniti, comments that “the use of data analytics to help drive decision-making has increased hugely”. However, in order for this to be meaningful, HRDs need to be commercial in their thinking and strong-willed when presenting information to the top.

If this isn’t the case, there is the danger of data simply being used to create added layers of bureaucracy, or for HRDs to shy away from discussing harsh truths about performance. “It can be a lonely job because often you’re having to act as the conscience of the business, challenging senior leaders and sometimes telling them things they might not want to hear,” says Nicola.

“When you’re sat at the table with a CEO, CFO and COO, you need to be able to inform and help make strategic decisions. A lot of that will entail providing a perspective on people, but you need to have that impact and influence.”

Charlie Wagstaff, Managing Director of Corporate & Public Sector at Criticaleye, comments: “While being technically and commercially competent, effective HRDs are unerring in their focus on how talent can be utilised to deliver against the business plan, both for the short and long term.

“The very best HRDs are distinguished by their ability to collaborate and form partnerships across an organisation – they understand how to influence the CEO and the board.”

It’s a case of having a full appreciation of what levers need to be pulled in order to improve performance. Stuart says: “I aspire for CHROs to contribute to the determination of business strategy, however, where they can really come into their own is during the development of the organisation’s business [plan]…

“CHROs can also challenge untested assumptions around the business… As an example, if an organisation is [setting] up a new business in a new geography, should they implement along the lines of the existing operating model, or use this initiative as an opportunity to adopt a different approach?”

The difference in value lies in a HRD being involved in the formulation of plans, as opposed to merely responding to operational necessity. While some HRDs are functioning at this high level, it’s evident that others have a long way to go.

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk

Talent Strategies for High-Growth Markets

Comm update_24 SeptemberIt’s tough to formulate an effective strategy for managing talent in high-growth markets. While it’s tempting for companies to repeatedly opt for short-term fixes given the speed at which individuals move between roles, it’s not a sustainable approach. Instead, if you want to maximise the chances of keeping your best people, you also need to have a long-term plan in place which allows them to develop and grow as leaders.

According to Jack Wood, Criticaleye Thought Leader and Professor of Management Practice at China Europe International Business School (CEIBS), the onus is on CEOs and Divisional MDs to start thinking ahead: “Companies are really short-term focused nowadays; setting aside long-term developmental systems doesn’t get much support. It takes an unusually wise senior executive to have that kind of vision for his or her people and organisation.”

César Cernuda, President of Microsoft Asia Pacific, acknowledges that it can be challenging. “It is sometimes easier to look for short-term fixes rather than building for the future,” he says. “It [can be] hard to strike the balance of how much development investments we need to make to realise optimal ROI and not become a training ground for our competitors.”

It’s a case of accepting that in high-growth markets a degree of mobility is inevitable. Bryan Marcus, former Regional Head for Latin America at Volkswagen Financial Services, observes: “Within certain skill-sets, particularly IT, you’re always struggling to find and retain the best talent because somebody is always potentially outbidding you.”

Of course, this doesn’t mean leaders should shy away from devising solutions. “At Microsoft, intentional talent planning and development is a key part of our strategy, especially in high growth, emerging markets like Asia Pacific,” says César. “We need to balance both short and long-term priorities in order to build the right overall foundation and be constantly evaluating, for each market, whether we need to build, borrow or buy talent.

“Often, all three strategies have to work hand-in-hand or in parallel against a clear two to three-year backdrop…. It is also vital that clear accountabilities are placed on expat senior managers to build local talent and drive a good succession and development plan.”

Yetunde Hofmann, former Global HR Director at Imperial Tobacco, suggests that problems will occur when the senior leadership team doesn’t take a step back to identify local capability requirements: “The questions you need to ask are: What are you trying to achieve in that local market and, therefore, what specific needs do you have in that market from a leadership or talent perspective?”

There needs to be an underlying knowledge of people’s capabilities throughout an organisation. Robert Bailey, President and CEO of Singapore-based travel specialist Abacus International, comments: “One of the things which we’ve done since I arrived, which has helped immensely, is create a competency-based performance management system.

“High-potential [employees] may not be [recognised] on [the] first pass… [so the] system was extremely helpful in both logging talent and identifying opportunities for development and rotation of promising individuals.”

On the ground

The temptation for foreign corporates operating in emerging markets is to fill senior positions with expats. Naturally, there are logical reasons for doing this but if there is a real lack of understanding about how a local market works, problems will soon arise.

Mei Wong, Affiliate Partner for Asia at executive search firm Warren Partners, comments: “You have to first of all question why you are sending expats: is it because they understand the company and the culture? Because they are people whom you trust? Or is it because you can’t find the right talent locally?”

For many medium-sized companies, a limited talent pool can result in a lack of managers with international experience. Mei says: “I have seen companies sending people to Asia who’ve never worked outside of the UK, so they don’t have the local market knowledge. That’s going to be challenging.”

In addition to this, organisations can’t be seen to be preferential in terms of who comprises management and the senior team. David Best, President for Asia Pacific at global aviation services provider BBA Aviation, says that “knowing that the top position will always be filled by an expat is no motivator for high-potential local talent”.

Els Vandecandelaere, Vice President of HR at pharmaceutical company Janssen, agrees: “There must be a healthy balance between expats and local talent. I don’t believe in an organisation where its strategy is to have expats fill the senior positions for all of their emerging markets…

“Hence our focus is on developing local talent to accelerate them through a diverse set of experiences so they can get to the top positions…. This includes working for a couple of years in an established market.”

It comes back to creating a talent map which accommodates the idiosyncrasies of local markets. Rob Atkinson, Chief Executive of Adshel, the Australian subsidiary of outdoor advertising company Clear Channel, explains that leadership development training, mentorships, participation in special projects and opportunities for secondment to other areas of the business are all vital in pushing people to the next level.

Alan Bannatyne, CFO at recruitment company Robert Walters, says: “I think you’re just always trying to keep the standards as high as you possibly can, and that by itself challenges people – it keeps them on their toes, allows them to grow their capabilities and therefore develops their career.”

The proverbial war for talent in high-growth markets is as intense as ever. Whether it’s Asia, Africa or Latin America, people with the right skills are in serious demand. That won’t change any time soon, so it makes sense to ensure you’re doing all you can to give your best people every possible reason to stay.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Talent, Culture and the People Puzzle

Comm update_25March (3) FacesThe HR Director maintains the rhythm of a company, ensuring that the way business is done remains consistent regardless of geography. This requires strong leadership and a commitment to values which employees, customers and suppliers buy into. Within this, a HRD must have the courage to both challenge the CEO and the board over decisions which aren’t in tune with the long-term interests of the organisation.

These are just some of the out-takes from our Human Resources Director Retreat, held in association with Big Four firm, EY, and executive search firm, Warren Partners. Over the course of 24-hours, our Members discussed the major issues facing the profession, looking at global culture, performance, organisational design and the pressing need for HRDs to see themselves as leaders.

Doug Baillie, Chief HR Officer for consumer goods company Unilever, said: “When I came into this role three years ago, the first thing I did was to get key senior business leaders into a room together and ask them what they expect from HR.

“From this, the choice that came to me was clear: do we, as HRDs, want to be the ones laying the road for the journey ahead or are we content to just fill in the cracks as someone else lays out the path? Actually, I don’t differentiate between a HR Director and a business leader.”

Steve Varley, Chairman and Managing Partner for UK&I at EY, said: “A key benefit of the HR Director is to help leaders understand the link between the inputs and outputs of an organisation. Effective ones do two things: they understand the business model – how the business makes money – and, secondly, they work hard to build relationships with the CEO and the board.

“If you want to have big change, you need big relationships. In reality, it’s often the people and the talent agenda that is much harder to tackle than the numbers.”

Stephen Catling, CEO of food manufacturer ABF Ingredients, said: “Strategy is a cascading series of choices and I’ve always believed that HRDs need to be at the table with me… Organisations need to make better use of the HR Director at the ‘where to play’ point, especially where there are people implications. If they are brought in only at the implementation stage, that is too late in my book.”

High ideals vs business realities  

During the course of the Human Resources Director Retreat, it became apparent that companies are grappling with the complexities posed by the notion of a ‘global culture’.

Nandani Lynton, Criticaleye Thought Leader and Adjunct Professor of Management at the China Europe International Business School (CEIBS), commented: “A chief requirement for achieving a global culture is ensuring that while core elements are the same across the organisation, it can also adapt to local circumstances. The first step on this journey is deciding what the DNA of the organisation is and what those core elements are that you simply cannot lose.”

According to Lucy Dimes, Chief Operating Officer for business process services provider Equiniti Group and former UK & Ireland CEO of telecoms concern Alcatel-Lucent, there has to be a “zero tolerance approach to certain non-negotiable standards or practices, such as health and safety, compliance and financial processes”.

She explained: “Everyone in the organisation must know that, regardless of local cultural differences, there are codes of conduct or business processes that can’t be flexed at a local level, and they rely on leadership, not just documentation and training, for them to be properly understood and adopted in the mindset of the people.”

Don Schneider, Group Human Resources Director for financial services group Old Mutual, commented: “I don’t see that there’s incremental investment in culture and values anymore, it’s more a discipline of embedding the culture and values in all our management and HR practices.

“HR is about judgement. Where people aren’t living the values, we’ve got to be brave enough to call it out as a problem and address it. HR Directors need to get people in the HR team that has the confidence to make that judgement and take a risk.”

This continues to be – and perhaps always will be – a work-in-progress for companies in terms of application. Gary Kildare, Chief HR Officer for Global Technology Services at IBM, commented: “Multinationals have been encouraged over the past decade to develop a global culture, but those getting it right are very much the exception.

“Increasingly, success depends on whether the values are shared throughout the company, developed at a local level and revisited and discussed on a regular basis.”

Gordon Headley, Chief HR Officer for Tullow Oil, says: “When looking to expand internationally and develop a global culture, organisations need to ensure that they engage early with local communities and develop their skills to ensure that they have the capability to support the organisation going forward.

“You can’t just fly in your own people; you have to invest in the local population… When building a presence in a new territory, don’t oversell your promises or you might find the operating environment very quickly makes them extremely difficult to deliver.”

Shape of things to come

It was widely agreed by attendees that a different mindset to leadership is long overdue. Charlie Wagstaff, Managing Director for the Corporate & Public Sector at Criticaleye, suggested that management of people “is one of the last frontiers of the leadership challenge” as companies seek to understand the fundamentals of achieving high performance.

Rudi Kindts, Non-executive Director for technical recruiter Matchtech and former HR Director for British American Tobacco, said: “We don’t know what the future will look like, so I think increasingly the skills required to be a successful leader will be around agility, curiosity, being able to work in teams and having an acute awareness of the environment around them and themselves. What is for certain is that leaders need to build organisations that are able to adapt to the future [and be flexible].”

Ambitious, forward thinking HRDs are expanding their skill-set in order to make a valuable contribution in such an environment. Joëlle Warren, Executive Chairman at executive search firm Warren Partners, said that progressive HRDs “have demonstrated breadth and depth to their background; they are not just functional specialists, but are actually well-rounded business leaders who have contributed strategically and commercially to the business”.

Steve commented: “A good HR Director asks the right questions: ‘What’s going on around here?’; ‘Why are we doing this?’ Commonly, they will knock me out of my performance mentality and into thinking about the long-term health and sustainability of the people within the organisation.”

HR can no longer be seen by boards purely as a support function. It is, however, incumbent on those in the profession to step up to the plate as far too many remain, as it were, missing-in-action. Daniele Sacco, Chief Operating Officer for HR at Rio Tinto, said: “We need a back-to-basics approach in HR which means thinking about where we can really add value. Doing talent recruitment and leadership development is a tangible way of showing how we can drive decisions that make a real difference to business results.”

Doug commented: “You’ve got to earn your stripes as a HRD. How you build that relationship will determine whether you’ve earned their respect as well as their trust. Sometimes that means being the lone voice in the boardroom… but it starts with you and it requires a HRD to be courageous.”

In essence, HRDs must be confident in explaining why a more sophisticated and integrated approach to understanding and investing in people is necessary. After all, it allows for a clear line to be drawn to performance, meaning that global businesses which possess knowledge around core competencies and where the leaders of tomorrow are coming from, will possess real competitive advantage.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

The Shifting Priorities of the HRD

Comm update_3 Dec1

How best to manage talent remains a hot issue for businesses as many seek to refine and reshape operating models. It’s why good HRDs continue to grow in stature, given they are uniquely placed to understand the skills and resources which span an organisation, where areas can be strengthened, what has to change and how realistic the board’s strategic plans might be.

Matt Stripe, Group HR Director for the UK & Ireland division of food manufacturer Nestlé, says: “HR Directors should be the architect of the organisation, responsible for taking the business strategy and delivering the blueprint… in terms of how it’s going to achieve those aspirations and the types of people and culture that will be needed.”

It’s a case of knowing which priorities and processes to focus on and what level of investment to make. Natasha Dillon, Associate Director at management consultancy Hay Group, comments: “I worked for BP for 12 years before moving into consulting and one of the biggest issues for the oil and gas industry is around talent management, with up to 60 per cent of the operational workforce retiring in the next five to ten years. That means getting your talent management in line with your business strategy is absolutely critical.”

The role can and does extend further. At air traffic services provider NATS, HRD Gerry Skelton was confronted with the problem of a £1.3 billion defined benefit pension scheme which posed significant issues for the business. He negotiated a deal with the trade union, due to start next year, which will reduce the deficit by £380 million and cut the annual pension bill by £28 million a year.

“Both sides recognised the challenge and that we needed to do something,” says Gerry. “It was very clear an outcome had to be achieved and very quickly. We reached a conclusion that allowed us to have a contribution level with future contribution costs that were both affordable and sustainable.”

Cometh the hour, Cometh the HRD

It is, however, clearly the HRD’s insights around people, performance, succession, engagement and culture that are increasingly of value to other board-level directors, particularly as businesses restructure, expand internationally, conduct M&A and continue to find ways to ‘drive efficiencies’.

Samantha Barber, Non-executive Director at electricity company Iberdrola, comments: “One of the things for me, being on the board of a very big global organisation operating in lots of different countries, is that the perspective coming through from HR is quite often about the underlying cultures within the business. The insights from things like your health and safety record, training, development and talent management begin to build up a picture of the culture across the entire business.”

According to Stephen Catling, Chief Executive of food manufacturer ABF Ingredients, it’s been extremely important to work closely with the HRD because they are vital for the development of strategy. “Getting the people agenda to completely fit your business goals – there’s no other way for me. I don’t see HR directors as systems and procedures people, I see them as true business partners.”

This is exactly how it should be, although of course it takes an ‘enlightened’ executive team to see it that way. Serge Colin, Group HR Director at construction supplier Lafarge Tarmac, observes that “for HRDs to gain influence in the boardroom, it means having to think and act as a business leader first, prior to them being an expert in the HR field”.

Again, this comes back to the special place an HRD has within an organisation. Ian Stuart, Chairman of manufacturing concern Aspen Pumps, comments: “It’s about being the CEO’s ear to the ground and I see it as the HRD’s role as being able to tell the CEO: ‘You do realise what’s going on here, don’t you?’ The CEO has to trust their HRD to come and tell them the things that nobody else will.”

For Ella Bennett, HR Director for the UK and Ireland division of global IT systems and services provider Fujitsu, the ideal relationship with the CEO is one where the HRD is seen as “part sparring partner, part confidante”, pointing out that, “the HRD has to be up for this and competent to play both parts well, and deliver on strategy”.

Gareth Jones, Group HR Director at M&G Investments, says: “Strategic decisions and people decisions are inextricably linked. HR’s role is to foster and sustain the human capital base of the organisation, enabling it to take on and adapt to future challenges, and to manage the people risks associated with them.

“For example, the HRD is well placed to offer a long term perspective on the leadership and talent pipeline, and to ensure there is the optimal supply of the right kind of people and skills through the business.”

There is another side to all of this. Those in HR who still believe processes and procedures really are what the role is all about could very easily find themselves ostracised, much like those financial directors who only wanted to sit around and work on spreadsheets all day. The role is now bigger and a good HRD will take on a whole range of strategic responsibilities to meet the needs and expectations of the board.

I hope to see you soon.

Matthew

https://twitter.com/criticaleyeuk

Brazil: A Tough Nut to Crack

Comm update_29 Oct

New entrants to Brazil are regularly bamboozled by the country’s administrative and tax systems. In order to capitalise on the growth opportunities of the world’s seventh largest economy, there are two golden rules: do your homework so you’re not caught out by the bureaucracy and take the time to get the right local management team in place.

Andrew Heath, President of Energy at Rolls-Royce, says: “Some of the challenges include the tax structure in Brazil – import/export is quite complex – and [there’s] quite a heavy social cost in terms of employment… On those topics people need to make sure they get really good advice in terms of how best to structure themselves and the sort of activities they should look at in-country.

“That certainly would be at the forefront of our mind. Rolls-Royce has been in Brazil for over 50 years so we have a fairly good knowledge of the country, but even so we have to take good advice in terms of making sure that we structure things in a way that we don’t suddenly fall foul of the tax system, because you actually pay import/export duties between states in Brazil as well. It’s not straightforward.”

Pankaj Ghemawat, Criticaleye Thought Leader and Anselmo Rubiralta Professor of Global Strategy at IESE Business School, says: “I remember working with one multinational, which is a people-intensive business, and they thought they knew what they were doing, so they gave their Brazilian employees the standard 13th month bonus.

“Under Brazilian law, that was seen as improper, so they effectively had to give a 14th month [bonus] as well. That’s part of the reason – not the only one – why this particular multinational, even before the current meltdown, had pulled back a bit from its very aggressive expansion plans in Brazil.”

Music company EMI has certainly had its ups and downs in the country, with an accounting fraud case back in 2006 and, more recently, the decision by Brazil’s anti-trust regulator to freeze the takeover of the company by Universal, even though the deal has been approved in both Europe and the US.

Nick Wilkins, Global Head of Manufacturing and Supply Chain at EMI, understandably emphasises that “getting good trustworthy managers in place that know both the market and the business environment is absolutely essential” if a company is going to navigate the business environment successfully.

A similar point is made by Bryan Marcus, Former Regional Head of Latin America for Volkswagen Financial Services: “The issue is always trying to find somebody that can put [across] the local perspective and also understands the corporate or the global priorities… So it’s not just about having local people who understand the local perspective, culture and challenges.”

Oliver Engelsdorf, Head of the International Desk for Multinational Business Development at Santander UK Corporate & Commercial, states quite simply that a business cannot go into Brazil without good lawyers and accountants. “There is too much bureaucracy and tax issues that you need to be aware of and trust me, you will need them, sooner or later,” he warns. “So it’s better to be well-advised from the beginning, and go [holding] the hand of someone that knows a little bit about it.”

Going for growth

Provided you’re aware of the realities, there’s no denying that Brazil does have its attractions. Ian Stuart, Chairman of Aspen Pumps and former President of the Latin American division for Black & Decker, says: “If you’ve got the right solutions and products there’s a big market there. Even though it’s not growing rapidly right now as an economy, it’s definitely growing in terms of its need for more value-added products.”

Andrew says: “It’s blessed with a wealth of natural resources, clearly a lot of oil offshore, and it leads the world in terms of deep offshore development of oil fields. They’ve got rich hydroelectric potential, which they’ve been using effectively for many years… [My] view of the country is that, with a continuingly stable political system, it is going to be one of the growth regions of the world for sure.”

Rolls-Royce is in the process of building a brand new facility to do assembly and testing work in Brazil and is also setting up a supply chain to support it. “We’ve been pleasantly surprised,” says Andrew.  “The important thing is to not come in with a western… view of the world in terms of specs and standards.”

Bryan says: “There are short-term challenges and there are some political issues which I think still need to be addressed and resolved… Brazil has got to be a long-term investment. You’ve got to have a high level of patience and a longer-term investment horizon than maybe for some of the other developing countries where there may be some low hanging fruit.

“The effort needed to set yourself up effectively in Brazil is quite high… It’s not so much a capitalist market as people think; I think the opportunity is the scale and the very large number of middle class and potential middle-class customers, but you’re into a five to ten-year return cycle, I would say, rather than three to five which is maybe some people’s expectation.”

Like each of the BRICs, success doesn’t come cheaply for businesses and assumptions are dangerous. The country may be getting the World Cup and the Olympics but beyond the samba fanfare and marketing hoopla it’s a country with serious socio-economic problems and an infrastructure sorely in need of significant investment.

The red-tape can be dealt with, but as ever the fundamental issue is to find staff that grasp the local and corporate culture. Maria Tereza Leme Fleury, Criticaleye Thought Leader and Dean of Fundação Getulio Vargas (FGV) business school in Brazil, says: “The multinationals need to acclimatise [and] adapt. If they try to transfer their own HR and management practice with no adaptation they will face problems. It’s the same when Brazilian multinationals go abroad and try to manage the employees the way they manage in Brazil.”

Andrew says: “The only thing we’ve found is that at senior staff and management levels, certainly in the oil and gas industry, you pay quite a sizeable premium because if you want people with experience then there’s definitely a shortage of supply… therefore it’s very much a sellers’ market, if you like, so the wages are quite high.”

If in-roads are to be made, it’s a case of having that local talent (ex-pats will only take you so far) and to have developed the right relationships with individuals that understand the governmental system (not to be confused with bribery). “Only local people are really going to be able to do that for you,” says Bryan.

I hope to see you soon.

Matthew

https://twitter.com/criticaleyeuk