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Honor Roll: Grade-A Choice

Kathy Herbert has transformed the HR function at Albertsons Inc. from personnel administration to strategic HR management.

Sunday, October 2, 2005
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It was during a casual breakfast that the defining moment in Kathy Herbert's career occurred.

Herbert, who worked on the operations side for Jewel-Osco, a food retailer headquartered in Melrose Park, Ill., had thought her career was headed in the right direction. She had started in 1969 as a part-time checker and moved up the ranks through various store-level management positions and then into corporate operations.

But during a breakfast while visiting stores with her boss, Keith Nielsen, then an area vice president and now senior vice president of operations for Jewel-Osco, he suggested she think again.

"Your strengths really seem to be more tilted to the HR issue," he remembers telling her. "I guess it must have spurred some thought processes for her because, operationally, that's where she went."

And it is where she has excelled. For her achievements as executive vice president of human resources for Albertsons Inc., the Boise, Idaho-based parent company of Jewel-Osco as well as many other food and drug retailers, Herbert has been named to Human Resource Executive's 2005 HR Honor Roll.

"Kathy has a passion for people," Nielsen says. "She's clearly taken HR to a whole [different] level. She's helped the business understand [its] customers. . . . She has just made a huge impact in the total company in [development, training and mentoring programs] and really has taken us from somewhat of a technologically starved environment in HR to close to state-of-the-art."

As HR leader of the country's No. 2 supermarket chain, Herbert has transformed the HR function from personnel management and labor relations to an operational arm of the business focused on best practices and strategic HR management.

Under her leadership, Albertsons has streamlined costs and processes via technology, redefined the core competencies of leaders, attracted top talent to the organization, instituted succession-planning and began wide-ranging diversity initiatives.

Determining Success

Herbert was hand-picked in October 2001 for the top HR role at Albertsons by CEO Larry Johnston, who came to the Fortune 50 company four years ago from General Electric, a company known for its strategic human resource management.

"I believe that having the right focus on people is the most important part of running a company," Johnston says.

"It was clear to me that she had the same vision and ideas that I had in terms of what we could do with the larger company," he says.

At the time, Albertsons -- which operates more than 2,500 stores and employs more than 240,000 workers -- was suffering from a deteriorating financial situation, lackluster employee morale, a morass of HR programs and processes, and the less-than-successful results of a merger in 1999 that doubled the size of the corporation.

There was little thought before she came onboard about leadership competencies, pay for performance, diversity initiatives or succession planning, Herbert says. Processes were manual, metrics were few, coordination was rare.

Understanding the Business

Herbert began her work with a "strategic HR map" she completed within her first 90 to 120 days on the job. Underlying the plan is her insight into the company and the industry.

"In order to make the changes necessary, you really have to understand how it impacts your customers and what makes the most sense," she says.

The three-year strategic map was -- and, updated annually, is -- an overview of HR's relationship with the organization, including compensation, succession, benefits, training, development, diversity and most importantly, having the right people in the right job, she says.

"So much of our population is promoted from within . . . it's really, really important that those people we hire . . . have a customer-centric fit," Herbert says. "America is over-stored. The point of differentiation we have is the folks who work for us."

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Employee assessments were undertaken and leadership compe- tencies established. Replacing more than half of the company's officers was "a hard thing to do, but you have to make the call," she says.

An online hiring-management system (from Unicru) that reduced paperwork and turnover while automating screening for both skills and cultural fit also began.

A diversity leadership council was established, the number of affinity groups grew from nine in 2002 to 33 in 2004 and a new orientation program was developed -- replacing 25 separate programs -- that includes tracking employees within the learning-management system. The company also began an online mentoring program and revitalized a high-potential program.

"There's been a huge change," says Johnston, "in the leadership team [and] . . . we have been very diligent in making sure that the leaders of the company reflect the customer base."

Albertsons now is "the only company in the world with a board that has gender equity ... That's a big deal [in an industry] where 85 to 90 percent of the purchasing decisions are made by women," he says.

Other changes have been the consolidation of payroll platforms, a virtual classroom desktop tool (Interwise) that improved access to information and greatly reduced travel costs, a companywide satellite broadcast system that increased communication effectiveness, and a new HRIS (PeopleSoft) to replace four highly customized systems with one fully integrated system by early 2006.

Even with all of these changes, the company's prospects remain uncertain. In September, its board began "exploring strategic alternatives to increase shareholder value, including a possible sale of the company," according to a company statement.

Whatever happens, Herbert can be assured of knowing that her contributions to the company have made an impact.

"I have worked with some, as you may expect, great human resource professionals in my career," Johnston says, "and Kathy is, by far, the best I have ever seen in this job."

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