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The Outsiders

A growing number of organizations are finding that a career HR professional isn't necessarily the best fit when it comes to filling the chief HR post.

Wednesday, March 22, 2006
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It was "just sort of accidental." That's the way Lawrence Jackson describes how he happened to arrive at his current post as executive vice president of Wal-Mart's people division.

He's not being flippant either. Jackson's resume doesn't exactly read like someone destined to run the HR department of the largest private employer in the free world. After graduating from Harvard with a bachelor's degree in economics, he began his career working as a corporate banker for the Bank of Boston. He then served a stint as a consultant for McKinsey & Co. before finding his niche at PepsiCo Inc., where he spent 17 years in a variety of positions, including plant manager, vice president of on-premises sales and vice president of operations.

In recent years, Jackson worked as senior vice president of supply operations for Safeway Inc. before moving on to Dollar General Corp., where he served as president and chief operating officer for a little less than a year. Impressive though his career was to that point, nowhere in his resume was there anything even remotely related to human resources . . . until he succeeded Coleman Peterson as Wal-Mart's top HR officer in late 2004, that is.

Jackson is certainly not alone. In recent years, there have emerged a growing number of chief HR executives who came to the position with little or no previous HR experience -- among them, Sidney Banwart, vice president of the human services division at Peoria, Ill.-based Caterpillar Inc.; Jill Smart, managing partner of human resources for New York-based Accenture; Ricardo Larrabure, global head of the Center of Expertise for Talent and Performance Management for ABN AMRO, based in Amsterdam; and Luann Widener, senior vice president of human resources for Deluxe Corp., based in Shoreview, Minn.

In an era when "human capital" has become a standard part of the business vernacular and CEOs regularly wax poetic about the importance of their people, one might wonder why organizations have chosen to hand the management of human resources, the very function responsible for the care and handling of the workforce, over to people -- albeit very accomplished people -- who have no experience in the function.

"You see more and more organizations leaning toward people who can manage a business first and the people component second," says D. Kevin Berchelmann, president of Triangle Performance, a Bellaire, Texas-based consulting firm specializing in organizational development and human resources. "If they can't find the two together in one person, they are defaulting toward the business leader, whereas in the past, they may have defaulted toward a really competent HR executive and allowed him or her to pick up bits and pieces of the business."

Ironically, some experts view the trend as a backhanded compliment of sorts for human resources. After years of striving for respect, HR professionals have finally managed to convince senior management that their function plays a significant role in the ultimate success -- or failure -- of the organization.

"It's a terrible thing to say, but it's gotten to a point where [the management of human resources] is almost too important to be left to human resources," says Berchelmann. "It's the great irony that says, 'You've made it such a significant function that we can't let you run it anymore.' "

Answering the Call

The trend toward hiring non-career HR people to take over the top HR post is simply the latest response to the clarion call to make human resources more strategic, according to Tobi D'Andrea, executive vice president of ORC Worldwide in Chicago. If HR is to claim its place in the executive stratosphere, particularly in today's increasingly global and complex business environment, its practitioners are going to have to bring more business focus and acumen along with them.

"The business issues that the top HR person is facing today are far more fundamental in terms of the weight of the dollars and the strategic importance of the issues -- outsourcing and globalization of the workforce, for example," says D'Andrea. "These all require that you have a complete appreciation of the business strategy and the business operations. Unfortunately, HR organizations have a bit of a shortcoming here and a gap in not being able to build that appropriate depth and bench strength quickly enough to respond.

"That is what is forcing what we are seeing today."

That's exactly what recently retired Chairman and CEO Larry Mosner found when he set out to hire someone for the top HR post at Deluxe Corp., one of the world's largest check manufacturers.

Mosner had already taken a close look at the bench strength within HR when he began talking to Luann Widener in early 2003. While he praises Deluxe's HR staff as "very capable people," Mosner says they simply were not ready for the top HR post.

"They just didn't have the view of the entire organization," he says.

Widener, however, had worked with people at all levels of the organization and had shown herself to be a strategic thinker, says Mosner. In his opinion, she clearly fit the bill.

"What she brought was knowledge and perspective of the entire organization and the experience of leading and managing a lot of people," he says. "It was a very easy decision to select her to fill that role."

Unlike Jackson, who spent much of his career moving around from company to company, Widener has been with Deluxe for the past 27 years. Most of that time has been in the manufacturing arena, where she ascended to vice president of process improvement in 1997 and then to vice president of manufacturing operations in 2000.

"As I went through all of those career moves, I always had an eye on what the next opportunity would probably be," says Widener. "It was a pretty well-defined path. If you were a good production manager, you probably would get the opportunity to be a plant manager or you might get an opportunity to be a regional manager. So it was kind of out of the blue when I took an HR role."

Mosner says he had no reservations about bringing someone into the post who did not possess a depth of HR knowledge and experience. Widener, on the other hand, wasn't so sure she was the right person to head up Deluxe's 100-person HR team.

"I didn't see myself necessarily wanting that role right out of the gate," she says. "I told my CEO, 'I'm struggling with why you would put me there.' I had to think about it for a long time."

Specifically, Widener questioned whether she would be putting the company at risk due to her lack of HR experience. What's more, she wondered whether she had the skills necessary to wield true influence in the organization.

Thinking back on her previous posts, however, she began reflecting on an HR-related experiment she had undertaken while working in operations. It involved applying more of a scientific approach to the company's selection and recruiting process.

Working with Profiles International, she launched an initiative that involved "understanding the behaviors, traits, skills and characteristics" of Deluxe's top performers and then incorporating them into an assessment tool that could be used to predict their likely degree of success at the company, she says. Individuals selected using the enhanced process indeed proved to be more successful, she says, which allowed the company to decrease its recruiting costs, while increasing its quality of hire.

Recalling the process, Widener realized taking over the company's top HR post would give her the opportunity to build upon the experiment and influence the speed at which the organization could implement changes by selecting the right people for the right jobs. Excited by the prospect, she called Mosner and told him she would accept.

Trial by Fire

While she felt confident her previous experiences equipped her with "a deep business understanding," as well as the respect of the workforce at all levels, Widener was quick to recognize that she suffered from a serious dearth of HR knowledge. To achieve somewhat of a comfort level, she employed a multifaceted approach, educating herself by reading everything she could get her hands on, engaging Minneapolis-based consulting firm Personnel Decisions International to help formulate a framework for human resources, and building a network of fellow HR professionals in the Twin Cities area.

In addition to meeting in person to discuss key HR issues, Widener says members of this informal network of HR executives have become such close confidantes that she feels comfortable enough to "call them and lean on them" for advice. She also immediately initiated what she calls "Lunch with Lu," a monthly event during which she spends the day with four or five people within the HR organization, discussing the business and asking them what facets of HR they feel aren't working all that well.

Widener is not alone when it comes to feeling apprehensive about deficits in basic HR skills and knowledge. Getting up to speed is a typical concern of non-HR people who become HR leaders.

Before taking over the top HR spot in May of 2004, Sidney Banwart had spent more than 35 years at Caterpillar, primarily in engineering positions and then as the company's first chief information officer.

Recognizing the need to quickly understand HR issues, he got involved with the HR Policy Association, a Washington-based public policy advocacy group. Banwart's involvement ran so deep, in fact, that he ended up chairing the association's Pharmaceutical Purchasing Coalition, which was being formed to devise a new purchasing model for prescription drugs to encourage employees to be better consumers.

Accenture's Jill Smart took more of a roll-up-your-sleeves and get-your-hands-dirty approach to familiarizing herself with HR policies and practices. She was promoted to managing partner of human resources in the fall of 2004. However, her move from one world to the next came with more shades of gray than some other outsiders.

Smart had held management positions within human resources since 2000, when she became head of the company's people enablement business practice, which included training and knowledge management.

Still, the detail-oriented Smart was frustrated because she didn't have a thorough understanding of all the particulars involved in the company's various HR processes.

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During her first year in the top HR post, therefore, Smart took it upon herself to personally conduct Accenture's annual review process for thousands of senior executives throughout the company. Since her predecessor had stood back and let the HR staff handle the entire process, Smart's insistence that she lead the initiative caught her direct reports by surprise.

"At first, they were shocked and frustrated that I wanted to do that," she says. "But in the end, they learned a tremendous amount, too, because I changed things as we went through to make it better, so now, their jobs are going to be a little bit easier as they do it going forward."

Smart simplified the review forms and created standard reporting processes and tools for HR staff in the various organizations of the company.

In addition, she established "accountabilities," such as mandating that senior executives complete all required training and finish annual reviews for their people on time.

To make sure they lived up to expectations, Smart laid out exactly what consequences the executives would suffer if they did not accomplish these tasks.

ABN AMRO's Ricardo Larrabure had worked in banking for nearly 35 years, primarily in client-facing roles, but had never before served in HR when he found himself asked to head up the company's Center of Expertise for Talent and Performance Management in 2005. He isn't shy when it comes to admitting his shortcomings.

"My learning curve was vertical, literally vertical," says Larrabure. "I knew nothing about the jargon, nothing about how all the pieces fit together, all that sort of stuff."

Honest Self-Appraisals

According to D'Andrea, Larrabure has hit on one of the keys to making this kind of arrangement work. For a business person to be successful in the top HR spot, she says, they have to "know what they know and know what they don't know" and be comfortable asking for help. Indeed, Larrabure credits his "very strong and capable" HR team for helping him hit the ground running in his new position. Likewise, Jackson says, "I'm one of the first to say that I don't have all the answers, but I'm also comfortable surrounding myself with people who are better at what they do than I could ever be."

Banwart also relies heavily on his team, giving his direct reports the spotlight whenever he is asked to make a presentation or elaborate on a particular issue. "Letting the people who have the knowledge and the expertise get the credit is a win/win because it helps me learn and it helps them gain credibility with the rest of the organization," he says.

A strong, knowledgeable team is not only beneficial; it's a must-have for an inexperienced new HR chief, according to Greg Hessel, senior client partner and global head of the human resource center of expertise for Korn/Ferry International, the New York-based executive search firm. Because they lack a breadth of HR experience, a newcomer will have difficulty keeping the function running at full speed -- never mind driving a competitive, aggressive, progressive HR strategy -- if they don't have a knowledgeable, skilled team working alongside them every step of the way.

"It's a lot of heavy lifting for somebody to come into the role [without having] had any HR experience," says Hessel. "You need to have a pretty solid team around you to ensure that, while you are getting up to speed, the company is not being put at risk."

But for a new HR chief, particularly one who has spent the bulk of his or her career in other disciplines, there's another risk: being branded an "outsider," one who hasn't paid his or her dues in the function and, therefore, has no right to be there. This will most likely be the case in the company of "HR-lifers," those who have spent most of their careers in HR and possibly feel they should be the rightful heirs to the throne.

When they see themselves passed over for an outsider, they may become resentful and anything but cooperative. Their responses can range from the extreme -- sabotaging the new HR chief's long-term strategy -- to the more sublime, but equally as destructive -- jumping ship and taking their valuable skill-and-knowledge base with them. The key to mitigating those circumstances lies in how the new HR leader approaches the continuing development of those individuals.

"It can be challenging to the people who have been in HR for a long time and are looking to help fill those very senior roles," says Smart. "HR leadership needs to take seriously the career paths of those people, so that they don't see just the downside, because there's a lot of upside in terms of the ability to have HR be more strategic and business-oriented. Those HR people can do nothing but grow and benefit from that."

When approached in a positive manner, the ascendance of an "outsider" to the top can provide the opportunity for a great two-way learning experience. As the new HR chief bones up on basic HR knowledge, HR staffers should seize the opportunity to learn from their new boss and develop the skill sets they lack, thus better positioning themselves for the next time the top spot opens up.

"For those HR professionals who felt passed over, the undeniable truth is, 'Someone believed I had skills that were less than that required to lead this organization,' " says Berchelmann. " 'I can gripe and moan about it, I can go look for an organization that doesn't believe that or I can take the time to learn those things the organization thinks are important.' "

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