Measure of Success
Whatever he sets out to transform or improve, Mark James -- Honeywell's CHRO and HRE's HR Executive of the Year for 2013 -- succeeds, using metrics as a key to his approach.
By Tom Starner
During the course of running human resources for the past five years at Honeywell, the Fortune 100 multinational conglomerate, Mark James has scored many major wins. Among the most impressive is his global HR reorganization effort, which saved the company an impressive $85 million.
Ask James for his success secrets and he describes what might have gone into his HR reorganization planning session, with an out-of-left-field nod to George Washington, as in the Father of Our Country crossing the Delaware on a frigid December night in 1776.
To James, the same planning strategy that might have gotten the good general over to Trenton (where his Continental Army surprised the Hessian troops and went on to win the war) works perfectly well for Honeywell HR in its drive to be a strategic business partner.
"Imagine the planning meeting the night before Washington's voyage," James says in his office at Honeywell's Morristown, N.J., headquarters, growing animated as he ticks off the variables. "Among other things, it would include the best place to launch, what time to leave, how many people would be in the boat, who would sit where and what rowing cadence would be used."
So before he and his team embark on any project, program or initiative, he holds pre-launch meetings where he stresses that he expects all possible debate, the old "no idea is a bad idea" approach. He wants everyone's view on everything, even if they have totally different views from his, because, he says, that's the only way HR will create a successful plan.
As showtime arrives, James' penchant for debate disappears and the work begins.
"When we are behind closed doors, people need to say, 'That's not a good idea, here's a better one,' or 'Here's something that concerns me,' " he says. "But if they don't say something and then later on I hear [them] say, 'Yeah, I knew that was a bad idea,' I'll let them go. I can't have them as part of our team.
"The final decision might be made by a vote. It might be me saying, 'This is just the way it is, thanks for everyone's input,' " adds James, a Utah native who is nothing if not the folksiest executive you will ever meet. "The key is you have to show up the next morning and row with the team. That's how we operate."
For James and his team, how they "operate" has been tremendously successful. In five years, their major wins have included managing overall costs during the Great Recession with the help of his organizational efficiency (OEF) initiative, undertaking that much-needed functional transformation of Honeywell's HR organization, creating an HR metrics solution that actually works, developing an effective Honeywell "One Country" HR strategy for international business and, finally, successfully reinventing the company's procurement function, which he oversees as well.
With all that and more working for him and Honeywell, James also is Human Resource Executive®'s HR Executive of the Year.
Honeywell's Chairman and CEO Dave Cote, who in 2008 brought James into the top HR role (James had been running HR for the company's aerospace division), is proud but not surprised James won the award. Cote says James has many strong leadership qualities, but among the most impressive is his ability to use metrics to do more with less -- a mantra for many employers in the post-recession era.
An avid Boston Red Sox fan, Cote likens James to the movie Moneyball's Billy Beane, the numbers wizard/general manager who stunned the sports world when, using a statistical analysis called sabermetrics, he took the Oakland Athletics, one of the lowest-paid Major League teams, to the playoffs four straight years -- 2000 to 2003 -- and again in 2006.
"There is a comparison to the film ... ," Cote says. "It's not enough to have excess talent and money. It's how you make those two factors work for you that breeds success."
Cote adds that the Moneyball connection speaks to a lot of things James has done within Honeywell's walls, as his rigorous use of metrics and data have made their imprint on every James-led initiative.
"It really is making a difference," Cote says. "One of the things that always bothered me about HR is people will feel this way or that, but they never have any data to support any of it. HR always seems to be the least measureable area. Mark has [measured everything he's done] at Honeywell, whether it's with the One Country model, HR reconstruction, talent management, procurement ... you name it."
When it comes to analytics, James says, Honeywell HR uses a combination of homegrown and off-the-shelf software (he chooses not to mention specific vendors), with the main driver being the innovative use of the available technology by HR.
James' role involves leading the global HR strategy and programs for the company's 132,000 employees (58,000 in the United States) in more than 100 countries. (Honeywell produces a range of commercial and consumer products, engineering services and aerospace systems for customers, including consumers to major corporations and governments.) His role includes organization and talent development, staffing, learning, compensation and benefits, labor and employee relations, HR services and the Six Sigma training organization. As noted, he also has other responsibilities not customarily associated with an HR leader, including oversight of Honeywell's global functions for aviation, procurement and communications.
In addition, he partners closely with Cote on the agenda and choosing the right attendees for the company's annual senior leadership meeting -- a critically important event for discussing company progress, sharing best practices, highlighting opportunities and ensuring that leaders stay focused on the fundamental processes that help Honeywell win in a slow-growth global economy while they continue creating the glue that builds "One Honeywell" -- a culture Cote says he instituted when he arrived at Honeywell in 2002 to focus everyone on business acumen, listening to the customer and doing "what we say we are going to do."
The Story Behind the Success
James' emergence in HR was not by grand design, he admits, having "stumbled into it" during college. As a teenager, James went on two-year missions with his church and learned he really enjoyed the human-collaboration aspects of the experience. Early in college, James says, HR just seemed too touchy feely, a bit soft for his career track. But numbers came very early and easy for the son of an accountant, so he dual-majored in finance and HR.
The real turning point, however, might have come earlier in life when James' dad invited him to visit at work one day. Seeing his dad's accounting efforts hardly got him jazzed up career-wise.
"At the time, I thought I would rather be the garbage man, because riding on the back of the truck at least was fun," James says with a laugh.
At the last minute, while an undergraduate at the Jon M. Huntsman School of Business at Utah State University, James leaned toward the HR career path, mainly driven by his preference for people over spreadsheets or digits.
"I still liked working with numbers and there was no real connection to HR at the time," he says. "I would like to say I planned this all out, but that isn't true."
Planned or not, James' win list at Honeywell is laden with measureable results.
For example, during the 2008-2009 recession, by most measures the worst in 80 years, Honeywell had few layoffs and none were technically recession-related.
By comparison, during the 2001-2003 recession, the company laid off 30,000 people.
This time around, Honeywell -- with $37.7 billion in sales for 2012 -- again faced recession-related sales revenues, down 16 percent. James understood that, so he and his staff of 18 direct reports developed solutions that balanced the downturn's effect on employees and customers to address the expected lower sales numbers.
Mainly, through the OEF initiative, James and his team coordinated more than 200 actions to cut costs. The most visible and one of the most critical of those actions, he says, was the use of global employee furloughs, which were painful but, in the end, saved about 20,000 jobs based on the company's finance-department estimate.
OEF, James says, was based on a close alignment between the human resource and finance functions, and was designed to provide improved transparency into the total cost of labor, including all related spending as a percent of revenue.
Also, Honeywell created a financial framework with a management operating system that aligns strategic business groups' budgets with OEF targets.
OEF, James says, helped to preserve jobs because Honeywell leaders were able to apply key principles and make smarter decisions regarding labor costs. In fact, all business leaders must ensure adherence to OEF targets throughout the year to ensure labor expense is being used in the most efficient way to hire, reward, develop and motivate the best employees, James says. The furlough strategy meant Honeywell employees around the world were required to take unpaid leaves in order to stave off layoffs -- a "spread-the-pain" approach.
James further explains that Honeywell also did not go the layoff route because it believed it would need its workforce as the economy bounced back.
"It wasn't so much an altruism sort of thing," he says. "It's a waste of money to sever people and then turn around and rehire them. Also, we kept our sales feet on the street, unlike some competitors, so we didn't have to start all over again and rebuild relationships. We were able to keep our people by using the furlough approach across the company.
"In the end, we still made money and kept our margin through the recession," he says proudly.
Most of all, James adds, OEF improves quality while lowering costs; in essence, doing more with less.
Putting Data to Work
Apart from the furlough program, James cites two smaller but, in his view, significant examples of OEF success stories among those 200 actions -- some of which were part of OEF, some not. Using its data-analysis capabilities, Honeywell HR sought to discover why 80 percent of a group of employees in a high-turnover country were leaving the company at a specific time in their tenure -- around the three-year mark. If employees made it past that anniversary, he says, they typically stayed on long-term.
After much digging, HR found that the decision to leave had to do with a certain sort of activity in their background. If they had it, they stayed and were a success. If not, they were likely to leave. (For competitive reasons, James would not reveal the "secret sauce" aspect of this particular example.)
"That one factor turned into a knockout punch when we went to hire for that job," he says, adding that turnover was cut in half as a result of the findings. "No matter what they said in exit interviews, we didn't see the cause until we looked at it quantitatively."
In the second example, Honeywell HR -- again, after studying the data -- found that, in China, requiring sales people to speak English, a prior job qualification, was hurting performance because it was not landing the best sales talent. James eliminated the requirement and sales numbers shot up.
"Again, it's about cost and quality," he says. "With that change, we get better sales people and we don't have to pay as much, either, because English is not a requirement. It seems like a no-brainer, but most companies are not aware of it. Using data forces you to look at labor from a much different perspective."
As mentioned, the OEF effort was not alone among James' successes within his five-year tenure. Other winning efforts outside of OEF include:
* Reorganizing procurement. With Cote unexpectedly handing him the reins a few years back, James transformed Honeywell's global procurement organization into an integrated, high-performing team that delivers outstanding results. The effort involved hiring and rotating key leadership talent from across the businesses and functions. The result: Procurement now collaborates effectively, consolidating and leveraging Honeywell spend and sharing resources to drive improvements in targeted supply categories, productivity and working capital.
* Improving talent management. James and his team strengthened Honeywell's talent management with increased emphasis on its Management Resource Review and the Honeywell Performance and Development processes, both of which differentiate and reward top performers. In fiscal year 2012, "regrettable turnover" (loss of top talent) remained around 2 percent, while total turnover moved into the single digits, from 11 percent to 9 percent. Also, positive employee-relations-survey scores, which had dipped slightly during the recession to 77 percent, have improved to 80 percent.
* HR's "One Country" model. James instituted this model, which organizes all HR generalists within country boundaries to provide HR support across the company's four strategic business groups (Performance Materials and Technologies, Transportation Systems, Automation and Control Solutions and Aerospace), rather than having HR generalists assigned to each business regardless of the employee-population size -- which was how it was done in the pre-James era. It allows for deep, in-country knowledge and drives standardization.
Mark Paulek, vice president of HR for Honeywell in Europe, Middle East and Africa, has worked directly with James for four years but has known him for eight, as both worked within Honeywell in various HR roles before that. He says James is, above all, a "what you see is what you get" style of executive. Also, while James might have a driven and competitive mind-set, he definitely is not into playing games, at least not of the office-politics variety.
"I have had many bosses and he is, without a doubt, the least-political one," Paulek says. "Mark's extremely focused on the job at hand and quantifiable performance. He has very little political intrigue to him, which makes working for him very easy."
Jonathan Driggs, an employment law attorney and former co-worker of James in the mid-1990s when he worked with him at Iomega, says you would not have predicted James becoming a high-level executive back in his early days. Not because he wasn't competent, but because he was pleasant and not a flashy guy.
"He was a nice guy, folksy and from a small community, so people might underestimate him," Diggs says. "But I worked with him and he showed a tremendous judgment about people and business. He could see the nuances. He was able to read situations very accurately."
Fred K. Foulkes, a professor of organizational behavior and director of the Human Resources Policy Institute at Boston University School of Management, and a judge on the HR Executive of the Year selection panel, considers James to be "a distinguished member of the new breed of top executives who are both HR leaders and astute business people."
That combination of characteristics -- the analytical mind that also "gets" the people side of the equation -- has served James well. When asked, he says he's a business person as well as an HR person because he believes HR processes are business processes. He also admits to spending half of his time on things that are not technically HR-related, mainly issues connected to how he can help Honeywell make more money, or lose less money.
"Apart from all the specific programs, Mark's most fundamental success was turning HR into an integral part of the company's management structure," says Cote. "HR is usually something to contend with or get through, but by deconstructing and reconstructing HR, Mark has made HR a business partner as opposed to the organization that tells everyone on Friday to have a nice weekend. Mark is about making HR a real business partner, not a baloney business partner."