Like it or not, human resources professionals play by the CEO’s rules. But, apparently a growing number of CEOs now want HR’s input in making those rules.
Many of the most pressing problems that preoccupy CEOs already are, and will in all likelihood continue to be, about human resources.
A more competitive, increasingly globalized market, the rapid intrusion of new technologies and an unavoidable surge in retiring baby boomers have all converged to produce a troublesome labour shortage.
The value of human capital has gone up drastically and so too has the value of managing that capital effectively. Where once “People are our most valuable asset,” was mostly hollow posturing, successful CEOs — the story now goes — will be the ones who believe this and act as if it’s true.
The result: HR now finds itself called upon more and more by the CEO to help steer the business.
Canadian HR Reporter
surveyed CEOs of some leading Canadian organizations about what people issues require their attention, how they’ve worked with HR to meet those challenges, and how they are counting on HR to help them chart a smooth course through stormy waters and whatever else may lay over the horizon.
Paul Tsaparis, president and CEO Hewlett-Packard Canada
Hewlett-Packard (Canada) Ltd. was established in Montreal in 1961 and now has more than 1,300 employees at 19 locations in Canada.
One of the top priorities for Hewlett-Packard Canada is finding and holding on to the high-tech talent that can make or break corporate strategy. Nothing unusual there.
However, HP seems to have had more success than most. It has a turnover rate that would make most high-tech firms jealous (around 7.5 per cent) and the computer hardware giant was recently recognized as the third best employer in Canada by Report on Business magazine. Particularly noteworthy since employee surveys made up the bulk of the evaluation, says CEO Paul Tsaparis.
Key to their success is the HR department’s diligent maintenance of what he calls the total employee experience. It is the basics of compensation, benefits and a good work environment, but it is strategically critical that they get it right.
“Our people strategies are central towards Hewlett-Packard’s success,” he says. “We have, at least what we are told is one of the most innovative benefit programs in Canada.” HP created a program that enables employees to customize their health-care benefits by channeling their health dollars in a before tax manner to meet their individual needs. “Employees are loving this program,” he adds.
“We have wealth-building schemes where every HP employee has access to a financial advisor. One of the things we kind of laugh about here is some of our younger employees who have never thought about retirement or benefits. Right out of the blocks they’re getting an opportunity to start to think about how they can create portfolios for themselves, how they want to manage their money.”
During the dotcom explosion, HP had to develop aggressive retention programs — offering better salary and stock options, for example. “The good news is our retention rates are actually quite spectacular relative to industry averages, so we didn’t lose that many people to the dotcom craze because we had done a lot of the good work before that,” he says. And as for those that left: “We feel pretty good about the fact that a number or employees are looking at potentially how to get back into HP.”
Because people issues are an integral part of overall strategy, HR is closely involved in setting the direction for the company.
“The simple quote here is that HR is at the table,” says Tsaparis. John Cross, vice-president of human resources, is part of the leadership team of eight people. “Everything we talk about from a strategic nature and driving our business forward, John is a part of that. And we regularly discuss business once a month. Issues that affect the company, that affect our business and HR is part of all of those discussions and a key contributor to enabling our business success to happen.”
And Tsaparis counts on HR to steer the organization through a continuing reinvention — “Keeping the best and reinventing the rest,” he says.
“HP is going through a very dramatic reinvention that involves major changes to our organization and it’s very important that we communicate these changes to our employees in a timely and an open manner and we’re also soliciting feedback as we go.”
Lessons were learned from the rapid, and successful, spin off of Agilent Technologies from the parent company in 1999, where 16,000 employees from around the world had to be placed in about three months.
“In Canada, I’m proud to say we did not lose any employees and in fact we were able to give employees their first choice in virtually all instances, potentially to go to HP or to go to Agilent. That is just a phenomenal track record and our HR department played a very significant role in that achievement.”
At the time of the announced spin off, some employees felt a little like they were being abandoned by HP. Essential to keeping them and easing fears was a thorough communications strategy. HR had to get employees the important information they wanted as soon as they could so they knew how the transition would affect them. “Overall communications strategy was critically important and they generated the communications strategy,” says Tsaparis of his HR team.
Ideally, HR would talk to every employee on a one-to-one basis. An impossible proposition, says Tsaparis. Instead Web-based tools were used to address issues near and dear to their hearts, like benefits, pay and so on.
And aside from designing the programs and guiding employees through the change, HR also coached senior management, basically acting as consultants to help senior staffers manage the change themselves.
In the new economy, the companies that are the most successful will be the companies that are the most adaptable, says Tsaparis. He likes to use an analogy of an ecosystem where the organisms that are best able to respond to changes are the ones that survive and thrive. Regardless of how change manifests itself, people need to be able to adapt, he says. And so a critical part of HP strategy is finding those types of people. “HR’s focus is making sure we have those right people so that we can be the most adaptable organization possible to deal with situations whether it is B2B or B2C. It almost doesn’t matter because there will be another one and it’s that organizational readiness that will enable us to be successful moving forward.”
John Wetmore, president and CEO IBM Canada Ltd.
In 2000, IBM Canada hired 2,440 employees bringing its total Canadian workforce to about 19,000. That same year, it invested more than $64 million in employee education and training.
“I spend an increasing amount of my time on people issues. Short of spending time with customers, which is my number one priority and where I spend the bulk of my time, people issues would probably fall in line as being the next most important area where I spend my time,” says John Wetmore, president and CEO of IBM Canada.
Consequently he works a lot with his HR team and credits them for contributing to the success of the company.
“I have a very, very good understanding of what HR is doing because I interact with them on quite a regular basis,” he says.
In order to remain competitive in the ultra-tough high-tech talent market, IBM had to make sure their benefits program would be attractive to prospective employees while still containing costs.
“I would stack our set of (benefit) offerings up against just about anybody in terms of the control we have over rising costs and that was the direct result of the right design put together by our HR team. If we did not land on that design our costs would be quite a bit higher.”
They had to review their compensation strategies to compete with other companies and decided to extend their stock option program to more employees across the business.
Creating the right work environment to foster success also requires constant attention from HR.
“We’re in a very competitive industry, which means we have to communicate well about our vision and about our strategy. And in my case it means I do town hall meetings. You almost can’t over communicate in today’s competitive age with change coming as fast as it does, and so having the right climate around the business is I think, a people priority as well.”
Vice-president of HR Neil Cooney is a member of the senior operations group for IBM Canada and Wetmore says they work closely together to address the human resource priorities the company has established.
Leadership development is one of IBM’s top priorities and Wetmore has been working with HR to guide the organization in that direction.
“We have a management development function within HR. They run a set of programs and I regularly go to every one of those management development programs to talk about the business and communicate what’s going on. We have a program that HR runs for new hires and I go to as many of those as I can go to. So every week I’m participating in programs that are run by HR to help on our priorities. That is how I stay connected because I am active in the talent area and HR is very connected to that.”
Wetmore has formal quarterly review meetings with the senior HR team and other senior executives where, in two hours, they go through pretty well all the major functions in HR.
“I really value these quarterly meetings. We’ve got a very good process and in two hours we can go through where are we on hiring, where are we on our campus program, where are we against our budgets, where are we on any new programs in the benefits area, where are we in diversity,” he says.
“Diversity has been really important to us. We have a very diverse population. The reality is there has existed glass ceilings for women and visible minorities and we continue to have really good programs to try and break through that.”
Aside from those formal meetings there is rarely a day that goes by that he isn’t in contact with Cooney discussing HR issues that will affect the business.
“We’re talking about key people. There might be an open position we’re talking about or compensation plans. With about 19,000 employees there is always something going on. We constantly have parts of our business that are under-performing and need to rebalance skills and so on.”
Sebastian Kuntz, CEO and founder EC-Gate
Founded in 1997, EC-Gate is a growing application service provider focused on the e-marketplace. With 75 employees and a significant amount of European customers, EC-Gate has head offices in Toronto and Amsterdam.
“Creating and maintaining a strong team environment can be difficult within any organization, when you’re a relatively young start-up on the leading edge of technology and half your staff is in another country it’s particularly challenging,” says Sebastian Kuntz, CEO and founder of EC-Gate.
“With dual headquarters in Toronto and Amsterdam one of our key challenges is to foster an ‘international’ corporate culture where employees work autonomously while enjoying the benefits and support of being part of a bigger team. This of course is imperative in the highly competitive and fast paced world of e-commerce where staff must stay on top of the latest industry developments and be able to quickly access and share information on technology and clients across time zones.
“From an HR perspective it’s important that we’re continuously communicating with employees, encouraging feedback and looking for ways to strengthen corporate bonding.”
EC-Gate is small enough at this stage that it doesn’t have an actual HR department.
“This puts tremendous pressure on the shoulders of all of our managers who have to play multiple roles,” says Kuntz. “We have weekly management meetings where we discuss HR issues and agree on the best way forward. Internal communication is key. We have found that frequent, informal communication works best in our entrepreneurial culture. Whenever there’s important news, we simply get it out through e-mail or in a meeting. No fancy newsletters. Just information as frequently and openly as possible. It creates a great culture where people feel they know what’s happening and can easily ask questions.
“Of course, we are growing quickly, which means HR is part of the organizational structure in the months ahead.”
An early project for the new head of HR will be the development of policies and procedures and making sure employees have a place to go with any problems. As it grows to 100 employees, EC-Gate is reaching the point where addressing these issues through the creation of an HR department is becoming important.
“Our HR efforts to date have focused on creating a culture that allows people to do their best work in a fun environment,” says Kuntz. “Many of our employees came from large, hierarchical, bureaucratic organizations. They were happy to leave that culture behind. Our challenge is to maintain the feeling of a small company as we double in size every 12 months.
“HR will be at its best in putting in all the systems we need without adding bureaucracy. Helping us find and hire the best people will be another key part of HR’s role in the coming year.”
Darren Entwistle, president and CEO Telus
Formed from a merger of BC TEL and Alberta-based TELUS in 1999, and now one of the largest telecommunications companies in Canada, TELUS employs about 26,000 people.
“Within our industry today there’s a lot of talk about technology, but truth be known, people have never been more important to the success of our organization and organizations within the telecommunications industry than they are right now,” says Darren Entwistle, who became president and CEO of TELUS in July, 2000.
Because of the talent shortage, it’s incumbent upon everyone in the organization at all levels to take responsibility for recruiting, retaining and developing top talent, not just HR, he says.
“And that is a mantra that I would expect from my management team and I would look to HR to facilitate that particular challenge. But at the end of the day, an organization that leaves its people, issues and challenges to the HR discipline, will be an organization that does not have the best in terms of employees within the organization. It is a management responsibility that’s facilitated and complimented by skilled HR resources.”
Entwistle considers people issues to be his most important responsibility and therefore works closely with HR to set the strategy that will ensure they are ready to meet those challenges head on.
“They (HR) are explicitly involved in developing and evolving the culture of the organization to give us the competitive advantage that we need to be successful. They’re explicitly involved in ensuring we have the right structure through which the strategy will be implemented — a structure that’s predicated upon a market and customer focus. They’re explicitly involved in assuring that we’ve got top talent pervading the management hierarchy and that we’re developing and nurturing that talent so that it’s not being attacked by our competitors and poached away from the organization.
“Making poor choices on recruitment is very, very costly to an organization. To avoid those undue costs requires a very rigorous selection process. This, at the end of the day, is not rocket science, in terms of a process, but one that’s predicated upon hard, quantitative, and qualitative analysis, getting the data and rigorously analyzing it,” he says.
“By data, I mean reference checking, in-depth profiles and interviews, skills and behavioural simulations and values testing. When an individual goes through this process and is ultimately successful, prior to even joining the organization, they should feel as if they’ve accomplished something because the selection process is that rigorous.”
It also falls on HR to ensure the company has a culture that complements overall strategy.
“For example, if your aspiration is to be a growth organization, then hand-in-glove would be a competitive performance culture. One way we went about achieving this was putting a program in place called “Energizing the Organization” which was led by HR, but was driven and governed by the executive leadership team of the company
“Once again reflecting the balanced responsibility between HR and the management community of the organization working together.”
Cindy Burton, president and CEO iWave.com, Inc.
iWave.com is an information management provider. Based in Prince Edward Island, the growing firm employs 52 people and has a two-person HR department.
It surprised most people, including the president and CEO of iWave.com, when at company-wide strategic planning sessions last year, the HR session had the highest attendance and created the most buzz.
“That strategic session was a real eye opener. People wanted to have their say and it all came out in that HR session,” says Cindy Burton, president and CEO of iWave.com.
After that session last November, the HR department and the executive team developed a 12-month calendar ranking all of the items that needed to be addressed within the company and now meet monthly to brainstorm new ideas and to make sure they are on track with their people issues.
“As for new problems that arise, I have a very open door policy and my HR manager will simply walk into my office and we work to solve problems as a group as they come up,” says Burton.
With growth on their minds, recruitment, retention, compensation and motivation are priorities for the two-person and growing HR team.
“Managing the human aspect of what we do is critical to our overall success and we see our HR staff as the key factor. Whether it’s ensuring that staff are properly compensated or motivated, that grievances are addressed quickly or that our hiring process is efficient and consistent, they all contribute to productivity,” says Burton.
“In terms of compensation, HR has helped us understand the concerns and benchmarks of the staff and assisted finance in the development of reasonable compensation levels to ensure that everyone is satisfied. They then took the next step and established a forum for staff to keep the lines of communication open.
“With regard to motivation, HR has helped identify ways to specifically keep the product development staff motivated by helping them identify achievable challenges. For example, I asked my HR staff to work with one of my project leaders to evaluate the existing staff, identify who could be moved to a new department, cross-trained, take on more responsibility, new challenges, etc. My project leader’s strength lies in understanding her target market and information management, not necessarily managing people. Managing the people resources is an area where my HR staff can really shine to keep everyone running at peak capacity.”
Staff evaluations and improving corporate culture are two examples of the areas where HR has had a great impact, says Burton.
“In terms of staff evaluations, having a person dedicated to HR ensures that our evaluation process is consistent and productive. It allows us to identify problems within our training programs early, or conversely spot potential problems faster and apply remedies quickly. The rest of us are usually too busy doing our own things to notice little problems; we only see them when they get huge and affect the larger group. The evaluation process developed by HR avoids those big problems by catching them early.
“Productivity within an entire team can be affected if one person is not on track. The standardized evaluations developed by HR keep productivity high by avoiding bumps in the road.”
Camille Orridge, CEO Toronto Community Care Access Centre
The Toronto Community Care Access Centre is a non-profit organization that provides healthcare assistance for people in their homes and employs more than 300 people.
While tech firms struggle with their own HR issues, other traditional organizations are struggling with technology and bringing their organizations and employees more in line with technological advancements. And, it starts with the HR department, says Camille Orridge, CEO of the Toronto Community Care Access Centre.
“HR is one of the areas of the organization that must go through the changes first and very quickly. HR has to complete this transformation and then lead this change for the rest of the organization. If we are saying that people are the largest part of operations, then the biggest revolution will occur at this level. In order for the organization to accomplish this, HR must become the key function to lead and change the rest of the workforce,” says Orridge.
Technological changes have had real impact on the way work is done. Every aspect of work has been virtually revolutionized and transitions have to be made from the old to the new and that’s where HR is needed.
“The critical concern becomes how we change the workforce from the ‘old’ method of work to what we have today. For sure we have to change front-line staff but we must also transform management as well because they are the ones to lead and implement change in the rest of the organization. So in effect, we have a simultaneous and dual change to effect.”
In this revolutionized workplace, HR is also taking more of a strategic role. While they have traditionally focused their efforts primarily on employee relations, compensation, benefits, recruitment, training and development and occupational health and safety, today organizations are looking to HR to lead the way in some regards.
“Some of these traditional activities may need to move to the back burner in favour of more critical initiatives. I’m looking for HR to move from being a traditional functional department that carries out routine but necessary tasks to being the work area that champions the organization’s vision and then maps out the course that we must all take. In much the same way that a CEO looks into the future and determines where the organization will be in five years’ time, HR must do the same with its people.”
Ultimately, for HR to have any positive impact on the overall effectiveness of an organization, they must be in synch with the CEO and must be present at the senior level, says Orridge.
“HR is where I look to in order to find change management leadership in the organization. They’ll need to be out in front developing work plans and strategies for the rest of us to follow and implement.”
In the health-care industry, HR leadership comes in the re-training or re-skilling of staff while daily operations continue.
“Client flows are constant, people are still getting sick and our services continue to be in high demand. At the same time, our people need to learn and acquire new skills. This necessitates taking some time off-line to learn, acquire and then practise. Everyone will have a learning curve to deal with. That said, HR has to plan for this and develop the strategies to implement. In this case, either reduce clients or have additional staff ready to provide support while the new learning takes place. Since we clearly cannot reduce the number of clients, the HR response must be to hire and train for a transition team.”
Wayne Barnes, president and CEO Goodyear Canada Inc.
Goodyear Canada Inc. is a wholly-owned subsidiary of The Goodyear Tire & Rubber Company established in 1910. With seven manufacturing facilities and four offices, the company employs about 4,000 people in Canada.
The HR department at Goodyear Canada is charged with mastering the balancing act between issues at home and those originating south of the border. While they deal with their own unique people issues, they also help to find ways to incorporate HR practices passed along by their American colleagues.
“Our requirements are always changing and I look to HR to continually examine and search for creative methods and solutions,” says Wayne Barnes, president and CEO of Goodyear Canada. “This includes tailoring programs that are introduced from our colleagues south of the border. Our HR associates strive to take the best of what Goodyear in the U.S. offers in terms of HR services and shape them into appropriate Canadian programs. We are constantly balancing between a corporate, rigid structure and an entrepreneurial, free-spirited environment.”
To sustain that type of environment, Barnes, along with the executive team, is accessible to HR, and vice versa.
“We’ve streamlined our operations to a level where we can communicate quite freely. I’m proud to say we really do have an open door policy. We are small enough to do most of our communicating face-to-face and I think it makes us more efficient. Because HR is a part of everyday business, I don’t need a lot of fancy graphs and charts to show me that there is an issue of concern,” says Barnes.
Barnes recognizes HR’s struggle to show its monetary worth. The work they do is about “people” and can’t always be quantified into dollars and cents. But, their value is seen in the larger picture — the organizational effectiveness of the company.
“Aside from the more measurable areas of HR like contract negotiations, safety initiatives and compensation reviews, it is difficult to define the value of HR. The most pressing issue right now is maximizing the contributions of associates. By supporting an enriching, team-focused environment, and implementing effective incentives, HR contributes to Goodyear Canada’s overall organizational effectiveness,” says Barnes.
Maximizing performance and recognizing employees for their work top the list of people issues at the tire-making giant.
“The HR issue of greatest importance is how to maximize the performance and contributions of our associates. Concurrently, we need to reward our people appropriately for their performance. This is no simple task. From our experience, a highly effective performance management system is extremely difficult to implement and manage,” says Barnes.
David Booth, president and managing director Compaq Canada
Since first setting up shop in Toronto in 1985 with just 14 employees, computing stalwart Compaq Canada has grown to employ 3,700 people across the country.
“I’m really happy with what we’re doing right now but can we get better? Yes,” says David Booth, president and managing director of Compaq Canada. “The recruitment side of the house for example. We’re in a hiring phase and I want to make sure that people are flocking to come to Compaq. The desired result is that Compaq Canada be recognized in the industry as a best-in-class employer. HR has a responsibility to make sure the market views us as, and that we truly are, a best-in-class employer.”
When he joined Compaq Canada in May 2000, one of the first things he initiated was a review of their 14 major objectives, which were pared down to just three — one of which was becoming a best-in-class company on employee retention and development. The other two were increase top-line revenue and build the enterprise business.
As they investigated what would keep employees around, it quickly became clear staff cared most about the quality of the work environment and the relationship with management and whether or not they felt included in the strategic goals of the company. Accomplishing this is overseen by the HR department.
“It’s led by every manager in the organization but HR facilitates it and helps make things work pragmatically,” he says.
HR at Compaq Canada reports directly to Booth. “They’re a member of the Canadian management team, the same as our VP of sales is. They have an equal voice at the table,” he says.
“I meet with John (Cardella, vice-president, human resources) or members of his staff weekly. We have a Canadian management meeting process — every two weeks the entire Canadian management team goes over the major issues. That’s the forum to align the business, for everyone to bring forward issues that are cross-functional.”
And HR will play a critical role in responding to the results of Compaq’s latest employee survey.
“We take the results of the survey and say ‘Where are the areas we can improve upon?’ One is, how can we help employees balance their personal and professional needs? That’s a real issue in today’s world.”
Telecommuting, working from home and job share programs will all be explored. Then it will be up to HR to take it to the logical step.
“By driving to the correct result, HR will get to what I need them to do. But I need HR driving to a result, not something that’s esoteric. I need to know how does it tie back into the business plan.”
Art Knight, president, Saskatchewan Institute of Applied Science and Technology
The institute employs 1,600 people spread across campuses in Regina, Saskatoon, Prince Albert and Moose Jaw.
CEOs can be a problem when they try to micro-manage HR, says Art Knight, president of the Saskatchewan Institute of Applied Science and Technology (SIAST).
“CEOs should look at HR from a general policy perspective,” he advises. “Don’t pretend to be an HR professional — the details of HR should be left to them.”
Knight’s philosophy grows out of knowledge of the profession learned through hands-on experience in industrial relations — first from the trustees’ side of teachers’ negotiations and then during his involvement with labour negotiations while vice-president of academic at the University of Saskatchewan. With a doctorate in chemistry, Knight has also learned about the chemistry needed to solve people problems.
“(As CEO) you have to know enough about HR to have confidence they are doing the job well, and then let them manage the department,” he says.
In a unionized environment (only 70 of the institute’s 1,600 staff aren’t covered by a union agreement), Knight needs HR leadership that has strong IR experience. And at SIAST that means the head of HR is an important member of the senior management team. Marie Alexander holds the title chief human resource officer, and is part of a four-person senior team that includes Knight, the vice-president of programs and the chief financial officer.
“From my point of view, the collective agreements are very complex and HR issues are so pervasive in ongoing operations that it doesn’t make sense to do without the views of HR at the most senior level of the organization,” says Knight. “I want HR upfront when there are policy decisions being made that can affect the HR environment or cause challenges with the union.”
In addition to people issues around staff deployment and union dealings, the HR department at SIAST recently played a major role in the upgrading of information systems at the institution. This included taking the lead in developing and sourcing an integrated system that meets the needs of HR, finance and students, as well as self-service for employees.
So what tops HR’s agenda now? The common refrain: recruitment.
“We need proactive recruitment. Not just to replace retiring or moving IT people and professors but to expand our capacity,” explains Knight.
“We also are looking for opportunities for staff renewal — younger people with more recent qualifications. We want new people with fresh skills and ideas but we must balance this with marketplace and retirement scenarios.” As much as SIAST may want to renew its’ employee base, it has to analyze its opportunities to do so. For example, while the engineering program has a large number of looming retirements and fresh faces would be ideal, finding replacements isn’t easy in a tight labour market.
With files from David Brown, Laura Cassiani, Joyce Grant and John Hobel.