HR helps drive change at HBC

Merger with Saks prompts overhaul of systems, processes
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 05/15/2015

The Hudson’s Bay Company has a storied history in Canada, stretching back to the 1600s. The chain has seen more than a few changes over the years, most recently with NRDC Equity Partners acquiring HBC in 2008 and HBC then acquiring Saks in 2013.


As a result, HBC is both a really old and a really new company, according to Stephen Cerrone, executive vice-president of HR and CHRO at HBC in New York.


Not surprisingly, these upheavals have led to a transformation for HR that’s driven from a new business strategy around HBC and Saks merging, said Cerrone, who spoke on the matter at a Retail Council of Canada conference in Mississauga, Ont., in April and later in an interview with Canadian HR Reporter.


Leadership

Focusing the business began with the leadership team. Of 11 people reporting to the CEO, 10 were new to their roles. One-half were promoted internally and one-half were hired externally.


“From an HR perspective, putting these people in these roles (meant) massive development moves for all of these folks, all at the same time,” he said. “We’ve been pretty deliberate over the last year to ensure we have the right people that are going to drive the growth.”


As part of leadership alignment, the group came together to get to know each other, find out about each other’s lives. That meant having no agenda, no slides — just hanging out, said Cerrone.


“Basic stuff: do you have children, where do they live, what’s important to them, what are their hobbies? Really basic stuff because that’s how teams form. This is a really kind of primitive thing.”


Then it was about figuring out: Where the heck are we going?  So the team spent two days putting together a strategy focused on five pillars over three to five years: driving digital growth; off-price; Canada expansion (knowing Nordstroms is arriving soon); growing top stores; and synergies and efficiencies. 


Cerrone — who joined HBC in January 2014 — also interviewed about 30 senior leaders, asking about their HR strategy, HR focus and what should be done in the next three to five years.


“There was no strategy, there was a set of objectives,” he said, adding that at the time HBC was hunkering down, making do with what it could. “Nobody really had a roadmap.”


So the team came up with a new strategy: driving a unique culture, building a pipeline of talent and focusing on leadership development. However, the group  can’t tackle those things without changing the way they ran HR, said Cerrone.


“We need better systems, we need better processes, we need to be more analytical, we need to be more efficient. So these are transformations we are going through.”

HR, like the rest of the company, had disparate, disconnected systems, making it hard to get information and data, he said.


“If you’re an HR business partner, generalist, supporter of the business, it’s just difficult for you to do your job,” said Cerrone. 


“People spend an unbelievable amount of time in HR on manual, non-integrated processes and they should be spending time on the business.”


Analytics

As for analytics, that was less of a weakness and more of a philosophical view, he said.


“If you begin using data and science and information and analytics to inform your talent decisions, you just must make better decisions. So, we started — we’ve got a long way to go — we said, ‘Look, to transform the way we’re running HR, if we’re going to be the size company we are — you know, 45,000 people, $8 billion, et cetera — we needed to be more analytical and a bit more scientific about the decisions we were making,” said Cerrone.


“We started — in some cases quite rigorously, in other cases more just practically — just trying to use data and be more objective about some of the talent decisions.”


Those analytics included mining data on store-level performance. About 90 stores were chosen, with about 15,000 data points over about four years, honing in on different dimensions of human capital such as the ideal density of associates, the percentage of full-time employees, tenured and salaried employees and mean age.


“It’s fascinating work,” he said. “We’re really mining that to see: What are the two or three things that we know about our associates that drive incremental productivity over and above other associates?”


And it shows people aren’t necessarily leaving because of compensation. 


“People aren’t leaving because of pay, they’re staying for other reasons. We needed to know that. So... we’re mining a lot of data,” said Cerrone.


Another big move by HBC was an employee survey, which had never been done organization-wide. The poll was sent out to 45,000 employees. The response rate? Eighty-nine per cent or 33,000 employees.


“That’s pretty damn high,” said Cerrone, adding store staff were gathered into a room to complete the survey. “The message? People had something to say.”


In certain areas, such as supervision, collaboration, career development, customer focus and communications, the scores were above global retail. “People were optimistic, so there was some real positive energy in the organization,” he said.


However, there were retention risks and other issues of concern. The lowest scores were leadership and career development, though scores of 75 per cent were still pretty strong, said Cerrone. And they weren’t surprising results as there had been changes in leadership.


“(For) the career development one, we didn’t have it. People didn’t know where they were going… we hadn’t told them anything.”


Talent review

HR also put together a common talent review template that started by looking at the top 200 people in the organization using a common set of competencies. 


“The idea there was to calibrate your definitions,” he said, as a high-potential in one department might not compare to a high-potential in another.


“We are trying to build a common view of talent across the organization so as we grow and move people around, we have a consistent lens to say someone is literally good or not, high potential or not, developable or not,” said Cerrone.


Building massive charts gave a great view of the situation and also highlighted issues, such as why certain people were vice-presidents in one department but not in another, even though they had similar roles. 


“We had the back and forth and, at the end of day, I think we ended up in a much better spot in terms of having a consistent view of who’s a future leader,” he said.


Culture

In integrating the two companies, another big focus has been on culture. That included a two-day off-site meeting with executives for “culture immersion” to define what the new culture is going to be, in terms of values and behaviours.


“We’re defining the culture and immersing our leaders in what that means for the company and for them, and we’re taking our HR processes and saying, ‘Let’s make the cultural attributes embedded in the HR processes,’ whether it’s recruiting, onboarding, selection, talent reviews, incentives, benefits — you name it,” said Cerrone. “It’s a multi-year effort and we’re about a third of the way into it.


“The note cards and laminated mouse pads don’t do much. They’re nice… but they don’t drive behaviour so we want the group to make some public commitments to each other… and then we’re going to get them engaged in leadership development programs.”


Inconsistencies will also be a concern, to ensure they’re operating consistently across the board, he said.


“If your… systems are different, your performance management systems are different, your objectives are different, your forms are all different, it’s hard to have a common culture,” said Cerrone. 


“So whether it’s recruitment, performance management, talent reviews, career pathing, leadership… rewards, it’s all now going to be integrated — we’re building this common cultural element with all these practices.”

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