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Secrets and Strategy at Kroll

June 17, 2001
Related Topics: Corporate Culture, Featured Article
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As vice president of human resources at Kroll, a New York-based privateinvestigative firm whose operations span the globe, Jim Northrup deals with afew issues that are, well, a bit more complicated than the usual dilemmas thatHR professionals face. "Some companies have a workplace-violence preventionpolicy that anybody who brings a firearm onto the premises is fired on thespot," he notes. "Obviously, we can't have a rule like that, becausewe've got people who are licensed to carry (guns)."

    It's Northrup's job to devise benefits packages for the sort of employees whofind themselves suddenly jetting off to mysterious foreign locales forindeterminate stays. He has to create career-enrichment programs relevant to aworkforce whose jobs are already filled with intrigue -- electronicsurveillance, kidnap-victim recovery, financial fraud, and anti-terrorism. Heoversees a corporate evaluation system designed for people whose work can't betalked about in any great detail.

    And he has to make do without an employee policy manual. "We don't havea book that states what you can and can't do," he says. "We takethings on a case-by-case basis. Every job is unique."

    Kroll blandly bills itself in a corporate fact-sheet as "a global riskconsulting company specializing in investigative, intelligence, and securityservices," but that's akin to describing the ejector seat on James Bond'sAston Martin as an accessory. Founded three decades ago by attorney Jules Kroll,the eponymous outfit first made a name for itself on Wall Street, doingintelligence work for combatants in corporate-takeover battles. Kroll graduallyexpanded its franchise, hiring legions of former FBI and CIA agents,ex-prosecutors, accountants, and computer experts.

    The firm actually is a broad, continually evolving array of businesses, with2,000 employees and subsidiaries that offer everything from video surveillanceand drug testing to engineering consulting on how to make buildings more secure.It has branch offices all over the world, most of which operate withconsiderable autonomy and little contact with headquarters.

    In the 1980s and 1990s, Kroll staffers chased after the stolen loot ofdictators such as Saddam Hussein and Ferdinand Marcos, investigated themysterious hanging death of Italian banker Roberto Calvi, and helped pushorganized crime out of the trucking industry. After terrorists bombed the WorldTrade Center in 1993, Kroll was hired to help beef up security. More recently,Kroll spokesperson Patricia Wood says, the firm's investigators delved into amurder case in the Ukraine, and helped a Hollywood star with a security problem.

The HR role in Kroll's reinvention
    Beyond the unconventional personnel issues that Northrup and his 10-memberstaff sometimes encounter in the investigative/security field, there are evenmore complex challenges.

    HR is playing a key role in the reinvention of Kroll, which, after threeyears as part of a corporate merger, is emerging again as an independent company-- a vastly bigger one, positioned in a dizzying array of new lines of business.Northrup and his team play a crucial role in helping those diverse,geographically distant operations work together to serve the new company'sstrategic goals.

    In addition, HR is developing recruiting, training, andenrichment programs that are helping the new Kroll cope with a corporatemarketplace that moves at Internet speed, where the demand can shift almostovernight from due diligence on mergers to, say, fraud investigations or countercyber-terrorism.

    For legal reasons -- his work for Kroll might expose him to sensitiveinformation from investigations -- Northrup is probably one of the few HRprofessionals around who's had to become a licensed private investigator. Evenso, he notes that his résumé is anything but cloak-and-dagger. A native NewYorker in his early fifties, Northrup worked in the pharmaceutical industry forBristol-Myers and for a time ran his own business, recruiting executives fortemporary corporate assignments. He joined Kroll in January 2000, not out of afascination with intrigue but because the job offered some interesting HRchallenges.

    After years as an independent company, Kroll merged in 1997 with O'Gara Co.,an Ohio-based manufacturer of armored vehicles, in an attempt to create aone-stop shop for corporate security needs. But the two vastly differentbusinesses -- investigative-security work and manufacturing -- and theirmanagements didn't mesh. After a failed takeover attempt by the Blackstone Groupin 1999, Kroll-O'Gara contemplated splitting into two separate publicly heldcompanies.

    Finally, in April, the company instead sold its armored-vehiclebusiness to Armor Holdings, Inc. for a reported $59.5 million in cash and stock.Kroll, as the company now again calls itself, will go back to focusing oninvestigative and security services and consulting.

    Because of acquisitions and growth in the investigative-security side,however, the new version of Kroll is far bigger than the original. "Krollwas a $70 million company before the merger," Northrup says. "Now it'sa $200 million company." The new Kroll's operations reach around the globe,with employees working in 55 offices in 18 countries. And as Kroll has expanded,it's evolved into an operation with more flexibility to adjust to continualchanges in the demand for investigative-security services.

    "The marketplaceis always moving," Northrup says. "Six months to a year ago, we weredoing a ton of work on financial due diligence for Wall Street deals. But today,that's a smaller part of the business. We're doing more litigation support,fraud investigations, and asset tracing. In a downturn, those fields heatup."

HR Tips from the Kroll File

  • Devise support systems to help employees thrust into difficult assignments. Kroll HR makes sure that employees abruptly dispatched on critical assignments aren't distracted by worries about their insurance and benefits. That's a good idea for any company, even if its staff isn't rushing off to investigate a murder or thwart terrorists.

  • Don't be afraid to be flexible. Rather than impose a one-size-fits-all U.S. standard on its compensation, benefits, and conduct criteria, Kroll tailors HR to fit the culture in which its employees must operate.

  • Take HR on the road. Not having permanent on-site HR people in local operations might seem like a problem, but Northrup has turned traveling HR into a plus for Kroll. He's used site visits to strengthen the relationship between headquarters and its far-flung units.

  • Rely on electronic background screening. Today, an increasing amount of data from the legal system is online, through both official government sites such as PACER, which allows searches of federal court records, and private fee-based services such as Kroll's Background America. A few keystrokes can give you peace of mind about a new hire, or help you avoid a big problem down the road.

Developing HR to fit Kroll's needs
    The need to cope with the company's evolution, in part, led Kroll to createfor the first time a separate HR department in 2000. For Northrup, it was notonly a rare chance to build a company's HR department from scratch, but also anopportunity to help forge the overall corporate strategy that HR then would playa key role in executing. "Whenever the senior management group meets, I'mwith them," Northrup says. "We have a voice at the table to assurethat HR is a player."

    In some ways, working for an investigative firm actually makes Northrup's jobsimpler. Integrity screening, for example, is a snap, because Kroll owns acompany, Background America, that is in the business of checking job applicants'names against computer databases of court records across the nation. Kroll usesthe same Web-based service that it sells to hospitals, day-care centers, andothers that need to root out potential bad apples. "It wouldn't do for usto be the shoemaker's children," Northrup jokes.

    Similarly, Northrup doesn't have to worry too much about recruiting. Despitethe company's avoidance of publicity, over the years the occasional high-profilecases have made Kroll a brand name recognized by law-enforcement, legal, andintelligence-agency professionals. "It's not unusual for us to get 200résumés in a week from people who are working in the investigative orprosecutorial or criminal justice fields," he says. "We tend to getpeople who have extensive experience and specialized skills, and are at the peakof their careers."

    The one exception: Kroll's financial services unit,which is growing to meet the increasing demand for forensic accounting --detectives who can scrutinize a business's books and expose fraud. "We tendto hire people who either are coming out of school and going for theiraccounting certification or have been recently certified but don't want to workfor Big Five accounting firms," Northrup says. "We give them a lot oftraining, and they progress."

    Developing an HR program that fit Kroll's needs was a particular challenge,for reasons that go beyond the hush-hush nature of the company's work.Additionally, "most of the offices are relatively small. In Buenos Aires orHong Kong, you won't have more than 50 or 60 people in an office. With that leaninfrastructure, there's not a lot of ability to provide HR support at a locallevel."

The HR road show pays off
    Instead of putting HR in every office, Northrup brings it to them. Unlikemost other HR executives, he spends about 40 percent of his time on the road."When things get hot -- there's a major reorganization, or a change in thebenefit plan -- I go to that location," he says. He's turned traveling HRinto a plus for Kroll, a vehicle for nurturing the relationship between a localoffice and headquarters. "These offices have maybe seen a handful of peoplefrom corporate, ever, so without exception they're excited when I visit them inperson."

    The firsthand knowledge and insights that he gathers from those visits alsohelp Northrup cope with the daunting complexity of Kroll's compensation andbenefits programs. The company's subsidiaries operate in an assortment ofcountries, many with differing corporate structures and regulation. "Youhave to be careful about applying U.S. standards to everything, because that maynot work," he says. "There are compensation issues galore. In someparts of the world, you're required to provide a company contribution to thepension program, but in other places there's no requirement.

    "In some places,there's a requirement if you have a plan. So we may have a situation where inone part of Europe, a unit has a nice contributory retirement plan, while in thenext country, a unit doesn't have a pension plan at all. But that unit has muchhigher salaries to compensate. The problem is that each side sees the best ofwhat the other has, and wants that, too."

    Other multinational firms may encounter similar dilemmas, but Kroll'ssituation gets even more complicated because of the nature of investigativejobs, which expand across borders and require operatives to go where the actionis. "We had somebody assigned to the London office, but they're reallyspending a year in Moscow," Northrup says. "We have somebody fromLondon based in Mexico City, and somebody from the United States based in SouthAfrica. That's not your garden-variety HR issue.

    "We've also got situations wherepeople have to pack up and go someplace right away with a few days' or even afew hours' notice, and in many cases they can't say anything to anybody aboutwhy. We try to ensure that programs are in place for them, so that they don'thave to be worrying about what sort of insurance coverage they have or whatother support mechanisms are in place for them. We need for them to be free tofocus on the job."

Flexible benefits and secretive reviews
    To meet such varied needs, Northrup has to show ingenuity in devisingbenefits packages. Fortunately, despite the highly dangerous nature of some ofKroll's work, few employees have needed the company's disability benefits,Northrup says. "I don't think we've had anyone who's left the companybecause of stress or disability. We've got people in those jobs who are formerDEA, or FBI, or from another government agency. They've made this kind of thingtheir life's work, and they've survived and thrived in it."

    Evaluating employees can be a tricky HR issue for any company, but it's aneven more sensitive matter at a firm whose work product often is shrouded insecrecy. In its previous incarnation, Kroll used a paper-based system forperformance review. This time around, Northrup is in the process of creating aWeb-based HR system that will allow managers around the world to input theresults of an evaluation from their desktop computers, allowing a greater levelof analysis than was previously practical. Some corporate HR departments mightbe leery of putting their data online, but they don't have Kroll's computernetwork, which already is outfitted with layers of stringent safeguards."Everything we do from an IT perspective has got a lot of security."

    Additionally, the performance reviews themselves tend to be discreet, in someinstances filled with references to locked-up case files rather than specificsand details. Kroll managers and executives, from their years in theinvestigative business, are adept at reading between the lines. "The seniorpeople in our organization are pretty sophisticated about what you can and can'tcommunicate," he says.

Reinventing Kroll's culture
    One of HR's biggest priorities at the new Kroll is helping the investigativefirm re-invent its culture to match a rapidly changing global marketplace.Traditionally, Kroll relied on the skills of highly specialized investigatorswho tended to stay within their arcane areas of expertise. Today there'sincreasing recognition that Kroll and its employees both could benefit from thesort of enrichment and development approach that many less exotic companies haveinstituted.

    Kroll is developing a training center on the outskirts of Silicon Valley,where employees will be able to build their knowledge of the latest high-techinvestigation methods. The company also is working to provide employees withadditional training opportunities in investigation of financial crime. Becausein recent years Kroll has acquired so many diverse businesses, Northrup seessome potential for cross-training and the exchange of ideas, though there may belimits in an industry where so much information by necessity is on aneed-to-know basis.

    "We're interested in having people at different levelsget exposure to other specialty areas, but I think it remains to be seen howextensive that will be," he concedes. "But clearly, up to a point,they benefit from understanding other parts of the business."

A confidential style can work elsewhere
    While not every company has to maintain as low a profile as Kroll, Northrupsays that HR professionals elsewhere can learn from the style -- even if theyaren't trying to evaluate electronic surveillance experts or devising insuranceplans for kidnap-ransom negotiators. "I've always subscribed to theprinciple that most of the things we do in HR deal with intensely personalissues for employees -- how they're paid, how they're evaluated. We takesecurity to a pretty high degree. Here, people in the company don't talk aboutthe cases they're working on, and we don't talk about people in the company. Ithink it works."

Workforce, June 2001, pp. 48-54 --  SubscribeNow!

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