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What the CEO Wants From HR

July 29, 2009
Related Topics: The HR Profession, Miscellaneous Legal Issues, Featured Article
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Eric Wiseman, CEO of VF Corp., is hip-deep in a hugely ambitious growth plan for the global apparel powerhouse, which wields such brands as Wrangler, Lee, Nautica, The North Face and JanSport. While other apparel companies are in survival mode, VF remains focused on heady targets for sales and earnings.

Wiseman knows what it will take to meet those targets. “If you sit in my office, with a growth plan to raise revenues from $7 billion to $11 billion by 2012, you’ll see that I need three things,” he says. “I need a strong fi- nancial lever, and that’s never been more important than it is now. I need brands that are winning against the competition. And I need talent. Money and brands don’t do me any good if I don’t have the talent.”

VF employs 46,000 people in 150 countries, but when Wiseman talks about talent, he means the 100 VF executives who drive corporate growth. What he wants from his vice president for human resources is nothing more or less than full assurance that those 100 executives are properly developed and deployed. “I spend very little time on tactical HR and an enormous amount of time on our leaders,” he notes.

Wiseman’s position delineates the exact point at which the work of the CEO and that of the highest HR executive intersect in successful corporations. “CEOs are interested in revenue growth, profitability, innovation and the ability to retain customers,” says Jeff Schwartz, principal in Deloitte Consulting’s human capital practice and co-leader for Deloitte’s global talent initiative. “They are interested in business issues and talent issues, but not HR issues.”

Within the talent issue, the primary concern for CEOs is the leadership pipeline. “An emerging best practice is active succession planning with very active involvement of top leadership,” Schwartz says. As long as HR executives function as business leaders by driving the talent agenda, their strategic role is secure. Problems arise only when they try to drive HR operations as a strategic issue when it is not.

“HR must be operationally correct. The dial tone must be there,” Schwartz says. “But the real focus of the top HR executive must be the company’s leadership needs and capabilities, which is a business driver. Some HR executives, however, are still torn between their allegiance to HR operations and their forward-looking business agenda.”

Achieving clarity
At VF headquarters in Greensboro, North Carolina, the agenda for Susan Williams, vice president for human resources, is clearly defined. “My time with the CEO is all about talent and the organization,” she says. “My job is talent development, which means focusing on the top management group of about 1,500 people, but the top 100 are the detailed focus for HR and the CEO. About 95 percent of my time with Wiseman is devoted to that group of 100 leaders.”

Wiseman and Williams attend the company’s biannual senior talent assessment review, or STAR, a meeting that includes VF’s operating committee members plus the “coalition” of business unit leaders and the head of HR for each coalition. Williams also meets privately with Wiseman to discuss the coalition leaders during the STAR review period.

“At the STAR meeting, we look at the top people one at a time,” Wiseman says. “We ask, ‘What kind of a leader has this person become? Is this person ready for more? We may talk for 10 minutes about how amazing someone is and how we can move them around for career advancement and to engage them in all parts of the business and all geographies. Some of the discussions go the other way, and we have to ask if we simply missed the boat on that person or if something can be done to strengthen them.”

Wiseman is the best evidence of the company’s extraordinarily careful succession planning. His move to CEO began with his promotion to president and COO in March 2006 after 11 years with the company. In January 2008, he replaced retiring CEO Mackey McDonald, who led the company though a successful decade-long transformation. McDonald continued in his position as chairman until August, when Wiseman took over that post as well.

Williams’ role in building the company’s top leadership can be seen on a detailed level in the company’s recent creation of a new corporate officer position. “One of our imperatives is global expansion,” Williams notes. “We had a great operating committee, but there was no international talent. So we evaluated candidates, and then I followed through to facilitate all the arrangements and worked with the board for approval to create a new corporate officer position.”

On January 4, Karl Heinz Salzburger, the new corporate vice president and president of VF International, took his seat on the operating committee.

Enabling growth drivers
Apart from their focus on the top 100 leaders, Wiseman and Williams work together to ensure that two key growth drivers—international expansion and aggressive acquisitions—continue to deliver. “The CEO challenges me on talent gaps,” Williams says. “We want to grow in China and India, so he supplies me with the time frame for expansion, then I look carefully at what it takes to get top people in those locations. He challenges me to understand our international talent in depth.”

To move ahead with the company’s international expansion, Williams also assessed the company’s global HR talent. VF has now hired a vice president for human resources for Asia plus HR leaders for Europe. “I’ve received the CEO’s support for building a global HR leadership team,” Williams notes.

The company runs global human resources with a lean staff of 275, led by international HR vice presidents who meet quarterly. “We’ve invested heavily in HR leadership over the past five years,” Wiseman notes. “We have to have consistently strong HR across all regions and brands.” VF also strengthened its HR analytics capabilities. “We hired an [organizational development] expert and built staff around that person, and it has completely changed the game for us,” he says.

Wiseman informs Williams about any possible acquisitions at the earliest stages. In addition to formal HR due diligence, Williams conducts covert intelligence through her own HR contacts. She also takes a proactive approach to integration. “When we acquire companies, we want to make sure that we keep the talent necessary to support the brand,” Williams says.

Williams gathers intelligence about any changes in business expectations and growth projections from the vice presidents for human resources at the coalition level. “The VPs of HR for the businesses are also the confidants to their coalition leaders or their CEOs, so they get the information on any business changes and contact me, and I accumulate that information and take it to Wiseman,” she says.

Owning the top
At another global giant that is managing through the global downturn with greater success than its competitors, the CEO and the top HR executive also maintain a steady focus on the top layer of corporate leadership. Zurich Financial Services, the giant insurance-based financial services company with 60,000 employees worldwide, relies on an all-important group of 200 executives to steer the company through the credit crisis. Chief executive James Schiro and Peter Goerke, group head of human resources, concentrate their attention on this select group.

“Talent management is putting the top 200 people into the top 200 positions through detailed planning,” Goerke says. “The top 200 leaders are owned by the executive group. New leadership appointments are on my daily agenda. I have to understand if we have leaders who should be given more responsibility or whether we need to do external searches.”

Every January, Schiro, Goerke and the full executive group meet for two days to evaluate all 200 positions and review succession planning for each one. The executive group members are Swiss, American, Dutch, German, Italian, Irish and British. Many, including Schiro and Goerke, have worked at professional services firms; McKinsey & Co. and PricewaterhouseCoopers dominate the list of previous employers.

“In part because of their past professional services positions, the group’s members have moved the people issue up quite a bit on the agenda,” Goerke notes.

In addition to their focus on the top 200 leaders, Schiro and Goerke carefully review new talent moving into the organization. “In my one-on-one meetings with the CEO, there are strategic discussions about where I need him to spend more time,” Goerke says. “For example, I may ask him to help position the company as an employer of choice by going out to speak to students at MIT.”

At VF, Zurich and other successful companies, the focus on the top layer of leadership has only sharpened with the economic downturn. “The key now is to look at the top issues for the company and who will lead it through these issues,” Deloitte’s Schwartz says. “Business problems drive the succession process.”

At VF, results remained impressive through much of 2008 but slowed in the fourth quarter and the first quarter of 2009. Growing through the downturn will require the best that the company’s top 100 executives can give.

“We’re not in a crisis,” Wiseman says. “But we are a performance-driven group of people, and it’s frustrating for us that our results were not what they could have been for 2008. There’s no magic dust to get through this, just talent.”

Workforce Management, July 20, 2009, p. 1, 17-20 -- Subscribe Now!

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