March 12, 2019
What is HR’s role in business transformation?
In a world where there is growing pressure to innovate, outpace competitors and simply survive, it’s nearly impossible to find an organization that is not undergoing some degree of business transformation. Now more than ever, human resources (HR) leaders are playing a pivotal role in that journey, particularly as it relates to attracting and developing the right leadership and talent, fully engaging the organization around the strategy, and helping to build a culture that supports change.
At our recent panel discussion in Los Angeles, we had the opportunity to talk with HR leaders who have played leadership roles in transforming their businesses:
- Mary Finch, EVP & CHRO at AECOM
- Debra Fiori, CHRO at Parsons Corporation
- Gautam Srivastava, EVP of HR at Universal Music Group
- Amy Thompson, Chief People Officer at Mattel
Here are some highlights from the conversation and lessons learned on the road to transformation:
Transforming a business strategy involves transforming a talent strategy
Parsons is a 75-year-old engineering firm that repositioned itself as a digitally enabled solutions provider in the defense, security and infrastructure markets. As a result, the company has moved into new services and lines of business not previously explored. The underlying philosophy has been simple: “If we don’t transform, we’ll struggle to grow,” said Fiori. “It’s really forced us from a talent strategy perspective to attract and retain talent that’s very different from what we’ve traditionally attracted and retained as an engineering and construction project management company.”
The organization is now looking for leaders who have demonstrated agility, have gone through a transformation and have some failures under their belt — a sign that they can learn and adapt. To appeal to talent that would typically be drawn to a startup culture, Parsons has rethought its employee experience, from changing its workspace to look like a technology company to providing more ongoing feedback.
Global infrastructure company AECOM has also paid special attention to the aesthetics of the workspace and external branding in the battle for talent. Finch explained the changes by saying the perception of the company and the employee experience must be cohesive: “How do you make the inside of the company match the outside? We spent a lot of money on branding, but if you come inside and it’s archaic, what can the employee experience be? We’ve really been focused on the true employee experience.”
Finding talent that reflects the consumer and new channels
Mattel has also experienced significant pressure from a changing landscape, particularly as the 75-year-old company lost a major distribution channel following the Toys-R-Us bankruptcy. To succeed in an omnichannel era when consumers shop and engage across multiple platforms, one of Thompson’s key priorities was aligning talent and capabilities with strategic goals, such as helping Mattel grow into new channels like film and franchise.
This move has required the company to pursue a broader mindset shift and realign incentives. “One of our advantages as a company is that we have long-tenured employees,” said Thompson. “At the same time, we have legacy ways of working that need to evolve – we need to be quicker and more agile as we grow. So, shifting our mindset and giving our employees permission to embrace new ways of working that are centered on innovation and collaboration and letting go of low-value activity that doesn’t directly support our business priorities is one key step we are taking internally to drive culture change at Mattel.”
Universal Music Group, the largest music company in the world, has experienced wholesale disruption. Digital distribution and more sophisticated methods of targeting and tracking consumers have radically changed the game — and the talent the company pursues. As streaming has surpassed CDs and digital downloads in popularity, Srivastava says the organization is looking for talent with data analytics and marketing skills to help better understand consumers and reach them on the platforms where they’re most active.
The change in consumer behavior has also brought the issue of diversity to the forefront. “We’ve always had a very diverse artist roster and diversity in our employee base needs to evolve as well,” said Srivastava. In the U.S., 49 percent of our employees are women, but we can do better to promote and find diverse talent across our executive ranks. There’s another aspect to diversity in that we are not only an American company. For example, we have operating companies around the world. In France, our operating company is focused on French repertoire, and in China, a Mandarin repertoire. As such, we are diverse and global, and we strive to communicate with candidates that there is room for you, reflective of your interests.”
Hand in hand: Culture and talent
We define culture as the shared assumptions that drive the way organizations think, behave and act. Culture represents the “unwritten rules” for how things really work. Studies have shown that a strong culture drives organizational outcomes when aligned with strategy and leadership — but can be a liability when it’s not.
Our culture model assesses organizations on two key dimensions related to culture: how it responds to change and how people interact to get their work done.
HR leaders play a key role in shaping the target culture and finding talent that will be attracted to and succeed in the transformed organization. There can be a struggle to find talent to fit the culture of even “cool” businesses like music. To overcome the challenge, communication is key. “We sometimes have to attract people who didn’t start in or grow up living in music all their lives,” Srivastava said. “You have to educate them about the industry, how it can be different from even other entertainment companies, how it works, how we prioritize the creative side to music above everything else, and how they can be successful. Give them a sense of that to attract them. We spend a lot of time just talking about our identity as a company and what it means to work here when we first onboard them.”
Culture can be an especially thorny issue in the M&A process. AECOM has been an acquisition-heavy business over the past few years. “One of the first things I did in my first 30 days was ask, ‘Why don’t we define what we want the culture to be?’” said Finch. She worked with the top 75 leaders in the organization to ask how they would describe the current culture. Through her research, she found that there was an overall negative perception of the existing culture: People found it bureaucratic and siloed. So she and the rest of senior leadership embarked on a path toward creating a more collaborative, risk-taking and innovative culture. “We're not done by any stretch, but we have the foundation on which to build,” she said.
Fiori found that to shift the culture, the organization had to change the type of talent and leadership it typically hired. “For every open leadership role, we were very rigorous and disciplined about understanding the profile we want for the future,” she said. “We do a cultural fit analysis because we don’t want total organ rejection. We've seen that the greatest shift in the change and the transformation is actually coming through these leaders.”
Looking inward to help drive external change
In today’s environment, there’s no such thing as “done” when it comes to transformation. The process is a learning experience as much for CHROs as anyone else. This often means letting go of what has always worked in the past and experimenting with new approaches. HR leaders who adopt a “be the change” philosophy can inspire it throughout the rest of the organization.
Dave Vidor is a member of Spencer Stuart’s Industrial and Business & Professional Services practices. He specializes in board, C-suite and senior-level executive search, assessment and succession planning consultation for private equity backed and publicly listed corporations. Reach him via email and follow him on LinkedIn.