'Because They're Worth It'

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By: Russell Pearlman

As head of Human relations for a company with 87,400 employees in 150 countries, L’Oréal’s Jean-Claude Le Grand is constantly managing turnover. When a scientist, marketer, digital expert, or anyone else leaves, Le Grand aims to have at least one person, and preferably two or three—be they new or existing employees— who the company can tap to handle the role. That includes executives, too. He created a confidential nominations committee where executives work through all the highest-level moves within the organization.

But in 2023, Le Grand has found himself with a surprisingly different kind of HR issue—one that comes from the world of artificial intelligence. With the transformative writing tool ChatGPT making so many headlines earlier this year, many employees have been asking about their future at the company. After all, though known for its famous beauty products, the company already uses AI tools to do everything from scanning cosmetic trends to assessing job candidates. “So many people are asking, ‘Will I be fired?’” Le Grand says at his Paris office. “Guys, we are in such a complicated moment, and we are together in that journey!”

If you don’t have L’Oréal products in your bathroom, it’s likely someone close to you does. Started as a business that sold hair dye to Parisian hairdressers, the 114-year-old firm is the largest beauty company in the world, selling more than $40 billion worth of skin care, hair care, fragrance, and makeup in 2022.

Besides its eponymous brand, the company owns a diversified portfolio, including Lancôme, Kiehl’s, Garnier, CeraVe and Maybelline. It also creates fragrance and cosmetics products for top luxury brands such as Armani, Prada, and Ralph Lauren.

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But for L’Oréal to stay number one, Le Grand says the company’s own beauty has to not just be skin-deep. “If you are number one in beauty, you also have to be number one in your learning and your processes. You have this duty to lead and lead by example,” he says. That means spending millions on training and reskilling employees every year so they can take advantage of business opportunities. It also means that there are always going to be competitors coming after the company, either its business or employees. And it means that the company has to be transparent and consistent in its messaging to employees about policies, promotions, and risks, even when there’s a war in Europe and inflation impacting customers.

The newest wrinkle is AI—how it will shape who works at the company and what those people do. For his part, Le Grand says he really isn’t worried. It’s about how the company rallies its workforce to learn and use new technologies, he says. “For me, tech is a huge plus, and it’s what I explain to my teams.” He cites his ability, as a man over 50, to learn and manage two social-media accounts.

Le Grand spoke with Lauren Shin, vice chairman in Korn Ferry’s global consumer practice, about why he thinks the future of his company, and beauty, will stay decidedly human; how to build and maintain a pipeline of executives; how to create a firm which is diverse and inclusive; and how to convince people to uproot their lives for a job. (This interview has been edited and condensed.)

How did you get to where you are?

In 1994, I was approached by a large luxury retailer to become the head of HR in France. But at the last interview, I said no. At the time I was working at a tech company. Then, a year later, I was approached by L’Oréal. I was not familiar with the beauty or luxury industry, but having gone through that prior process, I liked the idea, and this time, I decided that it was the right offer.

“We need managers who are ‘yes’ people, not because they are yes-men and yes-women, but because they have a point of view, a vision, and they will speak their mind ...”

How do you go about developing executives?

Some people think that they get to the top because of their ability to lead, an ability to play God. But it’s really about curiosity. The world is so uncertain, and we need people who are agile and open-minded and not just replicating what has been done before.

Training for management and executives starts really early, and it revolves around culture. We have people who come in from engineering or business school who know key performance indicators, but have no idea about the culture needed for success. We just created a training program about culture. We piloted it with 25 executives this year and are rolling it out more broadly soon. We need managers who are “yes” people, not because they are yes-men and yes-women, but because they have a point of view, a vision, and they will speak their mind with humanity and sincerity.

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What about succession at the top of the company?

Succession at all levels is a lot of continuous work. We have a small group that meets four to five times a year to talk about what roles may be opening and assess potential people for those roles. There needs to be a balance of candidates, too, between male and female, French and foreigners, e-commerce backgrounds or traditional backgrounds. We spend hours and hours on this, but it’s the assurance that we’ll have quality people when the role opens.

Importantly, we as a company need to have choice. It’s not only about developing and grooming one person. There might be one who might be more ready at any given moment, but you have to create options for the organization.

That likely means that one really qualified person might get upset if they don’t get a top job. What do you do then?

The people who’ve been through these searches are strong, and we want them to stay. They’re of strong character and have a great ability to lead. We wind up having long hours of conversation about the company’s vision and their own future. There’s compensation involved, too. And we talk about how the person can invent things and they can innovate.

What does DEI mean at L’Oréal?

We have a goal—to meet the infinite variety of beauty needs and desires worldwide. The business of beauty is, by its essence, linked to diversity. People with different ages, gender, backgrounds, religions, or experiences enhance our creativity and innovation.

It’s a battle but it’s one that we started 20 years ago. Diversity, equity, and inclusion are not something “nice to have.” It is necessary for them to be fully integrated into everything we do, as a mindset and a core value. They should not be prioritized over innovation, market analysis, or product development, but rather embedded in our success in every single area.

There’s also more diversity on our executive committee. It’s a choice, and there will be more in the future.

“People think that they get to the top because of their ability to lead, an ability to play God. But it’s really about curiosity.”

Why are so many employees spooked about AI?

For the last two months everyone has been asking about ChatGPT, and the consequences on HR have been immense. With things accelerating so fast, in a crisis time like now, it’s natural for people to think, “Is ChatGPT going to take my accounting job?” “Is ChatGPT going to take my marketing job?” People might see that they lack skills in working with technology. It’s scary.

For us, tech is not a threat, it’s a fantastic opportunity. When I started here I didn’t have a computer. We didn’t have the internet in the office.

How do you allay those fears?

It’s very European, but have a social contract with people. For instance, three years ago we made a decision to replace a major back-office system. The advice we got was to just throw out the old, including the employees, and in with the new. But instead, we made a massive investment in retraining. And hundreds of employees embraced it, because they saw it as a journey to upskill and restart.

Are you going to put $15 million in training or $15 million in breaking people’s careers because you’re installing a new thing? When employees know that the first idea the company has is to invest in retraining them, it makes a big difference. If you as an organization do that initially, you can do all the transformation you want.

Does that philosophy apply elsewhere?

Yes. Three years ago, we decided to close our office in Hong Kong and open an office in Singapore. When we told the Hong Kong employees, we didn’t start the conversation with, “Guys, we’re closing Hong Kong,” We said, “Guys, we want the best people in Singapore, and we’ll do the maximum in terms of relocation and investment.” Initially my team said we’d get 57 percent maximum to go. But we ended up with 80 percent.