Former President, Americas and Global Consumer President
Once is an anomaly. Twice is a coincidence. Three times is a trend.
A half dozen times or more, however, is the making of a paradigm shift—and that’s what the recruitment of chief human resources officers is currently undergoing.
Over the last year, several of the biggest and most recognizable companies in the world have appointed new CHROs who have limited experience in their new industries. While it’s tempting to dismiss the pattern as no big deal—to a degree, HR skills are industry agnostic, right?—the reality is that it is a very big deal. It isn’t common, after all, to see a CHRO move from aerospace and defense to restaurants or from a software company to a retailer. Against the backdrop of the COVID-19 pandemic and the purpose movement, the surprising new model not only reinforces the elevated importance of the CHRO function in the minds of CEOs and boards. It also opens up previously blocked pathways for C-suite talent to move into the CHRO position and from it to other operational roles, including, perhaps, CEO.
In his view, Doug Charles, president of Korn Ferry’s Americas region and global consumer operations, says the pandemic pushed and stretched the demands on CHROs in a way never before seen. “With so much on the line, CHROs showed their strategic and tactical agility,” says Charles. “Organizations that didn’t have the right executive in the role were exposed.”
Certainly, the CHRO role has evolved greatly as organizations push for more digital transformations, cultural makeovers, and other business shifts. COVID-19, of course, has only increased that pressure. “CEOs need that combination of prior experience and a fresh set of eyes in their CHRO to help them anticipate, adapt, and adopt talent strategies to changes in their industry,” says Torrey Foster, vice chairman and managing partner of Korn Ferry’s Consumer Markets practice in North America. Even more prized, he says, is a track record of using data and analytics to train, deploy, and build a pipeline of leadership talent from the inside.
But what do the actual CHROs who have just joined top firms have to say about all that’s happening? To get some answers, we spoke with the CHROs of four of the biggest names— McDonald’s, PepsiCo, Tyson Foods, and Walmart. They all were appointed between 2018 and 2020 and came to their new industries with limited prior experience or following a prolonged absence. The following are excerpts from our conversations.
Our panel
What’s behind the trend of organizations recruiting outside CHROs with limited experience in their industry?
Heidi Capozzi: I think there are a couple of dynamics at play. One is that current sitting CHROs demographically tend to skew older, so there are more retirement-eligible folks that could be impacting demand versus supply. Another is CEO turnover: as new CEOs seek to build their own people and culture agenda, there’s a personal element to whom they pick as CHRO. Certainly, it’s someone who shares their values and brings expertise in the areas that support their future vision.
Ronald Schellekens: The CEO-CHRO relationship has definitely been elevated, particularly in light of the pandemic. There’s a new and greater recognition among CEOs, executive committees, and boards of the complexity and impact of the CHRO role. We are an integral part of the business and are expected to have an opinion and provide guidance on every part of it.
Donna Morris: I’m thrilled this trend is happening. It’s great to see so many talented CHROs transitioning into new roles and sharing their wealth of experience across industries. This allows for a fresh set of eyes and a different filter to question processes and systems. For Walmart, for instance, my two decades of experience in technology allows me to look at issues through a new lens.
Johanna Söderström: Talent is increasingly being recognized as driving the transformation agenda. As a result, the CHRO role is now viewed as a transformation and growth role, and strategically minded CHROs who have built people agendas to help solve business issues and provided a competitive advantage are in demand.
Why did you decide to switch industries?
Morris: Walmart is an amazing company, and I knew it would offer the opportunity to make an incredible impact, which was so important for me. And that has absolutely been the case over this past year. The role Walmart has played to make an impact on its associates, customers, and communities around the world is second to none. While I’m proud of my 18 years at Adobe, growing the company from 3,200 employees to 25,000, and actively recruiting many senior leaders, I am excited to have this opportunity to learn about a new industry and make positive contributions to a strong company. Walmart is also a company in an industry I resonate with, bringing together my passions for both people and digital.
Söderström: While food is certainly different than chemicals, there are similarities between Tyson and Dow that made it easy to switch industries. Both are manufacturing companies with massive production facilities. Both have two distinct employee cohorts—frontline workers and office employees—with different HR needs and experiences. Both are global players. I felt Tyson was a great fit for me to use my skills and experience to help the organization achieve what it has set out to accomplish with its people agenda.
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It’s great to see so many talented CHROs transitioning into new roles and sharing their wealth of experience across industries
— Donna Morris, Walmart
What advice do you have for CHROs who come into an industry that they have been out of for a while or are unfamiliar with?
Capozzi: It’s one thing to bring great HR subject-matter expertise to the table, but you have to understand the industry and business to apply that expertise in the most relevant and effective way. Anyone considering a move should have a curiosity for the new and be very intentional about their onboarding. One of the first things I did when I got to McDonald’s was don a uniform and get trained up to be a crew member at one of our restaurants in Chicago. I spent over a week there making Big Mac sandwiches, working the register and the drive-thru line, cleaning up. I talked to restaurant crew and got to see the day-to-day inner workings of the business.
Schellekens: You definitely need to get a sense of the uniqueness and rhythm of the business. The worst thing you can do is copy and paste a previous HR strategy and system to a new organization. Even though this was my second stint at PepsiCo, I had been out of the company for 16 years and had never worked in the US, so I went in very consciously saying this was like joining a new company and not the same one I left. If I used old experiences and visions of the past to interpret what PepsiCo is now, I’d set myself up for failure. The same goes for anyone entering a new industry. You need to be clear about your past experience while appreciating the uniqueness, culture, and needs of the new role and business. You may think you recognize patterns based on previous experience and rush into action faster than you should. My advice is that slightly slower and right is better than quick and wrong.
Morris: Sector matters less than cultural fit. You need to understand who you are going to work for and with. How receptive the organization and its leaders are to change directly relates to how successful you will be able to integrate and bring forward ideas. To be successful, CHROs need to develop partnerships and interpersonal connections; and if you don’t understand how you will work together with other leaders in advance, it could be a derailer.
Söderström: That’s part of the challenge: balancing cultural fit with your mandate. It takes a certain amount of sensitivity and emotional intelligence to understand what the culture is enabling and hindering while also driving the changes the company hired you to make. They did hire you for your specific background and expertise. You need to understand how to use the organization and its leaders to enable change and bring people along.
The road less traveled
The pandemic, remote work, and purpose elevated CHROs’ visibility and importance to business success. As the resumes of the four CHROs highlighted in this piece show, the progression also created a paradigm shift whereby organizations are increasingly willing to go outside their industry to get the right executive for the role.
This is a unique time period, of course—the pandemic, remote work, and diversity and inclusion issues. All of your new companies have essential and frontline workers. How did they help shape your approach to health, safety, and mental and emotional well-being last year?
Schellekens: PepsiCo is a company that is very visible in our communities. More than 230,000 of our 290,000 associates go out to our factories, warehouses, and stores every day, and throughout the pandemic, they have continued to serve our consumers and communities when they needed us most. Our frontline workers are our heroes, and we realized very early on that we had to do everything possible to keep them healthy and safe. We also realized they have different needs than our office workers due to the nature of their jobs. So we focused on ensuring proper social distancing in all of our facilities and the distribution of PPE [personal protective equipment], including donating PPE to fellow frontline workers around the world. We also expanded benefits for associates who were diagnosed with COVID-19 or had to care for a sick family member. And because we know our associates thrive when our communities thrive, we also worked with The PepsiCo Foundation to provide over 145 million meals to hungry families impacted by COVID-19, with a special focus on providing nutritious meals for students who usually get meals through school.
As we were doing all of this to protect our frontline workers and communities from the pandemic, we also faced a reckoning on racial inequality. After some of the horrific incidents we witnessed in 2020, we stepped up our dialogue with our associates and our employee resource groups, and we realized we needed to do a better job of listening to them. There was real hurt, pain, and anger, but also a lot of constructive dialogue. Out of these conversations came our Racial Equality Journey, a more than $500 million commitment to our Black and Hispanic associates and communities. This initiative has three pillars: people, business, and communities. When it comes to people, we are focusing on increasing Black and Hispanic representation at PepsiCo through recruitment, education, internships, and apprenticeships. When it comes to business, we are leveraging our scale and influence across our suppliers and strategic partners to increase Black and Hispanic representation and elevate diverse voices. For communities, we’re working to drive long-term change by addressing systemic barriers to economic opportunity, with tools like scholarships for community-college graduates to help them earn four-year degrees. We still have a lot of work to do, but this initiative is something I’m very proud of.
Capozzi: At McDonald’s, there are over 2 million individuals who work under the Arches, most of them working in restaurants. Having the opportunity to work in the restaurant during the pandemic really allowed me to walk in their shoes. It gives a different lens to the work you are doing. We also did a lot of listening. In appreciation of our crew during the pandemic, many franchisees offered enhanced compensation programs, including bonuses. Last year, we provided additional employee assistance and emotional support counseling sessions for employees in our corporate-owned restaurants in the US, and later in the year, we piloted a program that offered expanded access to backup eldercare and childcare.
We’ve also talked over the last year about transparency and accountability around DEI [diversity, equity, and inclusion]. We took an important step forward this year as we incorporated a human capital metric—inclusive of driving our values, increasing representation of women and underrepresented groups in leadership, and strengthening our culture of inclusion—into the incentive program for our senior executives.
Morris: What our 2.2 million frontline associates did last year for the company, our customers, and our communities was heroic and unprecedented. I am absolutely blown away by the impactful and meaningful work that happened across our business. Our goal as a company is always to support our greatest asset, which is our people. We did that last year by launching a COVID-19 leave policy that the New York Times called “a standard for the rest of the private sector.” We paid out $2.8 billion in cash bonuses to frontline workers as a form of gratitude. We pledged $100 million over five years to a new Center for Racial Equality, and established four associate-led, shared value networks focused on the US criminal justice, education, financial, and healthcare systems to address racial equality. All of those things happened because of what we saw and learned from our frontline workers last year.
Söderström: The health and safety of our frontline workers has been our top priority, and we’ve made significant progress. We’ve invested hundreds of millions of dollars to transform our facilities with protective measures. We hired our first-ever chief medical officer, who reports to me since health and safety oversight has become part of my role. We’ve also added 200 nurses and administrative staff, have been vaccinating thousands of team members, and are piloting several free health clinics this year for employees and their families. In addition, we remain focused on creating career development opportunities for our frontline workers, launching an on-site program called Upward Pathways that provides free training and certificate courses. We also pledged $5 million to five different organizations chosen by our team members that are committed to advancing diversity, equity, and inclusion.
Initiatives like these that resulted from the pandemic helped thrust CHROs into the public spotlight last year. Given that the issues of remote work, D&I, and employee well-being aren’t going away, how does being more visible create opportunities to elevate the role?
Söderström: Last year, our team gave more news media interviews than any other function in the company, as we shared the steps we’ve been taking to protect our team members during the pandemic and what we’re doing to promote a culture of well-being and build a healthier workforce. People and purpose are now on the table in a way they never were before, and they elevate everything a company takes on because of the impact they have on communities.
Capozzi: The fact that our position is more public is an opportunity. Now, everyone is listening. It’s a chance for us all to step up and make more progress and a greater difference. We need to use this time to innovate around how to connect people and ideas better, particularly inside our own departments, because we can then fan that out to the rest of the organization and the wider CHRO community.
One of the first things I did when I got to McDonald’s was don a uniform and get trained up to be a crew member at one of our restaurants in Chicago.
— Heidi Capozzi, McDonald’s
It’s interesting that you mention the wider CHRO community. One of the things we’ve heard from other functional roles during the pandemic is how much even competitors relied on each other for support, to share best practices, and just connect with each other. Was that the case for CHROs as well?
Schellekens: Absolutely. Certainly for me and my fellow CHROs at IBM and MasterCard. We are all in the same vicinity, so it was like helping out your neighbor. We all consulted with each other on things like office reopening playbooks. We wanted to help each other out. Institutions like Gartner and HR executive networks also quickly linked the various CHROs together to share best practices.
Söderström: Same thing with Donna and me. We both started our new jobs within months of each other. So we both were newly relocated to Arkansas, in new jobs in new industries, amid the pandemic. It has been great to have a CHRO network to bounce things off and learn together.
Morris: Johanna and I had a prior connection from sitting on the board of the Society of Human Resource Management as well. It was fortunate to be able to connect a few times to compare notes on what we were going through, for sure. As a member of the HR50, we’ve also had subgroups sharing best practices. Accenture, under the leadership of Ellyn Shook, has been so generous with that, for instance. I think the pandemic has absolutely strengthened the CHRO community— we all had a common focus on the well-being of our workforce.
Capozzi: In this job, you often face new challenges, difficult decisions, and issues that can’t be discussed with just anyone. Having a network of CHROs to call on for advice has been incredibly helpful. This was true before the pandemic, and it certainly was a source of support during the pandemic. Even as it relates to switching industries, I know I’ve turned to CHROs in the restaurant and retail business who have been very open to sharing best practices.
Last year, our team gave more news media interviews than any other function in the company.
— Johanna Söderström, Tyson Foods
Getting back to the position being more visible, it’s no secret that CHROs have one of the shortest average C-suite tenures, down to a current average of 3.7 years from 5 years in 2016. CHROs also rank at the low end of C-suite positions in terms of succession planning. How much do those two data points play into the switching industries trend and organizations trying to upgrade or realign the position with business objectives?
Morris: On the tenure topic, I’m actually not sure given the pace of change that it’s a good idea to have a CHRO in the job for more than a decade. I question how objective someone who has been in the seat that long can be when they built everything. If the role is a catalyst for change, that becomes hard when you are in a fixed position. I’m not sure four years is right, but I’m not sure 10 or 18 years, like I put in at Adobe, is right anymore either. Given the global demands of the role now, I’m not surprised though that an average tour of duty is three to five years.
Capozzi: On the succession side of the equation, we spend a lot of time helping other leaders plan succession pipelines for their functional areas. In reality, CHRO succession should be a model for how it is done in other positions. We should be using ourselves to experiment and pilot ideas to improve succession management.
Schellekens: There’s no question that boards and CEOs are turning to CHROs to help them drive the business agenda. And if they don’t have the right person in the role to do that, they are going to go out and get the right person, which plays into the tenure and succession issues. No matter the industry, certain aspects of the role are always transferable. What companies are looking for are CHROs who can establish deliverables around an organization and people agenda to meet their business priorities.
The worst thing you can do is copy and paste an old HR strategy and system to a new organization.
— Ronald Schellekens, PepsiCo
CHROs haven’t historically been considered potential CEO successor candidates, partly because of the lack of operational and P&L responsibility. But if the issues of the last year aren’t going away, and if CHROs are being held accountable for delivering on a business agenda, then does that mean there could be a path to the CEO position for CHROs?
Söderström: I could see a path opening up sometime in the future depending on your career path and experience. We are at a point in time where CHROs are expected to step up and lead in a broader space than before. With purpose, culture, strategy, and other people agenda topics becoming part of everyday C-suite conversations, CHROs are core business enablers and value creators.
Schellekens: Although HR is more integrated with the business and plays a much larger role, I don’t think we are quite at that point yet. I think there’s a value to moving HR executives into operating roles so that they can understand other elements of the business and to be on the receiving end of HR policies and practices and see what has an impact and what doesn’t. But when it comes to most CEO roles, it’s critical to have a deep understanding of the consumer and how to run end-to-end businesses at scale.
Morris: I’ll put it this way, the function has a lot of runway to make a sustainable impact on an organization, whether as CHROs or in another leadership position.
*****
For more information, contact:
Doug Charles: doug.charles@kornferry..com
Torrey Foster: torrey.foster@kornferry.com
Daniel Rubin: daniel.rubin@kornferry.com
Sheila O'Grady: sheila.ogrady@kornferry.com
Thomas Wrobleski: tom.wrobleski@kornferry.com
Christian Hasenoehrl: christian.hasenoehrl@kornferry.com
George Atkinson: george.atkinson@kornferry.com
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