How a CMO of People Handled the 2008 Downturn

We can see how a CMO of People affects the business by looking at a real example. Shutterfly provides customized image publishing for consumers; it’s best known for its photobooks. Like every other business, we faced a crisis in 2008 as the economy went into freefall. What would you expect of HR in this situation? At Shutterfly, where I was the CMO of People, the CEO asked CFO Mark Rubash and me to lock arms to focus the company’s valuable investments and people on three strategic priorities: photobooks, cards and stationery, and photo sharing.

What tools does a CMO of People have to confront an economic crisis? There are many. In this case, we drew on the power of performance management. We moved performance management to a quarterly (instead of annual) cadence—that aligned everyone on a “crisis” timeframe. Then we realigned incentives and goal setting to zero except for those three priorities that would get us through the crisis.

This process is a good illustration of how design thinking is applied. In this case, the solution involved changing the cadence of the performance management process so that goal setting and performance reviews were done more frequently, and making the process more lightweight by using simpler forms so that it could handle that cadence. We had to change performance management processes, reporting, the supporting technology and communication. Everything had to fit together, and we could only achieve this through tight collaboration between the CEO, COO, CFO and CMO of People, and the rest of the executive team.

We managed to keep growing despite the slowdown. That growth was possible because performance management rigor was instilled across the company, which was a result of the HR function collaborating daily with the CFO and sharing responsibility, along with the entire executive team, of focusing on the company revenue growth. The HR function was a proactive part of the mix, addressing the business crisis as it unfolded, and the CMO of People played a key role in getting the business focused on urgent priorities.

The Opportunity in a Nutshell

The HR organization has the potential to have a dramatic impact on the business. To unleash the potential, the head of HR must play an elevated role with greater accountability and a broader scope than most HR leaders have today.

What Can You Do Today?

HR professionals tend to talk about their work in terms of supporting the business (such as arranging for executive coaching), running programs (such as an inclusiveness initiative), and managing processes (such as delivering benefits). If you want to elevate the function, then push the HR team to talk in terms of business impact, such as accelerating product development, reducing factory downtime, or increasing per customer revenue. Ask the HR team to post business imperatives, not just HR imperatives, in a prominent place that will keep them top of mind.

Understanding of the Brand

A CMO of People uses “brand” as a key organizing principle, just like Marketing.

Is brand about image? In part, but it’s better understood as a predictable immersive experience that drives greater productivity and performance. Starbucks wants its customers to have a consistent and predictable experience every time they visit a café. To this end, they carefully manage every touchpoint with the customer. Similarly, a CMO of People uses every touchpoint with employees to build a superior brand. They use an “employment brand book” to ensure consistency in interactions with employees, just as Marketing uses a brand book to ensure consistency in interactions with customers.

The point of a marketing brand isn’t just to impress customers—the point is to increase sales. Similarly, a CMO of People wants a brand that drives high performance. A traditional HR leader might want the brand to include “a nice workplace”; a CMO of People would want “a workplace that enables performance.”

Think about Target’s brand—it’s not the famous bull’s eye logo; it’s a comprehensive promise they make to customers. As a customer you go to Target because you know you will find the household goods you want; you know the price will be good; you know you’ll be able to find the products easily; and as a result, not only will you go there, but you’ll also probably decide to buy something more than you originally planned. It’s a predictable experience that is good for the customer and the company. An employment brand should have the same ambitious and comprehensive nature. The employment brand is a critical competitive asset, very much the way the marketing brand is.

In summary, a CMO of People thinks about:

These ideas are commonplace in marketing, but business doesn’t typically think about the employment brand this way. Adopting these three ideas about brand improves performance. It provides a new way of orienting the attention of the HR department.

Range of Functions that Are Included in the HR Organization

The most visible outcome of this focus on brand is that, in the CMO of People model, HR includes a broader range of functions. In my roles at DocuSign, Shutterfly, and Grand Rounds, three important functions—Real Estate, Communications, and Corporate Social Responsibility—reported to me along with the traditional HR functions.

The rationale is that these functions own significant touchpoints with employees, and therefore have a major impact on brand. The Real Estate function, which is responsible for employees’ daily work environment, either has to report to the CMO of People or be highly influenced by the CMO of People. This structure is a natural outcome of the focus on brand as a key competitive tool.

Elevating HR requires some bold changes—increasing the range of functions under HR is one of them. However, this is not a random move; It follows directly from the marketing model, which puts brand at the center.

Criteria for Success (Deciding What Not to Do)

A company can do an endless number of things to potentially enhance the employment brand. How do you choose between them? Consider the following three questions to decide what to do and what not to do:

These seem self-evident, so what makes them special? They’re special because people might not like the answers. It’s easier to follow “best practices” than it is to hold each proposed initiative up to scrutiny. For example, many people like the idea of awards for long service. If institutional stability is an important part of the brand, then service time might be relevant. In a fast-moving tech company where the emphasis is on rapid change, long-service awards are still nice but not relevant to the business. They get scratched off the list of HR initiatives.

Consider how tempting it is for Silicon Valley firms to “be like Google.” With that in mind, they convince themselves that they should follow Google’s practice of providing an employee bus. Employees like the perk, but it’s expensive—and for most firms, it’s not valuable enough to buy. A bus is one of those nice ideas that fails to survive more serious scrutiny.

This does not mean that you shouldn’t spend serious money on building scale through HR investments. Shutterfly made the rather bold decision to buy the Oracle HR and Finance modules when the company had only 350 employees. That’s a big investment for a small company. What made it relevant and valuable enough to buy was the fact that Shutterfly was in the midst of scaling rapidly. Having that infrastructure made everyone’s jobs easier at a time when they needed to focus all their energy on growing the business.

The last question—“Is it important to generating ROI?”—is a reminder to focus on business impact, not HR programs. For example, anything to do with filling positions that, left unfilled, are a bottleneck to growth, is likely to be worth it in terms of generating ROI. Investments in reducing turnover (a perennial favorite issue for traditional HR) only make sense if turnover of good performers is high enough to create undue costs.

What Can You Do Today?

Is the business pushing HR to adopt perks because another company has them? Determine if the proposed perk is relevant to the brand, valuable enough to buy, and important to generating ROI.

How This Dollar Amount Changes How the Board Sees the Top HR Role

The takeaway is that a business should think hard about HR’s role in leveraging this investment. If the HR leader has that much impact, then how much should the board scrutinize them? To what extent should they bear responsibility for the business’s growth and profitability? Is it enough to advise the C-suite or do they need to be fully a part of that team?

Many firms treat HR as a cost of doing business rather than as perhaps the most versatile lever for driving performance. Intrinsic to the CMO of People model is the intention to use this lever for all it is worth.

What Leaders from Outside HR Say about Its Impact

The people who seem to best understand the implications of the CHRO levers diagram are CHROs who grew up outside the HR function. Former private equity investor Jacqueline Reses, who became CHRO of Yahoo, and later CHRO of Square, said, “HR was a vehicle for changing the growth trajectory.” It’s unusual for the board to see HR in that light, but it makes sense when you think of the CHRO levers. Reses also said that HR was a place for “having a view across everybody’s business.” This tells us both about the size of HR’s potential impact and the nature of that impact—if a company is going to use HR to change its growth trajectory, then it must let HR get involved in “everybody’s business.”

Collaboration as an Action, Not a Value

Emphasizing the large dollar value of HR’s potential impact isn’t meant to sound like HR should be king of the organization. It’s just that the HR organization should be right in the mix with other leaders collaborating to solve the problem.

Collaboration can be an empty concept because nobody disagrees with it. If collaboration is just an espoused value, then it may not mean very much. However, we’ve been discussing how the top HR job could have a huge effect on how the company leverages its expenses. This means that HR must lock arms with the CFO and CMO to ensure a holistic approach to deciding how to spend money. This will show up in the number of hours the CHRO spends with these other leaders; that time will be spent on actively making decisions together, not passively sitting in meetings hearing status reports. Collaboration is not just a nice feeling—it’s long hours ensuring that human factors are aligned with all the other elements of a business decision.

One implication of the CMO of People model is that the leadership team will spend its time differently, and work together differently, because that’s the only way to leverage the big spend affected by the CHRO. HR can’t be off to the side handling its own silo of responsibilities—changing that way of working will make many people uncomfortable.

To evaluate how close your organization is to effectively leveraging HR’s direct and indirect impacts, determine how many hours each week the HR head is spending on intense collaboration with other C-suite members. When I was CMO of People, meetings with the CMO, CEO, head of talent acquisition, COO, CRO, and the board dominated my calendar. This meant that I spent less time meeting with the HR team and I gave them an unusual degree of autonomy.

What Can You Do Today?

Put a number on HR’s direct and indirect impacts on your organization—a rough estimate is fine. Putting this stake in the ground will help to anchor your view of the magnitude of business impact that your organization should expect from HR.

Next, ask how close your company is to this model of intense collaboration where HR is right in the thick of the decision making, not off to the side. For example, HR weighing in on whether the company could deliver a new product to a customer on time based on HR’s understanding of possible staff shortages. How comfortable would the C-suite team be with this approach? Would it slow things down?

What Can You Do Today?

Given how HR tends to get trapped in daily firefighting, pick out one thing that HR needs to do to ensure that it supports the business plan and then confirm that it isn’t being derailed by short-term crises.

Services-Focused HR: The Millions that Didn’t Matter

The HR department of a mid-sized organization was asked about making a change that would result in a $2 million tax-saving over 4 years. They said they couldn’t do it. Why? Because they were too busy—or, to be more precise, that was what they believed to be the case, given their understanding of priorities.

It’s tempting to blame this HR team for not being business-focused; however, it’s fairer to see them as fulfilling their mandate. HR’s mandate often does not extend beyond providing services—when a job is vacant, they fill it; when training is requested, they provide it. They were too busy providing services to take on the extra task of saving millions.

If you want an HR department that will jump at a chance to boost the bottom line, then you need to elevate the function. That means creating a mandate that focuses on business impact.

Niceness-Focused HR: Free Cookie Day

I worked in one organization where HR had declared that Wednesday was “Cookie Wednesday.” Employees would drop by the lunch room and happily grab a free cookie. It was a benefit. It was nice, but going back to the “criteria for success” in Section 2.2, was it relevant, valuable enough to buy, and delivering ROI? In this case, the issue was not so much cost as relevance. Did free cookies drive the immersive employment brand or was it something that we could stop doing?

Strategically, the company leadership was focusing on a culture transformation from “nice and survivor” to “respectful performance-oriented,” so each dollar of employee experience spend was being assessed against delivering that outcome. Cookie Wednesday was not delivering on the outcome—in fact, it was pointed the opposite way; it didn’t inspire collaboration, innovation, or community building. We replaced cookie day with activities that embraced friendly cross-functional team competitions in which there were clear winners and losers, curated teams for community building, and a memorable experience for everyone. One popular activity was an “Amazing Race” team challenge. These activities were fun, and more than that, we used the benefit to promote teamwork and a desire to win. We used HR initiatives to drive performance, not to simply be nice.

When HR draws on a marketing framework, it becomes self-evident that free cookie day is not the best use of our time. It’s not that a company’s success rides on the presence or absence of cookies; when this thinking is multiplied across every employee touchpoint, you end up with a significantly different culture. In this case, we nudged the culture away from one that wanted to eat cookies toward one that wanted to win competitions.

What Can You Do Today?

Are there examples of non-strategic, services-focused HR or niceness-focused HR in your organization? Are you missing opportunities to use HR to drive performance? Is there a framework for HR’s role that makes seizing these opportunities a matter of course?

Notable Features of the Organizational Design

Take a look at the organization chart in Figure 2.2. In many ways it is similar to any typical HR function. However, the following features are worth noting:

The story of this organization design is a team working together to deliver an immersive, predictable employment experience. The goal of this HR organization can be seen in the design. (Note: I’ll leave it to the reader what can be inferred from an organization design where HR reports to the CFO.)

What Can You Do Today?

Look at the organization of your firm’s HR department. What “story” does the structure imply? Can you see how each box on the organization chart fits into a coherent, integrated story of how HR delivers business impact?

A Shift from a U.S.-centric to a Global Business at DocuSign

DocuSign is a technology company that facilitates electronic signatures. In 2014, it recognized the opportunity for extremely fast revenue growth through global expansion. This growth, if fast enough, would result in DocuSign seizing a leading market share in the digital transaction market.

What does going global mean for an HR function? Here’s what we did:

These initiatives called for investments, which were put on the table with all the other proposed business investments so that the leadership team could collectively make an informed decision about priorities.

In the 18-month period from March 2014 to June 2016, the total employee population at DocuSign exploded six times, increasing from 300 to 1,800 people. In the same period, it successfully made the shift from having only 3 percent of its employees outside the U.S. to 35 percent. That change would be difficult to execute without an elevated people function.

Managing Explosive Growth Required Discipline, But Not Genius

The risk in telling this kind of tale is that the audience will either inflate the story so that it looks more sophisticated than it was or underplay the story so that it seems like nothing special. The question to ask is not whether this is sophisticated, but whether it would be executed well given the mandate of most HR functions.

HR is often brought in late during the planning stages, which prevents them from being proactive and gives them a limited understanding of the overall strategic picture. One way DocuSign’s key advantage might have been that the CMO of People function was fully integrated into the execution of the business plan and fully committed to its success—not just committed to the success of its HR programs.

It has to be said that going through this hyper-growth is not a pretty process. However, an elevated HR function can get the job done; a positive outcome isn’t nearly as likely if the CEO gives the HR organization a limited transactional/ operational mandate. If HR is not fully intertwined with the core leadership team, then they’ll only get involved in issues (such as talent gaps, cultural breakdowns, or compliance failures) when they become a problem. Waiting until there is a breakdown is no way to run HR since it leaves you with problems that would have been easier to prevent than they are to fix.

What Can You Do Today?

Does this list of HR activities, following from business imperatives, sound like what your HR function is asked to deliver? If not, why not? Is there a gap in how HR is integrated into strategy execution?

Applying Product Thinking to Office Design

Let’s consider how I approached the design of the physical workspace. First, as you’ll recall from the organization chart in Section 2.6, Real Estate reports to the CMO of People because of its importance to an immersive employee experience. The first question about the physical space was not “How many standard cubicles can we fit into the space?” but “What would it be like to walk into this office?” To put it broadly, the first concern is about how the “customer” (the employee) would perceive the “product” (the office). It’s not that we didn’t care about costs, nor that another organization wouldn’t worry about the employees’ perspective, but the CMO of People model that emphasizes predictable, immersive experience helped us to get our priorities right.

The second marketing principle—starting with a minimum viable product and rapidly iterating—showed up in how we approached design. Rather than come up with an office design on paper and then implement, we tested various product features throughout the design process. We experimented with the colors, ambient lighting, and furniture. Once we had a product that delivered the employee experience we needed, we were ready to roll it out to all our locations.

We can apply one of the principles found in the Fundamentals of the CMO of People Model section in this chapter here: “Is it valuable enough to buy?” In this context, the question is, “Would a candidate you wish to hire ‘buy’ this as a place to work?” We made sure the answer was “Yes.”

Applying Product Thinking to Town Hall Meetings

You can easily imagine how this product thinking plays out in other initiatives. Consider a town hall meeting (recall that Communication reports to the CMO of People). In your organization, are the speakers and what they want to say the primary perspective? Or is it the employee experience at the town hall? Also, is the design of the town hall meeting always the same or does the company gather feedback each time to continually improve the product?

The product marketing mindset provides a fresh perspective; if you are truly interested in this approach, you’ll find that Marketing departments have a whole series of tools to assist with this customer-centric perspective. For example, they create “personas” to capture the essence of different market segments (all customers are not the same). A CMO of People could easily adapt this tool to capture the essence of different employee segments.

Examples

There are many ways to communicate a persona. Here is one approach with two personas:

The descriptions of Enthusiatic Erin and Distinguished Dan are fictitious; the photos are in the public domain.

What Can You Do Today?

The product metaphor is simple, but if the HR culture thinks of deliverables solely in terms of programs, it can be difficult to see the world through a marketer’s eyes. The easiest thing to do is to get someone experienced in product marketing involved in the next HR initiative. This could be formal involvement on a cross-functional team, or informally seeking counsel over a cup of coffee from someone with the appropriate product mindset.

Why DocuSign and Shutterfly Embarked on This Journey

Both DocuSign and Shutterfly were rapidly growing technology companies. This meant that the needs for top talent and ongoing transformation were evident to the top team. The CEOs asked me to lead this task of transforming talent management and to bring a strategic perspective to this project.

Coming from a non-HR background, ideas like “end-to-end employee experience” and “sustainable brand” were natural ways to frame HR’s objectives. The “CMO of People” title was an obvious way to signal that I was taking a different approach.

My CEOs liked the CMO of People model because they understood the CMO’s role and why it had strategic value. They hadn’t necessarily seen an HR function elevated to this strategic level so the CHRO term was not as evocative to them. The CMO of People concept wasn’t just useful as a framework for running HR—it was useful for getting the whole organization to see HR in a new light.

How Other Managers Reacted

Many of our senior leaders hadn’t seen HR run this way, so it was a learning experience for them too. It takes time for people to see how things fit together and why it makes sense to do it this way. In Chapter 5, I’ll talk about prioritizing analytics, a choice that meant we would go without HR business partners for some time. Managers would say, “Where’s my HR business partner? I’ve always had one in every other place I’ve worked. Why don’t we have that here?” It’s not that I disagreed that they needed an HR business partner, just that we could only do so much and analytics was a higher priority. HR business partners were hired later on as the business grew.

Getting managers on your side is a matter of change management, which means doing a lot of explaining on an ongoing basis.

The Need to Elevate Collaboration

There are two types of leaders who will struggle under the CMO of People model. One is the leader who is used to HR being half a step down from the other C-suite roles and hence more focused on providing support than collaborating on decisions. The other is the leader who is used to making the HR decisions without having to hash them out with another C-suite leader.

A curious feature of the CMO of People model is that while the role has a lot of leverage, it is also highly dependent on the other members of the C-suite team. For example, I’ve talked a lot about the importance of the employment brand; however, the head of HR doesn’t create that on their own. In my work, I needed a truly great relationship with the CMO; we needed a shared vision of the brand that encompassed both product and employees. The CMO and the CMO of People both signed off on the company’s employment “brand book.”

Collaboration was also essential in real estate/workplace services. This function reported to the CMO of People because it was central to the end-to-end employee experience. However, the CFO needed to be part of the discussion because it involved a lot of money. Similarly, the CRO and COO needed to be involved because they owned 80 percent of the workforce. HR sits within a decision-making team.

Collaboration shouldn’t be confused with abdication, where HR just goes along with what other functions want. HR must own its responsibilities without underestimating the importance of having others involved in the decision making. The collaboration should be almost invisible—when it feels this way, you know that it’s working.

What I Did Wrong

It’s useful to look back and see what I could have done differently. Here is what I think I could have done better:

What I Did Right

Now, on a more positive note, let’s look at what I did right:

What Can You Do Today?

Write down the elements of the CMO of People philosophy that you like and compare them to how HR currently works in your organization. Are you better able to articulate the shifts that HR should make and the payoffs for making them?