Chapter 4
New Points of Leverage
A CMO of People makes good use of unconventional levers.
A Non-Traditional View of HR Leverage
Leaders have a pretty good sense of how HR has traditionally had an impact on the organization. The CMO of People model asks them to look at new sources of leverage.
If you asked a typical CEO about why HR matters, they’d talk about how “recruiting is incredibly important,” “training is essential,” and “culture is crucial.” However, framing the levers HR can push (i.e., work on recruiting, training, or culture) that way risks focusing HR on its operational silos and disconnecting it from the broader business. If HR only affects the business in traditional ways, it is unlikely the CEO will be able to make full use of HR’s ability to change the company’s growth trajectory.
An alternative way to look at where an HR leader can get leverage is to focus on how he or she interacts outside of the HR functional areas. How does the CHRO work with the CMO to drive business results? How does the CHRO work with the CFO to maximize revenue? How are functions like Real Estate and CSR folded into HR so that they have the maximum impact on sustainable profitability?
In this chapter, we’ll look at four unconventional points of leverage:
–The relationship with the CMO
–The relationship with the CFO
–The work of Real Estate/ Workplace Services
–The work of Corporate Social Responsibility (CSR)
Pragmatism over Sophistication
One surprising outcome of taking an unconventional view of how the company should deploy the HR organization is that HR might become, in a sense, less sophisticated. Let’s imagine that the organization finds that breaking into a new market is much harder than expected. Tell that to a traditional talent acquisition team and they’ll ask for money for more sophisticated tools for finding and assessing talent. The training group may ask for money for gamified, mobile, neuroscience-based learning programs. The compensation group may bring in consultants to come up with more elaborate incentive schemes. The company will end up with sophisticated recruiting, training, and compensation. It’s the sort of thing that might be written up in a trade magazine, but it might not solve the problem of breaking into a new market.
If you are serious about looking for leverage outside of traditional HR specialties, and see collaboration as an action and not just a value, then when the company struggles to break into a new market, the HR executive will spend long hours with other members of the C-suite looking for the root problems and pragmatic solutions to move past the barriers. The fact that an individual function like training or compensation is doing something state-of-the-art won’t have much appeal. Even it’s not an HR problem—for example, the problem might be an unclear customer value proposition—HR will still be part of the top team working together on the problem, instead of retreating to their own teams.
Rather than seeking higher performance through more sophisticated and often complex programs within HR, the CMO of People seeks a pragmatic understanding of the business issues and then collaborates with the C-suite to address those issues as a team.
What Can You Do Today?
Ask yourself if your organization sees HR as disconnected specialties (e.g., training, talent acquisition, reward). Does your organization value sophisticated solutions over pragmatic ones? If so, it might be missing the boat in using HR to drive overall business outcomes.
Using the Relationship with the CMO to Get Results
For HR to drive growth in the company, it must lock arms with the CMO.
The striking thing about Marketing and HR is how similar the roles are. Both are focused on a particular audience and how we can use the brand to influence the behavior of that audience in a manner that makes us a more successful company.
̶̶ Brad Brooks, CEO of OneLogin former CMO of DocuSign
It might come as a surprise to find the HR leader listing their relationship with the CMO as a point of leverage. Normally CMOs and CHROs are friendly, but don’t regularly work together. However, in the CMO of People model, HR can’t get its work done without an intensely close and collaborative relationship with Marketing. How close? Brad Brooks estimated that as CMO he spent five to twenty hours a week with the head of HR.
Using the Leverage that Comes from a Strong Relationship
To execute their vision, a CMO of People needs the Marketing department’s insights on the company brand, how that supports the employment brand, and vice versa. Marketing may also have specific skill sets in brand building—such as expertise with creating personas—that HR can learn from.
However, the collaboration works both ways. At DocuSign, when CMO Brad Brooks discovered that companies didn’t quite understand the value of the Docu-Sign product, both in the efficiency of operations and as a way to enhance their users’ experience, he held a visioning exercise to find a solution. The visioning exercise involved 55 people from across the company, and he needed HR to be a major contributor. HR was also involved in executing the steps taken to improve the customers’ understanding of the value proposition. Close collaboration—which means time and effort, not a feeling of togetherness—was the normal mode of operating.
Not Everyone Buys into This Model
For years, MasterCard’s Marketing department did not want HR to use their marketing brand (“Priceless”) as part of their employment brand. Rather than trying to align their employment brand with their external brand, they worked to keep them separate. It’s easy to understand why. Marketing considered the external brand so valuable that they felt they couldn’t risk it being diluted in some way. It takes an unusually close relationship between Marketing and HR to truly collaborate on the brand. This relationship may not be a priority in most companies, but the question is whether it should be a priority in your organization.
How to Build the Collaborative Relationship
Brooks uses the phrase “trust built from shared execution.” This reminds us that trust is not just a matter of goodwill; it is built when each side makes promises and then delivers on those promises. It always impressed him when HR was clear about what they would do as part of the mutual projects and how they would measure their work—and then getting those results.
We shouldn’t underestimate the importance of the five to twenty hours per week that Brooks spent working with the HR executive. A deep relationship requires an investment of time.
Beyond the broad issue of trust, a CMO will only be willing to share resources with HR when it’s clear that HR understands what they are trying to do and how Marketing’s talent will help. It must be evident that HR is aligned with the company’s goals and that the initiatives they pursue support those goals and won’t end up being a distraction.
Be prepared to invest a lot of time and effort in leveraging the collaboration between Marketing and HR.
Where Do Companies Go Wrong on the Employment Brand?
If there is no close collaboration between Marketing and HR, then the external brand and employment brand can diverge. It’s subtle at first, but eventually it hits a point where employees realize that their experience doesn’t match what the company tells customers it stands for.
The problem often begins when the CEO is somewhat vague about the brand. As a result, HR and Marketing come up with their own interpretations. Let’s not blame the CEO for this one, however—we should blame the CMO and CHRO for not seeing that they must care about what the other is communicating, since there is only one brand.
Don’t let the employment brand and marketing brand go off in different directions—it’s easier to prevent divergence than to fix it after it has become a problem.
Can the CMO of People Go Too Far?
An over-enthusiastic CMO of People might try to shape the external brand based on what they want the employment brand to be. Yes, there is a lot of overlap and collaboration on brand, but each side must understand the boundaries.
Brooks says that, in his experience, Marketing and HR need very specific swim lanes where each side knows the expected deliverables and purposes of its resources. For example, the CMO owns the company website. Clarity about who owns what, and what aligns with the brand, is crucial.
How do you get this clarity? You need to talk. A weekly or bimonthly communication meeting between the CMO, CMO of People, Public Relations, Investor Relations, and Employee Communications is useful—maybe essential—to getting alignment on messaging and clarity on those swim lanes.
What Can You Do Today?
If you are a CEO, CMO, or CHRO who buys into the idea that HR must work arm-in-arm with Marketing, then you must start making that happen by building trust and understanding. As Brooks advises, trust will come from shared execution—look for a small project where HR and Marketing can collaborate to create the seeds of trust.
Using the Relationship with the CFO as a Lever
The CFO is accountable for the money; the CMO of People touches a lot of money.
In most companies, the relationship between the CFO and the head of HR is usually nothing to write home about (unless the CFO is the CHRO’s boss, which is another topic). However, as soon as a CEO decides that they will use the HR role to energize growth, then the HR leader (the CMO of People) must use the relationship with the CFO as a point of leverage.
The relationship with the CFO is crucial because they control the purse strings to invest in talent management and they have the insight to put a dollar figure on talent initiatives that affect the business—such as hitting growth targets. When the CFO buys into what the CMO of People is doing, a lot gets done. When the CFO is skeptical, it creates a host of barriers.
In the next section, I’ll talk specifically about the role of Real Estate. At a high level the CMO of People is deeply involved with Real Estate because it has such a significant impact on the employee experience. This puts the CMO of People in the midst of discussions about office locations, long-term leases, and expensive leasehold improvements. You can’t get into those areas without a close relationship with the CFO. The CMO of People relies on the CFO for expertise on investments; the CFO relies on the CMO of People for expertise on how real estate decisions will affect employee performance and productivity. This demands a collaboration of equals, not two people working in their own teams. (You’ll infer from this example that the CMO of People also needs a good relationship with the General Counsel. I won’t go into that, but I’m confident that you can imagine how that would need to play out.)
The CFO must also be deeply connected to the CMO of People regarding decisions about the use of equity rewards such as stock options or restricted stock. For the CMO of People, equity rewards can be designed and deployed as an incredibly powerful tool for driving behavior, motivation, and retention. For the CFO, equity rewards constitute a major cost that must be carefully justified to skeptical investors. The CMO of People needs the CFO’s involvement in anything they do with equity rewards. The CFO needs the CMO of People’s expertise in designing the reward so that it will achieve its intended purpose. It’s another case where, for the CMO of People to have a serious business impact, they must leverage their relationship with the CFO.
These are not the only issues where the CFO and CMO of People must work arm-in-arm. Managing healthcare costs in the U.S. is a major area of collaboration. It’s up to the CMO of People to consider innovative solutions that support the employment brand while controlling costs. For example, Grand Rounds—where I work—uses innovative technology to help companies who self-insure. The algorithms match employees to the right healthcare specialists based on their symptoms, which reduces the expensive and frustrating runarounds so common in health care. Don’t expect the CFO to take the lead on looking at healthcare benefit options; At the same time, don’t go ahead and propose an innovative approach without having the CFO involved in the discussion.
Even something as seemingly HR-focused as providing a free cafeteria as a benefit is a place for CFO involvement because it’s surprisingly expensive. If it does not drive productivity and performance, the organization should seriously consider its value and genuine contribution to the broader experience. In a sales-oriented organization, commissions are a big line item in the cost of sales—the CFO has a lot to contribute to this discussion.
What Can You Do Today?
Start by asking how the relationship between your HR executive and CFO matches this ideal. Is the organization missing an opportunity to be more effective in how it invests in people by not creating a stronger relationship between these two leaders?
Using Real Estate and Workplace Services as a Lever to Enhance the Employee Experience
If the company is positioned as being fun and professional, but a candidate walks into the office and it’s a dingy place with a crabby receptionist and bad coffee, then you’ve already undermined the employment brand.
̶̶ Robert Teed, VP, Real Estate & Facilities, ServiceNow
The physical office has a major impact on the employee experience, so it makes sense to make Real Estate and Workplace Services part of the CMO of People’s team. The goal is to ensure that every element of the physical environment supports the brand. Many details can be used to craft the employee experience in this area. It covers everything from the finishes, to artwork, to food, to furniture, to access to transit, to the overall office layout.
Getting all this right requires an unusual amount of collaboration. When Robert Teed was VP of Real Estate & Workplace Services in DocuSign, he played an important role in Marketing’s rebranding exercise. Teed said, “We spent a lot of time with the overall brand team and the external agency to understand how to take the brand concept and convert it into a physical brand.” He also partnered with people in Recruiting, Compensation and Benefits, and People Analytics. This investment in collaboration built a detailed and common vision of what the employment brand needed to be.
Image is a guiding principle in converting the brand to a physical environment. For example, if a brand stresses “authenticity,” then the colors and finishes are probably drawn from nature. If a brand is “high-tech,” then the work area probably has metal finishes and modern lighting fixtures. Electronic Arts is a good example of powerfully presenting an image. Walk into the office, and you’re immediately surrounded by artwork from Electronic Arts’ games. There are video games in the lounge areas and sporting facilities where you can play with a real basketball (not just a virtual one). At Electronic Arts, you are not walking into a generic workspace—you are immersed in a video game company.
Another principle is driving productivity. The point of the employee experience is to drive performance so employee services should not just be perks. Teed points out how much time can be lost if people need to drive someplace for lunch. If that’s an issue, then Workplace Services could include a cafeteria, arrange for food trucks, or facilitate ordering food in. Similarly, offering concierge services such as dry cleaning is partially about making employees’ lives better while remaining primarily focused on removing barriers to productivity.
Teed also spent a lot of time understanding how people collaborate—how they actually work, as opposed to how we think they should work. This led to creating a lot of fluidity in the locations people could work, breaking down cubicle walls to create a variety of work environments—including making it practical to work at home or in a local café. This required working with IT and HR on policies to remove barriers to this fluid work style.
A third principle is adopting a marketing mindset and thinking of the employee as the customer. Teed used surveys and focus groups to see the workplace through employees’ eyes.
Challenges to Using this Source of Leverage
Enabling Real Estate and Workplace Services to have the full impact on the end-to-end employee experience requires breaking down some well-established silos. In most companies, HR is not normally closely tied to Workplace Services. A CMO working with a branding agency wouldn’t typically think of inviting the Real Estate leader to the meeting. It’s easy to see why a company would want this kind of collaboration to create a holistic, consistent approach to creating a brand, but it’s not how people normally operate.
Design Perspective
It is helpful to see how the CMO of People comes at things from a design perspective. As I said in the first chapter, a design perspective:
–Approaches issues holistically
–Sees things through the eyes of the customer (i.e., the employee)
From the employee’s viewpoint, there is just “an experience”; the fact that the organization believes that different aspects of that experience are the responsibility of different departments doesn’t matter. That’s why the points of leverage in this model are unconventional. A design perspective leads us to think of the work of the CFO, CMO, Real Estate/Workplace Services and CSR as part of a greater whole.
Furthermore, the design perspective always asks about the end result: “Does this drive productivity? Is it consistent with the immersive, predictable experience? Are we keeping it simple and focused? Are the right people doing it?”
If you’re implementing this approach, then you must deal with each of the parts. However, it certainly helps if you come from a design perspective where the “employee experience” is seen as a whole and there is an evident need for integration.
What Can You Do Today?
Look around the physical environment. Is there anything that leaps out as being in conflict with the brand? If so, point it out—not so much as a problem to be fixed, but as a sign that HR is not using the required levers to create a predictable, immersive employee experience.
How CSR Strengthens an Immersive Experience
We can see how the concept of an immersive experience is executed in a CSR program.
Corporate social responsibly (CSR) programs are nice to have and often sit a little off to the side of the main business where they do good work on behalf of the company. However, in a model of HR that emphasizes an immersive employee experience, the CSR programs are folded into HR. Within a coherent HR strategy, CSR becomes a lever for driving business impact.
It makes sense to put CSR within the HR function because employees care a lot about social responsibility. A survey by Cone Communications showed that 87 percent of employees are motivated to participate in CSR programs; 74 percent said that their job is more fulfilling when they make a positive impact at work; and 51 percent even said that they won’t work for a company that lacks a strong social and environmental commitment.
So here we have a lever—how do we use it?
Employee-Centered CSR
Consider these elements of DocuSign’s integration of CSR with employees:
–When employees first join, as part of onboarding, two hours are spent on community giveback—for example, they could put together kits of supplies for homeless youth. This way, they may truly understand what it means to volunteer to help the community.
–Each year, employees are given three days off to focus on volunteer activities.
–Rather than having the leadership decide where employees should donate money, they encourage employees to make donations, and then leadership matches those donations.
–CSR Impact events are organized by employee volunteers in each location rather than by the central CSR function.
Individually, these tactics are nice, but collectively, they help to make doing good an integral part of the employee experience.
Salesforce 1:1:1 Model of CSR
A good example of using a CSR program to drive the employment brand is Salesforce’s 1–1–1 model. The triple 1 refers to giving 1 percent of Salesforce’s equity, 1 percent of Salesforce’s product and 1 percent of Salesforce employees’ time to social causes.
Salesforce’s 1–1–1 program has helped tens of thousands of nonprofits. To give just one example, they have a Workforce Ready initiative that helps young adults develop the skills they need to enter the workforce.
The employee involvement can be skills-based (helping nonprofits with technology), volunteering (they get seven paid volunteer days), or suggesting where to donate (so that corporate philanthropy reflects employees’ passions, not just those of the CEO).
This model involves employees—it makes employees proud of what they and the company do to contribute to the greater good, and its emphasis on technology is consistent with Salesforce’s brand. It’s a nice, integrated program that is easy to understand and appreciate.
What’s really interesting, not to mention impactful, is that Salesforce liked the model so much that they’ve been encouraging other companies to adopt it and have even provided a platform that helps them do so. Salesforce has invested a lot of thought into this model and it’s great that they are sharing their lessons learned.
Integrating CSR with Sales and Marketing
The direct involvement of employees in delivering social goods is only one part of an integrated strategy. Other initiatives include:
–Donating the DocuSign product to various nonprofits
–Aligning procurement processes with CSR—for example, by collaborating with Marketing to select a vendor to provide marketing swag that was also a social enterprise (i.e., the vendor was a social enterprise that employed people who had trouble finding work).
–The CMO integrating CSR Impact events into customer events—for example, featuring employee volunteer efforts with a nonprofit that helped disadvantaged girls get involved in scientific and technical education
–Sales always communicating the company’s social impact work to customers Again, these tactics collectively demonstrate to employees that CSR is not just window dressing—it’s a way of life in their organization.
Drawing Lessons from the Philosophy Behind These Initiatives
It’s easy to toss around words like “integrated,” “collaborative,” “strategic,” and “immersive.” However, when you look at this collection of activities, you see how they create an employee experience that inspires, attracts, and retains talent. It improves the company’s image with clients—in fact, since bigger nonprofits are an important market segment, the donations to smaller nonprofits align with the company’s sales strategy.
What Can You Do Today?
Set up a lunch with the people responsible for employee experience and CSR to brainstorm how they might work together to integrate their missions. Get them to articulate their views of the employment brand.
Lessons in Elevating the HR Function
We need to reframe the HR function if we want to elevate it.
When young HR professionals hear talk of elevating the HR function, they usually think that it means people will start listening to their advice and give them bigger budgets. In terms of enhancing HR levers, the young professional would think in terms of more sophisticated initiatives.
This chapter provides a different take on what it means to elevate the HR function. The CMO of People model elevates HR by integrating it more deeply with other functions and getting it more focused on solving business issues.
This elevation and integration of HR has its costs. Nice, tidy silos can be efficient and give everyone their own playgrounds with clear boundaries of who owns what. The collaborative CMO of People model means that more time is spent working together on issues and clarifying the swim lanes—for example, if Marketing people are working on an HR project, then it’s clear who is accountable for what and what the deliverables will be.
The advantage of elevating and integrating HR goes back to the numbers shown in Section 2.3, in which I estimated that the CMO of People affects 40 to 70 percent of the company’s spending. More broadly, when you look at a specific business problem, half of the solutions will likely involve HR.
A big part of reframing an elevated, integrated HR function is that the focus becomes business issues rather than excellence within each HR department. In traditional HR functions, one might strive for excellent recruitment—at face value, that seems like a great goal. However, in a better integrated HR function, the thinking might be, “We don’t have a problem with recruiting store managers and full-time retail staff; It’s the turnover and quality of the part-timers that is killing our productivity.” In this frame, you would replace a generic “excellence in recruiting” goal with “figure out how to fix the productivity problem”—and recruiting might be a big part of that.
An “excellence” focus and a “business issue” focus do not oppose one another—in fact, they should ideally merge into a single approach. However, in practice, an HR function with a focus on excellence in each HR function will behave differently from an elevated HR function that has a general management perspective.
To maximize the benefit of the HR Executive, they must be in deep collaboration with their C-suite colleagues regularly.
The general terms “elevated,” “integrated,” and “collaborative” have specific implications on everyday behavior. I hope that this chapter helps to make the implications more vivid.
What Can You Do Today?
Is there any place where a part of HR is “excellent/sophisticated” and yet doesn’t seem to be solving the business issues that are grinding managers down?
Takeaways
–HR gets leverage beyond the traditional specialties of recruitment, training, and so on by working more closely with other C-suite leaders on business problems and by taking on new areas like CSR/ Philanthropy and Real Estate/ Workplace Services.
–The amount of time the CMO of People spends collaborating with their C-suite peers is significant; they might spend five to twenty hours a week working with the CMO.
–This way of thinking deemphasizes the ever-increasing sophistication in each HR sub-function and prioritizes a general management perspective of solving issues in the most pragmatic way.
–Building trusting, collaborative relationships takes time. It involves joint successes, creating clear “swim lanes” so that people don’t get in each other’s way, and making and delivering on promises. Collaboration is not a feel-good thing—it’s an asset that one builds.
–The role of Corporate Social Responsibility in the employment brand does not rest on one signature initiative, but on the whole suite of things that CSR does.