Moving on up

The HR profession is finally shaking off its image as a dead end for
careers.  In part one of a three-part
series on CEOs and boardroom HR, and as a backdrop to a major conference in the
autumn, we profile the top 20 senior executives with a background in global HR,
by Philip Whiteley

In 1998, Fortune magazine, reviewing its list of the 50 most powerful women
in business, noted that they all "steered clear of the dead-end ‘R’
departments – PR, IR, HR – that tend to be holding bins for women". It
could not say this now.

On 11 May 2000, Anne Mulcahy, former vice-president of HR at Xerox, became
its president. She followed Karen Beard, who became president, North America,
of ANC Rental, following a career that included a spell in charge of human
resources. The HR profession is finally established as a route to the top.

Here, for the first time, are the top 20 senior executives with a background
in HR. They did not just spend a token few months in personnel but cut their
corporate teeth on such matters as training, employee relations and succession
planning. They are also senior executives of major businesses in manufacturing
and services, and a few are recognised thinkers and speakers on the business
conference circuit.

For example, in March this year executive vice-president of luxury goods group
LVMH, HR professional Concetta Lanciaux, was named by Wall Street Journal as
one of the 30 most influential businesspeople in Europe. Leif Edvinsson,
another in our list, is widely regarded as the pioneer of the theory of
intellectual capital, which is increasingly recognised as key to competitive
advantage.

The trend is inevitable and will grow. Managing people is now more important
than managing the numbers, as skills requirements increase and the bulk of
companies’ value is tied up in talent, rather than fixed assets. For the senior
manager, a knowledge of teamwork and group psychology is of at least equal
importance to awareness of costs, technology, capital and competitors.

While HR managers are increasingly aware of the need to learn the business
and its objectives, what is equally clear is that general managers who are
ignorant of how to manage people will struggle.

The pioneers in the Anglo-Saxon world such as Karen Beard follow a more
established trend in Japanese manufacturers, where the practice of
cross-functional teamwork and gaining experience in different departments mean
that several senior managers have had experience in HR at some stage in their
formation. Examples include Tetsuya Katada, chair of industrial manufacturer
Komatsu, and Isao Kaneko, president of Japan Airlines, both of whom are
profiled here.

There is still some way to go. Engineering-related professions remain the
most likely route to Japanese and continental European boardrooms, while
finance and marketing are common in the English-speaking world.

This is sure to be different in 10 years’ time. "We will see more HR
people taking up very senior positions on the boards of organisations as the
platitudes that staff are the most important asset become reality," says
John Mahoney-Phillips, head of human capital at Swiss bank UBS. "People
are the only differentiator in an incredibly competitive market where
technology, location, speed of communication and even, to some extent, products
are only short-term differentiators."

Mahoney-Phillips, a former consultant at HR consultancy SHL, points out that
investment analysts now employ a growth premium – a value put on the innovative
capacity of a companies’ people – and that this can be as high as 60 per cent
of total worth for General Electric or 74 per cent in the case of Cisco.

"It is going to become essential for senior managers to be very close
and responsive to their workforce, especially as the workforce becomes more
demanding and more protected legally," he says.

Maurice Duffy, founder and chief executive of business and recruitment
consultancy mkworldwide, comments, "If you look at the 1980s, the vast
majority of companies looked at capital being the key differentiator. In the
1990s people viewed technology as the priority. From 2000 onwards it is about
people."

Yet most employers, while they incorporate the principle of regarding staff
as the greatest asset in their rhetoric, still treat them "like
conscripts, not volunteers", Duffy says. This has to change. "When we
talk to companies about recruitment I will ask them, ‘What is your retention?
Let us focus on that first – it is by far your best recruitment
methodology’."

Companies fail to make the most of their "most valuable asset" by
neglecting to develop existing staff – and by failing to use them to gain
employee referrals as a recruitment tactic, Duffy says.

Sir Ian Gibson, chairman of Nissan Motor Iberica and a former personnel
manager at Ford, argues that it was a historic mistake to have separated
management of people from general management theory. "In my early days,
dealing with labour issues was the role of the personnel specialist only. This
was terribly unhelpful, because management is about motivating and gaining the
best out of the workforce – it is not about being a better analyst or
production engineer. You cannot separate emotional and relationship aspects and
say it belongs to someone else – that is why it is called management, not
number-crunching."

One characteristic identifies the individuals featured in our top 20: they
nearly all spent years in the line. Even some of those who have spent most of
their careers in HR began in another specialism, and all urge personnel
managers wishing to follow their example to "learn the business".

One surprise in the list is the contribution of the car industry – a feature
across the globe, from Europe to North America, Australasia and Japan. A common
theme among those with a background in car manufacturing was a taste of hostile
industrial relations in the 1970s – or a while earlier in the case of Japan.
The silver lining from this particularly dark cloud has been that extremely
poor employee relations at least exposes their strategic importance. Nothing
can be achieved if the workforce does not wish it.

When strikes were common, they were an alibi for poor managers. Now they
will not be tolerated. Rod Eddington, who appears on the list having served as
a personnel manager at Cathay Pacific in the 1980s, was head-hunted to lead
British Airways in 2000, partly to help repair employee relations. The carrier
had suffered a disastrous strike in 1997, costing about £150m.

On appointing Eddington, chairman Lord Marshall said, "The board is
looking for someone with the necessary people skills. He has a well-deserved
reputation in the airline industry for his leadership, people and management
skills."

Increasing evidence, in research by Rutgers University, Stanford University
and the London Business School among others, shows that companies which put
welfare and development of staff as a high priority do better than those which
emphasise cost control. This should give HR managers confidence. The
bean-counters have had their turn.

The 20 HR executives

Anne M Mulcahy
President and chief operating officer, Xerox Corporation

Route to the top

Appointed in May 2000, Mulcahy is responsible for the day-to-day activities
of the giant office systems and equipment provider, and is probably the most
influential former HR manager in business. It is an impressive achievement for
someone turned down 12 times for managerial posts before being accepted as a sales
representative at Xerox in 1976.

Mulcahy has combined line management roles and HR positions throughout her
25 years at the company. She was promoted to her current post from the position
of president general markets operations within the group, which had a $6bn
turnover and 6,000 staff, accounting for about 30 per cent of Xerox’s revenue.

Before this she was senior vice-president and chief staff officer,
responsible for human resources, quality, communications, advertising, Internet
marketing and government relations. She assumed this post in 1998.

Immediately before this, she had served as vice-president and staff officer
for customer operations covering South and Central America, Europe, Asia and
Africa. Between 1992 and 1995 she was vice-president for human resources.
Mulcahy had worked her way up to this post through a variety of sales and
management positions in her early career at Xerox.

How the HR background helps

"Leading the human resources team at Xerox was one of the most valuable
jobs of my career. Without that experience I may not have been as successful in
the operations positions I subsequently held. Obviously, one of the most
important parts of leading a business is leading the people within it."

Advice for those starting out

Use the HR experience to its full potential, not play it down.
"Sometimes there is a concern in business today that moving from a
business group or sales region management role to an HR position is a lateral
or downward step. I am living proof that this perception is wrong," she
says.

Leif Edvinsson
Chief executive of Universal Networking Intellectrual Capital

Route to the top

Leif Edvinsson is not simply a successful executive, he is also a knowledge
pioneer. Years before the importance of intangible assets in a company’s
valuation became recognised in management circles, he was developing ways of
valuing the contribution that people make to an organisation through his work
at Sweden-based life assurance firm Skandia.

Edvinsson is a respected author and conference speaker. In 1998, he was
awarded the Brain Trust "Brain of the Year" award, following such
luminaries as Gary Kasparov and Professor Stephen Hawking.

This year, he was appointed to the world’s first professorship on
Intellectual Capital at the University of Lund. He is also professional board
member in a number of knowledge companies as well as CEO of the Universal
Networking Intellectual Capital.

His pivotal role was as vice-president and corporate director of
intellectual capital at Skandia in the 1990s, where in 1994 he produced the
world’s first intellectual capital annual report.

His roots are firmly in personnel and training. Before joining Skandia in
1991, he was senior vice-president for training and development at S-E Bank,
after being president and chairman of Consultus, a Stockholm-based consulting
company.

How the HR background helps

"The human resources perspective is fundamental," he says.
"The work of intellectual capital is about future earnings potential, as
well as the search for how to release the human potential with the structural
capital."

Advice for those starting out

"Learn about the financial language of numbers so that you can
communicate HR perspectives to the chief financial officer. Also look for how
to release talent within the organisation."

Isao Kaneko
President of Japan Airlines

Route to the top

Basketball fan Isao Kaneko has worked at Japan Airlines for four decades,
reaching the post of president in 1998 following a career spent mostly in
personnel.

It would be a mistake to imagine this one-company man as someone of insular
outlook. He has worked all over the world, including two years as regional
manager in Italy, where he fell in love with Rome and with pasta. If he had not
pursued a career in the airline industry, he would have loved to be a
basketball coach – and indeed he did coach the JAL company team for a while,
before becoming the team’s honorary president.

He has taken some tough decisions, however. Along with nearly all airlines,
he has been forced to seek savings and streamline management, but he has been
rewarded with a return to profitability.

Kaneko joined Japan Airlines in 1960. After experience in the international
cargo department, he joined the industrial relations department. This included
a spell in New York dealing with "strong, arrogant unions with alleged
criminal links", he recalls. "I had to fight. But if I believe I’m
right, I don’t move."

Kaneko became deputy vice-president industrial relations in 1980 for three
years, followed by the spell in Italy, and then was vice-president industrial
relations, with election to the board in 1991.

How the HR background helps

Kaneko says management in HR can equip someone perfectly for a senior role,
as one has contact with all parts of the business. "To be a leader in
industrial relations you have to know everything about the business – finance,
operations, marketing."

Advice for those starting out

"Above all, labour relations needs patience."

Karen Beard
President North America, ANC Rental

Route to the top

Former opera singer Karen Beard is responsible for all aspects of running
ANC Rental Corporation’s Alamo Rent A Car and National Car Rental in North
America, accounting for about $3bn of the company’s $3.5bn annual revenue.

Prior to her current position, Beard was the first female president of the
major car rental company, Alamo. Her career at Alamo spans more than 20 years,
having started in sales after deciding that a career in classical music was too
precarious.

She has served as vice-president of human resources, reservation sales and
consumer affairs; vice-president of domestic sales and senior vice-president of
operations, among others.

While at Alamo, she led many initiatives, such as identifying and targeting
the brand’s primary market, creating a website, cementing major partnerships
and streamlining operations.

Beard has been named as "One of the Most Powerful Women in Travel"
every year since 1996 by Travel Agent magazine Recently she was appointed to
the board of the Florida Division of Tourism by Governor Jeb Bush.

How the HR background helps

"During my 20 years in the car rental industry I have held many diverse
positions," she says. "But my tenure as head of the human resources
department was one of the most rewarding experiences. I became sensitive to
issues that the typical company president may not fully appreciate – issues
such as equal opportunity, labour relations, pay plans, benefits and wellness
programmes."

She also found that the experience helped her refine the interpersonal
skills, such as negotiating, motivating and listening, which are increasingly
recognised as essential in a world of mobile, skilled employees.

Tetsuya Katada
Chairman, Komatsu

Route to the top

Tetsuya Katada has been with the Japanese industrial manufacturing company
Komatsu for nearly half a century. He joined in 1954, starting in the human
resources division at the Osaka plant. He served in different management roles,
principally personnel, before becoming a director in 1978. He also had a spell
as general manager of Kanto regional sales office. In 1983 he was appointed a
managing director at the group, rising to vice-president in 1988 and president
(representative director) a year later. In 1993 he was given a Nation Medal
with Blue Ribbon by the Japanese government.

Katada has been a member of the listed companies advisory committee on the
Tokyo Stock Exchange since 1998 and has been vice-chairman of the Japan
Federation of Economic Organisations since 1999.

How the HR background helps

"When I look back on my career, I believe the HR experience has been
very helpful to operating in top management," he says. "First and
foremost, fairness is important. I am firmly convinced that you have to be fair
to everyone, including yourself and regardless of the position of someone in
the company."

Advice for those starting out

"Motivation is the key to get the best and most potential out of
people. You should know, however, that the ways to motivate people are
different for each person."

Rod Eddington
CEO, British Airways

Route to the top

Rod Eddington’s experience of personnel management came early in his career,
as he was rotated around different managerial positions at the Swire Group
between 1979 and 1992, working at Hong Kong’s flag-carrying airline Cathay
Pacific in Hong Kong, Korea and Japan. In 1992, he became managing director of
Cathay Pacific, before being recruited by magnate Rupert Murdoch to run Ansett
Airlines in 1997.

But the personnel experience has stayed with him. His ability in people
management was key to his being head-hunted for the prestigious £500,000-a-year
post as the head of British Airways in May 2000, reflecting the carrier’s
recognition of the disastrous 1997 strike which cost an estimated £150m.

He trained in engineering science at the University of Western Australia and
Oxford University, and taught as a research lecturer at Pembroke College,
Oxford, in 1978-79 before starting his business career.

How the HR background helps

"Staff-related issues can be the most difficult ones," he says.
"Sometimes it takes a while to understand what people are really driving
at. You have to be clear about what can be done and why. You have to be
consistent and you have to be fair." An important rule he has learned on
staff issues is "never let ego get in the way of finding solutions".

Advice for those starting out

"I have worked at airports, in marketing and in sales, and I have
worked on the personnel side. The more you know about the different aspects of
the business the better."

Concetta Lanciaux
Executive vice-president and advisor to president, LVMH

Route to the top

Earlier this year the Wall Street Journal placed Concetta Lanciaux in its
list of the 30 most influential businesswomen in Europe – the first time an HR
professional has made it on to the list.

She has been with LVMH since 1985, following a spell with US chip maker
Intel. She holds a PhD in humanities and social sciences at the University of
Carolina, and began her career as a professor at Carnegie Mellon University,
where the pursuit of an executive MBA persuaded her to move into the private
sector.

Lanciaux retains responsibility for HR within the French luxury goods group,
but much of her role is strategic general management. The intangible value of
skills and brands are so important to the producer of champagnes, perfumes and
leather products that development of people and strategy are interwoven. While
Lanciaux is heavily involved in strategy, chief executive Bernard Arnault has
always paid close attention to selection, recruitment and development.

Lanciaux is one of the few HR managers to be in the top echelon of business
speakers, and is as likely to be invited to speak on marketing as on training
or selection. For example, she was asked to address a Business Innovation
conference in October 1999 in Cambridge, Massachusetts, on developing the
brand.

She has published two books, Humanistic and Scholastic Poetics, 1987, and
Reward Strategies, 1990.

How the HR background helps

One of the main advantages has been the ability to ensure acquisitions are
successful, she says. "We never go out and replace everyone in the company
we have acquired. We find out the talents that exist in the companies. We
identify and retain talent and get the right person in the right job.
Management time spent on this activity is pretty high."

Advice for those starting out

"Have the same interest for the business as you have for HR," she
counsels. "Develop a passion for the business you are in."

Peter Pestillo
Chairman and CEO, Visteon Corporation

Route to the top

Peter Pestillo has a background in employee relations in heavy industry. He
joined car giant Ford in 1980 as vice-president labour relations, having
previously held industrial relations posts with General Electric Company, later
becoming vice-president, corporate and employee relations at BF Goodrich.

At Ford he held different portfolios at vice-president level. His one period
away from HR was as vice-president corporate relations and diversified
businesses between 1990 and 1999. In 1999-2000, he was vice-chairman
responsible for governmental affairs, HR, the Office of the General Counsel and
public affairs. He was then promoted to his current position, where he is chief
executive officer of the newly independent Visteon Corporation. Pestillo is
also currently the chairman of the Michigan Manufacturers Association.

A high-flier from the start, Pestillo graduated in economics from Fairfield
University in the US and has a law degree from Georgetown University. He is
also a graduate of the advanced management programme at Harvard Business
School.

How the HR background helps

"It has taught me that no one can be as effective working alone as by
coalescing a group into the pursuit of common objectives," he says.
"A fully functioning team is the most effective organisation, and it
should include all ranks."

Advice for those starting out

"First, know the business and its objectives, strengths and
constraints. The true test of HR excellence is ‘Does the business succeed?’. HR
must be a series of tools and techniques to foster that objective."

Francois de Cagny
Director of international relations, Credit Mutuel

Route to the top

The polymath is rare in the modern world, and the resourceful François de
Cagny would stand out in any list of executives. He studied both medicine and
law, moving to senior positions quickly in the industrial sector in his early
career after graduating in the 1960s, and served as director of HR, as
industrial director and as a senior general manager.

In 1979, he joined the bank Crédit Mutuel as director of HR for the division
Crédit Mutuel Ile de France, in the region surrounding Paris. He held
responsibility for social and employee relations and for training, as well as
general HR administration.

Since 1991, he has been director of international relations for the bank but
he has remained a prominent figure in the French personnel managers
association, the Association National de Directeurs et de Cadres en Personal,
and is a frequent conference speaker.

How the HR background helps

"Every executive function consists of leading and motivating a team of
people," he observes. "The modern tendency that sees people
management as being entrusted to the line managers demands that they are
trained in this. The fact that in my career I have twice held responsibility
for human resources in different companies greatly facilitates the relation I
have with the teams for which I am responsible."

Advice for those starting out

"In France, human resources is not seen as the route to an executive
position; those in HR are seen in some companies as providing cover for the
board, so it seems to me presumptuous to give advice. In reality, it is a
question of knowing who to be and knowing what to do."

Ross McEwan
CEO, AXA New Zealand

Route to the top

The chief executive of insurance giant AXA’s New Zealand subsidiary is Ross
McEwan, who has spent much of his career in human resources.

He graduated from Massey University in 1980 in business studies, majoring in
personnel and industrial relations, and joined consumer goods firm Unilever as
a personnel officer, where he stayed for five years, rising to the post of
personnel manager for the food division in New Zealand.

This was followed by a spell at tyre firm Dunlop as industrial relations
manager, where he modernised the pay scheme. He and his wife then spent a few
months travelling in Europe, before returning to take up the post of HR manager
at National Mutual.

In 1988, he moved into his first non-HR job, joining the sales department
with administrative duties, being quickly promoted to general manager. In 1992,
he became general manager of the life insurance division and two years later
had a spell in Australia. In 1996, he became chief executive for New Zealand
business. In the same year the company de-mutualised and AXA took a 51 per cent
stake.

How the HR background helps

"As CEO, most of the things you deal with day-to-day are
people-related. The HR background gives you a good grounding in what are good
people management practices and what are not. You need to make sure you have
the right people in the right places and that they are highly motivated."

Advice for those starting out

"You need a good grounding in HR, and you need to take the
opportunities as they come up to move into other disciplines. Some will be
sideways moves."

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