The Magnificent Seven

Who are the greatest HR directors of all time? Scott Beagrie conducts a global search for HR giants, and comes to some intriguing conclusions

When Personnel Today embarked on its quest to find the greatest exponents of the profession, it asked two fundamental questions: what separates the great from the good, and what do HR directors (HRDs) really do? There were no easy answers. The job is more complex today than ever before, which means that any assessment made has to be relative to the period in which an individual operated. Added to this, chief executives of the world’s most powerful companies are afforded a status equal to that of many celebrities – think former head of General Electric, Jack Welch – and this higher profile can distort the picture when it comes to accurately assessing people management strategies.

What is clear, however, is that when the US-based International Association of Human Resource Information Management called for the profession to take on ‘hero status’ and be strategic and forward-looking two years ago, it might just have been missing the point as HR has always done great things – it’s just that they are often overlooked or go unsung.

Although this list is likely to be as remarkable as much for its exclusions, and not all of our entries have traditional HR titles, everyone included here has set a precedent when it comes to HR management.

Lori L Dubose, managing officer in charge of people, People Express Airlines, 1981-1984

Legacy to HR Proved that one of the most radical ventures in participative management could succeed in a sector where such methods were unheard of.

The low-cost US carrier began operating in 1981 with just 20 employees, but it grew into a £1bn turnover company in less than five years. Although it was charismatic founder Donald C Burr who impressed with his humanistic concept of a company, it was Lori Dubose, then 28, who helped devise the unique HR policies that ultimately lead to a Harvard professor describing it as “the most comprehensive and self-conscious effort to fit a business to the capabilities and attitudes of today’s workforce”.

Dubose joined the company from Texas Instruments, where she was HR director, and screened out automatons in favour of young, energetic, free spirits who managed themselves and performed multiple tasks (termed ‘cross-utilization’), which also made the airline highly productive.

The cornerstone of People Express’s HR policy, however, was that every new employee had to buy shares in the business (albeit at a steep discount), which was a first and great for morale when the shares peaked at $26. But the company failed to evolve and cracks began to show by late 1984, when Dubose was unexpectedly fired despite eulogising the company’s ‘lifetime employment guarantee’, and People was eventually sold to rival Texas Air Corporation.

Sir Patrick Lowry, director of personnel, British Leyland, 1970-1981, and chairman of the Advisory Conciliation and Arbitration Service (Acas)

Legacy to HR Early multiple-careerist who set a benchmark for how HR should acquit itself in industrial relations.

As the first industrial relations director of British Leyland, Patrick Lowry (pictured above, left) played a central role in keeping the troubled motor company alive during the 1970s – one of the most bitter periods of industrial unrest in the UK. But his influence on employee relations was to extend way beyond the negotiation table.

Lowry recognised that intense foreign competition meant there was no room for outmoded employment practices, and he successfully ushered in labour reforms and a series of shifts in management style.

Previously an industrial relations expert at the Engineering Employers’ Federation, Lowry was a strong advocate of education and training and felt strongly that management had a duty to develop, motivate and engage its charges.

His remarkable skills, integrity and determination saw him steadily rise in the organisation. He was appointed to the board in 1972, made director of personnel in 1975 and then deputy chairman. After 11 years, he had his fill and was pleased to succeed Jim Mortimer at Acas. In his six years as chairman, his expert handling steered Acas through Thatcherite adversity to become a highly credible and respected organisation.

Arne Olsson Seniorvice-president and head of HR, ABB, 1987-2002

Legacy to HR In a profession that is infamously uptight about its perceived low status and the value of its expertise, Olsson serves as an excellent role model and ably demonstrates what can be achieved with a bit of nerve, self-assurance and willingness to let go of the transactional drudgery.

When Swedish electrical engineering group Asea merged with Swiss rival Brown Boveri in 1998, it created the one of the world’s largest organisations and the first truly global company. It also ushered in a new (and liberated) attitude towards HR strategy and management.

“Without being provocative, when I meet line managers I tell them that they should close the personnel department,” says Arne Olsson, who believes line managers are the ‘real’ personnel managers.

Following the merger, ABB famously introduced a global matrix structure that allowed it to be both global and local. It embarked on a massive round of job cuts and transference of resources, including HR, to the frontline companies, while Olsson continued to operate from the former headquarters of Brown Boveri in Zurich with just a handful of staff.

He took the view that he couldn’t keep tabs on the hundreds of managers across the company’s 1,200 separate operating companies and instead line managers were expected to take responsibility for their own development and growth.

This strategy freed Olsson to become a forerunner of today’s talent director – travelling across the globe and holding seminars to teach managers how to identify and nurture future talent. This was central to the company’s culture of excellence, and it worked – revenues grew from $18bn in 1988 to $36bn in 1995, while return on capital employed improved from 13 per cent to 23 per cent. ABB was four times named as Europe’s most respected company in a Financial Times/Pricewaterhouse survey.

Anne Mulcahy Chief executive, Xerox Corporation, 1976-present day

Legacy to HR She is living proof that a move from a line or sales management role into HR is not a lateral or downward step. If she completes the job of turning Xerox around in the US, it is likely to become a Harvard Business School case study.

The HR profession will never have a better advert for its potential to reach the top. As chief executive of Xerox, the former chief staff officer of HR is one of the most powerful women in business and, what’s more, she acknowledges her debt to HR in getting there. “Leading the human resources team at Xerox was one of the most valuable jobs of my career,” she says.

If that isn’t enough, she’s also brought the company back from the brink of collapse and is on track to take a place in the history books as one of the great turnaround CEOs, quashing the notion of the profession’s poor business nous.

A little over three years ago, Xerox was $17.1bn in the red, with just $154m in cash. But by March 2003, things were looking up: $3bn in cash, with debt reduced by 21 per cent. Although there’s a way to go yet, the straight-talking 47-year-old mother of two, who’s been at the company for 25 years’ in HR, sales and line management positions, is unlikely to drop down a gear.

At the heart of Xerox’s comeback is a massive technological transformation to get it back on track and able to compete with the likes of Canon and Ricoh in the document market. But Mulcahy’s personal qualities and approach to people also make the difference. She happily works closely with surbordinates, which wins her votes and credibility while colleagues speak of her amazing ability to inspire.

Ricardo Semler Entrepreneurial head of Semco, 1981-present day, and author of business best-sellers, Maverick and The Seven-Day Weekend

Legacy to HR There is a strong case for the word empowerment to be banned in the HR press as a) it is a hoary old cliché, and b) is frequently glibly used. But Semler demonstrates that true faith and commitment to empowerment pays off.

At Sao Paulo, Brazil-based equipment manufacturer, software group and service provider Semco, there is no HR department. Employees choose when they work, what they do, fix their own salaries and even have a hand in picking their manager. But instead of anarchy, Ricardo Semler’s people management strategies have had the kind of impact on the company’s bottom line that most HR directors could only dream of.

The Brazilian entrepreneur, who took over the company from his father in 1980, aged just 21, operates the antithesis of oppression in the workplace and his underlying theory is that employees will do the best for themselves, and therefore their company, if they are given absolute freedom to do so. Several of Semco’s new business ventures have come from employee ideas and have shaped the organisation’s direction.

In the past 10 years, the company has quadrupled its revenues, extended business from manufacturing to services and the internet, and has grown from 450 to 1,300 employees, while keeping staff turnover at an enviable 1 per cent.

Henry Ford, entrepreneur and creator of the world’s first mass-produced motor car, 1903-1945

Legacy to HR Was at least 80 years ahead of his time when he said: “The two most important things in any company do not appear in its balance sheet: its reputation and its people.”

While some of Henry Ford’s less right-on staff measures a century ago wouldn’t win any HR awards today (they included encouraging employees to practice personal hygiene), he did lay the foundations for the modern era of employee relations.

Ford expected a lot from his staff – commitment, punctuality and restraint in private life. But he recognised that policies generous to his employees would lead to happier workers and better products, and he stunned the industrial world of 1914 with his $5-a-day wage.

If Ford’s pioneering production line assembly of the Model T Ford in the US was to be successful and work at peak efficiency, he knew he had to unify the functions of his workforce.

While some employees didn’t take to his forceful management style, the inventor-cum-entrepreneur had the vision to bring in measures that would win them round, such as profit-sharing and a welfare programme.

HR guru Dave Ulrich has commented that while patriarchal, Ford dealt with employees “more as a family to engage than a commodity to hire and fire”.

By 1924, 10 million Model Ts had rolled off the production line, but Ford’s delay in producing a follow-up model allowed General Motors to steam in and capitalise on his momentum.

Leif Edvinsson, corporate director of intellectual capital, Skandia, 1991-1999

Legacy to HR Started a movement that will not go away. Organisations such as Microsoft and AOL acknowledge that some 90 per cent of their market capitalisation value lies in intangibles.

Most of us are probably over familiar with the concept that a company’s principal source of competitive advantage is its people. But what is less well-known is that Leif Edvinsson pioneered measurement of the asset that doesn’t appear on the balance sheet. The former senior vice-president for training and development at Sweden’s S-E Bank was appointed the first ever corporate director of intellectual capital at life assurance group Skandia, where he produced the world’s first intellectual capital annual report in 1994.

Although rudimentary and flawed, he started a movement that has taken the best part of a decade to gain momentum. He’s even given the bean counters something to ponder in suggesting that the financial benefits to Skandia of managing intellectual capital are reportedly in excess of $15bn. As an advocate of “brain economics”, it is fitting that he was awarded the Brain Trust’s ‘Brain of the Year’ award in 1998, following in the footsteps of Stephen Hawking and Gary Kasparov.

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