Fiona Smith Columnist

Fiona writes on workplace issues, including management, psychology, workplace design, human resources and recruitment. She is a former Work Space editor at The Australian Financial Review and has also covered property, technology, architecture and general news.

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Resource realised: Is HR finally heading to the c-suite?

Published 11 September 2013 12:21, Updated 26 November 2013 18:35

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Resource realised: Is HR finally heading to the c-suite?

Ann Sherry, CEO of Carnival Australia, says the experience she gained in HR was invaluable when she became CEO of Westpac New Zealand. Photo: Nic Walker

When Elizabeth Proust was approached to run the human resources function at the ANZ Bank, it is fair to say she wasn’t thrilled.

At the time, she was heading the Department of Premier and Cabinet in Victoria and she hadn’t considered HR as a logical step in her return to the corporate sector.

“Initially, I wasn’t all that excited,” admits Proust, now a well-established company director and chairman of Nestlé Australia and the Bank of Melbourne.

However, the CEO of the bank in 1998, John McFarlane, convinced her the job was an ideal way for her to learn about the business of banking and she spent three years as global head of HR.

Elizabeth Proust spent three years as ANZ’s global head of HR.Photo: Louie Douvis

Proust was preceded into the ANZ job by Peter Wilson, who had a more extreme reaction to the offer of a stint in the department.

“Did I back my car over your cat?”, he asked the then-CEO Don Mercer in dismay. At the time, Wilson was head of group marketing, Asia Pacific, at the bank. It says something about the surprisingly beguiling charms of human resources that Wilson has gone on to spend seven years as president of the Australian Human Resources Institute.

Previously, he was CEO at the Energy 21 Group and he holds a number of board positions.

The hesitation of ambitious executives to be “tarred with the HR brush” is to be expected. Human resources has had an image problem for a long time.

Wilson says it has been regarded as a career with very low barriers to entry, its operatives struggling with the frustrations of being not taken seriously by the engineers, accountants, MBAs and lawyers that populate the C-suite.

“The professional recognition to a formal accreditation level is not the same as finance or law,” explains Wilson, adding that his institute has been working to raise the bar.

As such, it is not that easy to find CEOs and company directors who have a background in human resources. Until very recently, it was not unknown for people to leave it out of their work histories and it was not considered necessary for leaders to understand the people side of the business.

But things may be starting to change.

As companies become leaner, their ability to hire and retain and promote the best talent may become the deciding factor in whether they succeed or fail. As this becomes the case, the “people” people may at last start coming into their own.

Predicts Wilson: “It’s going to be a slow burn. It is going to happen progressively”.

In Australia, it seems the banking industry has spawned many of the most prominent business leaders with HR backgrounds.

HR in the firing line

Like Proust and Wilson, the CEO of Carnival Australia,Ann Sherry, spent time in a bank learning how to get the best out of “the talent”.

Her career trajectory includes time as first assistant secretary of the Office of the Status of Women, advising the Prime Minister, and 12 years with Westpac Banking Corporation, which she joined specifically to do HR (coming with an interest in industrial relations, diversity and superannuation).

In 2002, she became one of the few women to run a bank, as CEO of Westpac New Zealand for five years and (simultaneously) CEO of the Westpac subsidiary Bank of Melbourne for two years.It was widely said, at the time, that she was in line to become the first female CEO of Westpac in Australia. (Gail Kelly became CEO of St George Bank also in 2002 and CEO of Westpac in 2008.)

“The approach from Westpac came from left field,” says Sherry, “But for me, this was the job”.

When she joined in 1999, the banking industry was on the nose with the public and the regulators. At Westpac, there were huge losses, allegations of mismanagement, a lack of transparency and wall-to-wall bad news about foreclosing on farms and branch closures.

American Bob Joss had arrived to be the new CEO, with a daunting turnaround task.

AHRI’s Peter Wilson says the rise of HR people to the c-suite will be a ‘slow burn’. Photo: Tamara Voninski

“There was a lot of things we needed to do”, Sherry says; staff were so embarrassed to be working for Westpac that they were changing out of their uniforms so no one would know where they worked when they took the train home.

“Elizabeth [Proust] and I were in our jobs around the same time,” she says. “We both came out of government into very large employers in an industry that needed to repair its reputation – and you have to do that through your own people. You can’t do that through other people.”

It was a tough environment to be in – with such a “confluence” of events – but it was also a wonderful place to learn about managing people and to make a difference.

“If you get that right, it is a sweet spot for business”, she says.

The power of people

Sherry says the experience she gained in HR was invaluable when she became CEO of the bank in New Zealand. “I think you know more about the levers you have available to you with the people in the organisation,” she says. “You also understand the value of having people really engaged in the business and problems you have if you don’t understand it – you know how powerful it can be.

“If you have been in the HR function, you also know the value of good communication. This is about talking regularly to people, giving context to people in the business,” she says.

Working in HR also gives a clear view of what good and bad management looks like, she says.

“I guess a lot of organisations now say: if you don’t get the people piece right, you don’t get the business right.”

While today there is certainly more recognition of the power and possibilities of good human resources, people who have made their entire careers out of HR are still no closer to the top.

Sherry, Wilson and Proust all make the point that CEOs and directors with HR experience don’t come from human resources. They merely pass though.

“You don’t want to stay [in HR] forever,” says Wilson. “I think the point is to have had a significant business role before you get to HR, and then move out laterally.”

Proust agrees: “If HR people say to me they would like to have a career like mine and go into directorships, if they have only done HR, I encourage them to go into line roles. I think you need to have done more than just HR.”

Into the C-Suite

The CEO of Deloitte in Australia, Giam Swiegers, has had a long association with human resources as a “people partner”, overseeing HR at various times in his career.

“I had to take charge of all recruitment, mall promotions, welfare, motivation and training,” he says of his early time in the role. “It was in the days when they thought chartered accountants could do anything”.

Swiegers says he sees no reason why career HR people could not become CEOs.

However a lack of self-belief afflicts many in the profession, he says. “I don’t think that many HR people have convinced themselves they can step up to the top job. They start off with the premise that nobody is going to take them seriously.”

Wilson says that many of the abilities developed in human resources are also key skills for CEOs.

“In terms of developing good leaders, I think a stint in the HR department is a great way to understand engagement, cultural development and how to get teams to work together,” he says.

A transformative experience

As far as Wilson is concerned, his experience in human resources dramatically changed his leadership style. “I used to be a bit of a command and control leader. I really did manage what was going around me quite vigorously to make sure that things were done well and were not left off,” he says.

He says he learnt how to get employees to “step up”.

“You get much more leverage out of that than you do from micro-managing from the top.

“I’m told I am a much nicer person than I was,” he says. “I was told I used to be aloof and didn’t relate well to them as people. Now, people enjoy working with me and they think it is lots of fun.”

Wilson says that examination of the companies that make the world’s best employers’ lists shows a strong correlation between high performance and strong human resources practices.

Giam Swiegers says HR might be let down by its own lack of self belief.Photo: Michele Mossop

“One definitely drives the other,” he says.

Proust spent three years at the ANZ bank as global head of HR during one of the most ambitious cultural changes in the history of banking. Called Breakout, the program sought to address behaviour and achieved global recognition as a Harvard Business School case study.

Proust says her understanding of the importance of the HR role changed once she started doing it: “I think it gave me a different perspective. I had seen it more as compliance than anything strategic, especially when I was in the public sector. It was about paying people on time and going through the processes of recruitment”.

“However, having the responsibility for people issues in the business, I think, gave me a really good perspective of the strategic issues and how the HR role had to operate to make sure the right people were recruited, and the appropriate training was provided and all the compliance issues had been taken care of.”

The heart of the matter

The CEO of outplacement company the Donington Group, Geoff Officer, is another former banking “graduate” and provides another neat link between Proust and Sherry.

Proust was chief executive of the City of Melbourne when she introduced Officer (a former Catholic priest and pioneer of outplacement services in New Zealand) to Sherry at Westpac.

Sherry offered him a job and he became general manager of people and performance at the bank in 2000.

Officer says he observed that both Proust (who had been a client when he worked in career transition at Morgan & Banks) and Sherry share a capacity to understand issues.

“Leadership is really about your capacity to understand the issues, get to the heart of them and know when to tap into your related experience. To know when you have got the right people advising you in terms of solutions,” he says.

“Ann [Sherry] was fantastic in retail banking, visiting the branches. She had the bank humming in New Zealand – just as she’s got Carnival humming.”

Swiegers says he firmly believes that the future of organisations will be decided by the quality of their people management.

A year ago, he heard then dean of the INSEAD business school, Dipak Jain, speak at a dinner.

“He said the only sustainable competitive advantage over the next decade is the manner in which we lead people. I really think that is absolutely right,” Swiegers says. He was so impressed with the message, he took his entire executive team to France in December to hear it from Jain himself.

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