Interview with Scott Northcutt, human resources director at DHL
HRD Scott Northcutt has ambitious plans to cultivate the delivery firm's management talent - but that doesn't mean fast-tracking. As he tells Peter Crush, there's no substitute for years of service.
If it takes balls for a newly installed HRD to stand up to the regional CEOs of a multi-country organisation and ask what they think of HR, Scott Northcutt, HR director at global delivery firm DHL, doesn't seem to have felt at all fazed by it.
"It was pretty much the first thing I did when I joined the company," he says, recalling when he joined DHL, with responsibility for the Americas, in 2003. "I did the same in 2006 when I took over the global function. The overwhelming message I got was that DHL needed more great 'talent', and to make sure this talent was ready now and in the pipeline for the future."
This charismatic, American-twanged HRD - he flamboyantly describes talent management as his company's "game-changer", because it "can affect our position globally", while his employee opinion survey is the "ticket to the dance"- uses the word talent a lot in this interview. But it is only, one suspects, because it is evidently very important to him.
"In pockets there is an abundant supply of talent globally," he says. "But locally it is scarce, and people are rarely where you need them to be. We're acutely aware there is a dwindling skilled labour force at the same time as DHL is moving into new territories. CEOs there are rightly asking where their talent is going to come from."
For a company that distributes more than 900 million parcels every year (last year it included transporting the Beijing Olympic torch - no mean feat, because it had to be kept lit), Northcutt has his own pressure to deliver. Two years ago he set to work on the organisation's talent pipeline, aspiring to have 85% of all DHL's management come up from within the company. At the time only 60%-70% did, but at the start of 2009, Northcutt hit 83%, and is not far off reaching this goal. His reasoning for doing this is disarmingly to the point. "It's less expensive to develop your own talent," he says matter-of-factly. "We also found that when senior managers did leave, productivity went down by a significant margin."
But Northcutt also reveals another reason why he wants talent to flower from the inside: "You can hire brains (from the outside), but not relationships," he says. "It's much easier to get things done when people already have networks. Staff already believe in these people; they emerge as stronger leaders as a result."
To achieve his 85% target, Northcutt has focused on the company's top 700 global managers - those referred to internally as the next generation of leaders. But another point of difference is that these top potentials receive the very opposite of corporate fast-tracking. Northcutt believes passionately that length of service is what matters most, not necessarily flair and potential. In his view there is no substitute for time spent in a role.
"I'd rather managers spend a lot more time in their job, not less time," he argues. "If they change jobs every two years or three years, I do not believe they are ready to become the next generation of leaders. My aim is for them to have a minimum of three to five years in the same job. Tenure can always be longer, the challenge is trying to keep it higher."
Insisting career-hungry managers stay in the same role is no easy task, but to keep them engaged, yet another proven HR principle is turned on its head. "The typical 70/20/10 ratio of training, outside education and mentoring is inverted in DHL," he says. "Outside education and training contributes just 10% of a manager's development. Mentoring represents the 20%. The remaining 70% comprises what we call 'stretch assignments'."
Stretch assignments feed into DHL's talent management scorecard - an HR system that tracks the company's high potentials. They form an integral part of each high potential's development plan - one that is discussed with them in detail by an HR professional each quarter.
"I say give people experience first, before they move on," says Northcutt. "Stretch assignments are deliberately hard, they are intended to cause failure, but the point we make clear is that when failure happens it does not mean each person is a failure themselves. It's merely an indicator of whether they are ready to do what they want to do with their careers."
Two types of assignment programmes exist: Rapid - working one level above your current role (it was launched in the Sub Saharan Africa region in 2007, and is now rolling out in EMEA and US), and International Exchange. The former is a six to eight-week project, a real assignment in which participants are accountable for real-life decisions they make. To be put on it, participating managers must be rated as 'fully meets' in DHL's complicated development criteria. The latter is a three to five-month secondment that cannot be done anywhere but in a different country. For both types of stretch assignments managers have to have been nominated by their direct reports.
"It's so darn practical," says Northcutt, slipping into less corporate-speak. "Both programmes are kind of similar to what every company ought to do, but I don't think anyone packages it up like we do."
But the project that really gets him excited is called OSCAR. "In the end, this will be one of the neatest things we'll do," he says enthusiastically. OSCAR is a sort of 'Top Trumps' for business roles in DHL, where the details of every role are outlined in a compare and contrast way. "Take the country manager role," he explains. "Say an aspiring manager wants to be that person. Well, now you can pull out a card on this specific role, and have it show the exact experiences needed to become one of them."
So far nine roles have been described in this way. Although this may not sound very many, by the end of this year Northcutt says he hopes to have codified all DHL jobs in the same way. Uniquely, he promises to interview existing staff at each of the role-levels described, to get the most accurate description from them of the characteristics and skills needed.
"We're not adding bootstraps, we're adding structure," he says, describing this time-consuming process. "There won't be any surprises either. If people think they've already got the skills of a role above them, it's likely we've already identified them. But, just in case we have missed them, this new methodology will remedy the problem." He adds: "It really does give the opportunity for, say, a courier driver, to know what he needs to know to be a manager or beyond."
Unlike other HRDs who will say everyone is talent but then will only focus on those at the very top, Northcutt truly sees the latent talent in everyone. "We do concentrate on talent at the top," he admits, "but that doesn't mean we ignore those below that. In America, for example, we have recently introduced the Certified International Specialist (CIS) programme. Every employee, including the CEO, has to be certified in it, and it covers all the basic questions any customer might ask of DHL in any aspect of the business. The pass mark is a high 98%, and staff must re-certify every year in order to work for us."
This scheme is now being rolled out to the entire organisation, and so far 95% of the business has been covered. "This sends out the message that we're all on the same team; it's just that we play in different positions," adds Northcutt. He reinforces the point again: "What I'm also saying is that I am fine if some people don't want to grow and move up to other roles, but I at least want to know that staff will be better in their jobs next year than they were this year."
Just keeping on top of these projects is enough to keep any HRD busy, but this HR director says employees are just as important to involve too. "I've worked with line management; that's why I've got this perspective," he muses. Not only are employees involved in OSCAR, but there are more than 1,000 employee action teams worldwide headed by ordinary staff who are tasked with bringing DHL to account for doing what it promised to do on the back of its employee opinion survey.
"HR is really just a service," Northcutt says, distancing himself from taking all the glory. "Our job is to set others up for success; our job is to make the jobs of managers easier. We do all the heavy lifting behind the scenes, and that's fine with me. Why? Because deep down I know we are aligned to the business, which is fine with me."
Working hard with line managers is a trick he says he learned in his previous vice president role at Wal-Mart. "The whole approach of that company is that the line manager is responsible for HR," he says. "Programmes that fail are always those that are flavour of the month. I'd rather work with managers to do fewer projects but know that they are more effective," he says.
One thing that certainly will not change are his 'chats' with each of DHL's national CEOs. "I've talked to them every year since I've been here," he says unapologetically, almost proudly. "I told them what I'm accountable for, and what I will deliver to them. By the same token, I know what their responsibilities are as well. That way it's evident to everybody what we're all here for."
He concludes: "You can go as fast as you want in this company - I call it the autobahn approach." And it certainly seems to be working for Northcutt.
1985: Graduated with an MA from Miami University
1999: Executive VP, human resources, Fleming Companies
Prior to this, he was VP with Wal-Mart Stores, Clayton Homes and the Dollar General Corporation
2003: Joined DHL as senior VP, DHL human resources, Americas, Asia Pacific and emerging markets
2006: Global executive, VP for human resources, DHL Express
Northcutt is married with three children