In this case, the ambitious young trainee, sensitive to the hidden message being given to him, replied to his boss, But Jerry, I thought I was doing well. Thus began the HR career of Bob Stack, currently executive director and chief human resources officer at Cadbury Schweppes, which employs about 38,000 people. Last year, the sweet and drinks company, known for brands such as Snapple, Dr Pepper and Dairy Milk chocolate, turned over 4,575 million and had a trading profit of 775 million.
In 1996, the companys chief executive John Sunderland introduced his boards Managing for Value strategy, which set the goal of doubling total shareowner return every four years. They missed their target by a short margin in the first period: total shareowner return grew by 84%.
Sunderland wrote in the companys annual report (2000), To double in four years is a stretching objective and we are pleased to have come so close to our goal. Much of this 84% was, no doubt, thanks to the strategic HR input supplied by Bob Stack and his team. This was a indeed a long journey for the Princeton engineer.
At Bristol-Myers, Stack found that he could apply the engineers tools of statistical analysis and problem solving to HR. The result, he recalls, was impressive. Line managers listened to his ideas and, unusually for those times, came back and asked HR to help implement them. One of these ideas was for an employee-relations office on the factory floor, then something of a management innovation.
Sitting in his grand Cadbury Schweppes office in Londons Berkeley Square, one of the few FTSE-100 HR directors to make it to the board, Stack is still excited by these memories. He tells me that he bumped into a woman recently from those early days at Bristol-Myers. She helped to run employee relations, literally in the middle of 40 production lines, three shifts a day, seven days a week. Now, Stack said, his face beaming, shes in charge.
After eight years at Bristol-Myers, a company Stack still remembers fondly, he joined American Can. During his 10 years there, the company went through tumultuous change, transforming itself from a packaging business to a financial services firm that became known as Primerica. In 1989, the changes continued. The company was taken over by Sandy Weill and he eventually turned it into Citigroup.
It was in these years that Stack worked for Al Dunlap, then the chief executive of the plastics division. Dunlap was later nicknamed Chainsaw Al because of his brutal cost-cutting programmes at Scott Paper and Sunbeam.
Stack considers courage to be an important attribute of any HR director and he needed plenty of it during this period. Surprisingly, Stack only clashed with the hot-tempered Dunlap once. It was not over the 4,000 redundancies he had to carry out (Stack recalls that the way to manage Dunlap was to be a step ahead of him). Rather, they fought over the apparently trivial issue of a Christmas party.
The incident, however, demonstrated Stacks preparedness to fight his corner when he felt strongly enough about something. Stack refused to agree to Dunlaps proposals for the party. He remembers what happened next: This was the only time the guy ever lost it with me in two years on the issue of a Christmas party. I said we cannot impose what you want to impose on people. He was literally pounding his fists on the table.
After the takeover, Stack remained with the firm for a year as its HR head. He recalls that he saw the companys 100-year-old culture destroyed in about one week. In the short time he remained there, Stack felt he could do some good.
For instance, during the integration process, which he led, he was able to protect employees pensions benefits, which he knew to be under threat. He recalls the stark reality that he faced at that time. It was clearly a modus operandi of the management to come in and cut costs, do draconian things overnight and issue edicts such as turn in all your company cars by Friday. They wanted to do away with personnel policies and job evaluations. Theirs was an attitude of we dont believe in those things, so get rid of them.
In 1990 Stack moved to Cadbury Schweppes, first as VP of HR in its global beverages business. He moved to the top HR job six years later. Stack wanted to work for a company with a positive attitude towards its people and Cadbury Schweppes needed an energetic HR director who could move the function up a gear.
It was the challenge and not the money (Stack took a small cut in pay) that attracted him to the post. Cadbury Schweppes was already envied the world over for its motivated workforce (many of whom prized the relative freedom they had to run their business units without too much central interference) and Stack was clear he did not want to upset something that was already working.
However, he and the board came to recognise that there would be an increasing need to pull the centre together, particularly when up against world giants such as Coca-Cola, Pepsi and Nestl. And, today, Stack can say that the company has managed to strike the balance between central direction and regional autonomy.
He points to a recent Cadbury Schweppes-Danone bid for the biscuit company Nabisco. There was no way, Stack claims, that they could have attempted this bid if they had not created a greater strategic focus at the centre (with central strategic and marketing functions being introduced for the first time). The bid failed in this instance, but the company was clearly able now to put its combined weight behind big initiatives.
It is no doubt helpful that Cadbury Schweppes puts its group HR director on the board. But Stack made it clear early on that he had certain preconditions. The most interesting demand read as follows: To provide an independent view to the board, namely the chairman and non-executive directors, on issues such as executive remuneration, fairness in employment practices, etc. If he had any worries about the CEO, he could speak directly to the chairman, for instance.
It was common practice, Stack recalls, for the finance director to have such powers. I felt that the HR director should have the same right too. He remembers the boards reaction. I think they were shocked but they approved it.
Now, Stack says, the non-executive directors will often come to him to discuss personalities or issues within the company. Stack does not believe that it is a God-given right, though, for HR directors to have this elevated role. He says that the people who confide in the HR director must have absolute faith that the conversation they have will remain confidential. Integrity is the HR directors first real test, says Stack.
Unfortunately, he continues, many HR professionals fail this test. Stack remembers one run-in he had with a finance director. He was furious when I would not reveal the source of some information. I said youve come to me with things. How would you feel if I went to the chief executive and told him about it? The finance director was silenced by this moot point.
During the past five years, Stack has sat at the top table as executive director and chief human resources officer. At 50 years of age, this is quite an achievement.
Many readers may well wonder what it is like when you reach these dizzy heights. Some may prefer to avoid it altogether. But one question that has been raised by Human Resources magazine is whether it is critical for a company to put HR on the board. Stack neatly ducks this question.
Rightly, no doubt, he argues that the first and most important thing a HR function needs is to be is respected at all levels of the company. There is no point in having someone on the board if the line management has no time for HR.
Stack has some good advice for those frustrated in their efforts to build this integral respect. The greatest measure of success for HR is when there is a business meeting with a non-HR agenda, either you are invited or someone wonders why HR is not there.
If this is not happening, Stack adds, force your way in. People respect the input youre going to bring as one of the key decision-makers. How well you understand the business will depend on how many meetings you slog your way through where you have a choice. And the choice is you dont need to go to that meeting because there is no HR agenda.
The other key way to raise HRs credibility, as everyone knows, is for HR people to really understand the business. But how to get the business acumen is trickier. Stack claims that some line experience, whether that is a weeks secondment to the distribution division or several years in general management, is very important. Even if the experience happened years ago, it still enables you to think about business issues in the right way.
But perhaps even more important for Stack is the ability to understand what good is. By this, he means understanding what makes the business, or one if its parts, succeed. This knowledge comes from a sharp awareness of what makes the company tick.
Stack points out that every company has a factory where its products or services are made. To understand what makes the guts of the organisation work you need to understand its factories. The more you know them the more likely you will know what good looks like. Is one born with this gift?
Like all good HR people, Stack is reluctant to admit that many people simply cant learn this stuff. It is partly vision and partly instinct, and such things are not always teachable. He says that when working with a factory manager on an issue, it is important to agree on what a good result looks like before applying HR solutions.
Stack describes what happens then. Youre then helping line managers define what good looks like. You can then work backwards and apply the HR. Our profession often gets criticised for telling the line what wont work. Now, theyll see that this person is here to help. By working together, theyll help you to understand the business. Once you get it right, you immediately improve your effectiveness.
But beware. There is a trap that Stack believes many HR people fall into. The HR function has to work much harder than any other, he says, to win credibility. And it must never let its guard down. One mistake, one bad apple and the game can be over. You need to be a bit of a sado-masochist to go into HR because people want to beat up on it. People make jokes about lawyers, but they actually want to beat up HR people.
Whatever they do right is expected to be right. That just gets you in the game. But if you dont pay people right, you dont hire right, you dont terminate them right and take care of the basics, you wont have credibility.
Stack points to outsourcing HR to prove his point. You might think you have given someone else the headache. Stack, who distrusts the whole concept of outsourcing HR, explains what would happen if a contractor does not manage the payroll properly. The managers will come to you and say, Why is the payroll screwed up? Youll say, Well, we outsourced it. Okay, fine, they will say, why is the payroll screwed up?.
So, the warning is clear. Build your functions credibility but never ever take your eye off the ball. Having done all of that well, you might be rewarded with an executive seat. And then the fun really begins. According to Stack you will then have at least seven roles to play. Everyone else, bar the chief executive, says Stack, has one role on the board. Except for the HR director. But when you consider what these consist of, you can see how much of a difference a good HR director can make.
First, Stack is an HR director and second, an equal representative on the board. So far, that seems fairly obvious. Third, he has to make sure he acts also as the conscience of the company. This does not duplicate the company secretarys role. Rather, Stack says, he is concerned to stamp out unethical or inappropriate behaviour at the lower levels. Hopefully, he says, many of the big fires have been put out before they reach the company secretary.
Fourth, he is the board facilitator. He takes care to see that the board is functioning well, getting the most out of its meetings and making sure they talk about the uncomfortable things too. The fifth role is to evaluate the people on the board, and the sixth is to be a coach to the chief executive.
On the latter, Stack would want to help John Sunderland maximise his communication skills with directors, managers and employees. Would Sunderland see his role that way? Stack says, Absolutely, yes. He points to one example where the board visited one of its businesses in South Africa.
After they had met with the local management, they rushed to the airport with a niggling feeling that they had not been clear enough. Sunderland later told Stack that he had been unhappy with how he closed the meeting and that Stack should have said something. Stack replied that he was right and that, in the rush, it had not occurred to him either.
Finally, the seventh role is to be a coach to all the board directors. The message is clear. This HR job, when done right, can be one of the best and most challenging around. Stack says there is no doubt the profession has raised its game in the past 25 years. If it is to raise it even more in the next 25, itll need many more Bob Stacks.
Further reading:
- Managing for Value: Its Not Just About the Numbers by Philippe C Haspeslagh, Tomo Noda and Fares Boulos, Harvard Business Review article (2001)
- The Cadbury Story by Carl Chinn and Adrian Cadbury (1998)
