When the CEO of Qwest Communications International asked Teresa Taylor to run human resources a few years ago, she thought she was being punished. Taylor was running a Qwest unit that sold network capacity to other companies and had no experience in HR. “I thought he was mad at me for something,” she says.
Her experience is becoming more common.
Companies as diverse as Microsoft, athenahealth, and Avnet have tapped managers from outside human resources to run their HR departments in recent years.
Of the 15 large-company chief HR officer changes that consultant Brian Wilkerson has tracked in the past five years, about one-third have been filled by non-HR executives, he says. That compares with maybe 10 percent of such appointments before, says Wilkerson, global practice director for talent management at Watson Wyatt Worldwide.
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The shift reflects the increased importance that chief executives and boards place on recruiting, retaining and grooming employees.
It also reflects a perception that some traditional HR professionals lack the deep understanding of business and financial issues that CEOs increasingly want, say consultants and recruiters.
“Many organizations are looking for their HR leader to be able to understand in great detail the business and the challenges of the business,” says Fran Luisi, principal of Charleston Partners, a Rumson, N.J., search firm that specializes in HR executives. Luisi says he increasingly looks for candidates whose experience extends beyond HR.
Corporate human-resource departments arose in the 1930s and '40s in the U.S., when companies sought labor-relations specialists to deal with unions and new government regulations, such as the minimum wage, says Sue Meisinger, CEO of the Society for Human Resource Management, a professional association.
Today, these departments typically oversee labor regulations, compensation, benefits, training, recruiting and retention. More recently, executives have asked HR to bolster productivity by measuring and improving workers' “engagement,” or emotional commitment to their jobs.
In 2005, Microsoft CEO Steve Ballmer asked Lisa Brummel – then running a billion-dollar consumer and retail division – to take over HR.
“‘We really don't have anybody who has deep experience to connect that great HR work with the employee base,”' Brummel recalls Ballmer telling her. Since then, she has sought suggestions from Microsoft employees in more than 50 meetings and streamlined the firm's career-development programs.
Taylor was approached in 2004 by Qwest's then-CEO Richard Notebaert. Notebaert, now retired from Qwest, says he wanted a business person running human resources.
“Sometimes, an HR professional can get hung up in the process and forget what the goal is,” he says. Taylor's marching orders were to negotiate a new union contract, and to better manage Qwest's health-care costs, she says.
To tackle health-care costs, she concentrated more of the company's business with one provider, UnitedHealth Group. She also pushed for a deeper understanding of work-force trends.
She approached the union contract “like a large business account,” she says, sharing information with the union and soliciting their ideas. She negotiated a new, lower wage scale for new call-center hires, she says. A spokesman for the Communications Workers of America, which represents most workers covered by the contract, said a knowledgeable person wasn't available to comment.
In 2007, Taylor became chief administrative officer as well as HR chief, with new responsibilities such as corporate social responsibility and corporate communications.