CHRO Alignment Series: Boardroom Synergy, Featuring Mastercard

Mo Fathelbab: [00:00:00] Welcome to today's episode of People and Strategy. I'm your host, Mo Fathelbab, president of International Facilitators Organization, People and Strategy is a podcast from the SHRM Executive Network, the premier network of executives in the field of human resources. Each week we bring you in-depth conversations with the country's top HR executives and thought leaders.

For today's conversation, I'm excited to be joined by Michael Ferro, MasterCard, fellow former Chief People Officer MasterCard. This episode is part of our CHRO Alignment podcast series. Today we'll be talking about CHRO, board alignment. Welcome, Michael. It's great to be here. Thanks, Mo, for the introduction.

Great to have you with us. So Michael t Kassoff, tell us how you landed up as Chief People Officer at MasterCard and who you reported up to. Okay, so

Michael Fraccaro: I've had this, [00:01:00] um, interesting career. Um, started off as a school teacher in Sydney and, um, then branched out and worked in a number of great organizations in various HR positions.

Found myself in the us. Um, joined a MasterCard at the end of 2012. Then it was in June of 2016 that I was appointed to the chief people officer role, um, at MasterCard, and I reported directly to the CEO at the time, RJ Bunger, uh, who is now the president of the World Bank. And I worked with, um, uh, his successor Michael Miba, as well as Tim Murphy, um, in the role of Chief People Officer up until April of this year.

Um, and then April of this year, uh, we did a transition in terms of a, a new chief people officer as I moved on, um, and became a senior fellow here at MasterCard. And I'm here until the end of the year of 2025. [00:02:00]

Mo Fathelbab: And you started as a school teacher. Well, that is a lovely, uh, career trajectory. Wonderful. Um, so Michael, from your perspective as a former HR leader, how would you describe the symbiotic relationship between the CHRO and the board?

Michael Fraccaro: Yeah, it's a really important, uh, relationship between, uh, the board and the chief people officer or the, or the CHO. And the reason why it's such an important one, one is really around, um, you are the, you're the. And I, uh, for the organization to the board. Um, and therefore when you are presenting to the board, when you are at the board meetings as well.

Um, quite often they're very interested in terms of not just the business strategy, but really around how can we enable that business strategy through the people and do we have the right leaders? Do we have the right compensation structures? Do we have the right culture? Um, and therefore it's a [00:03:00] relationship that's very important.

Um, it's two-way, it's collaborative. Um, it is. Really foundational to have an element of trust, um, in that relationship. Um, and the board is looking for, um, and from the chief people officer, um, insights around what's happening in the organization. They're looking for thought leadership. As well around how the organization is not just thinking about how we're going to execute, particularly at MasterCard, for example, our payment strategy, but how we're going to really enable it.

Do we have the right skills in place, um, to do that. And I think the, the other aspect is around openness. Um, and the reason why this is an important aspect around this relationship between the board, um, and the CHRO is that. Sometimes the board, um, have got a lot of wisdom. They've got tremendous experiences drawn from their own [00:04:00] specific careers, and they're on the board to help stimulate thinking.

And therefore the CHRO, um, also has to have a degree of openness to actually learn and listen. Um, and actually to pick up on things that you may not have considered because their, their lens is much more wider. And so it is two way. That's why it's really important to have this productive relationship, foundational BA based on trust.

Um, and that's really key. And how do you build that trust, Michael? You build a trust over time. Um, building relationships, obviously there's an aspect around what happens, um, in the boardroom itself, but quite often. The board, uh, meetings and so forth are very compressed timeframes. Typically, they're, they're two days, um, of meetings and therefore picking up the phone, um, reaching out, uh, to various directors and, and board members.

Um, obviously the most obvious relationship and [00:05:00] connection point is going to be the, the human resource and comp committee, because quite often that is the, the one area where there's quite a lot of discussion about executive compensation, benefits programs, share program, all those kinds of things. And therefore building the relationship outside of the, the formal meetings is a really important part of it.

Um, and then the other way is really being, um, open around, you know. What is it that they're looking for and, um, and how they can help you, um, in that journey. So there, there are a couple of things that we've worked on.

Mo Fathelbab: Uh, so Michael, today you're supporting MasterCard as a fellow. What does this role entail and what has this new perspective on the business taught you?

Michael Fraccaro: Yeah, so the role of a fellow, uh, we introduced it a few years ago with the idea of, uh. Preserving, uh, institutional knowledge in the organization for a period of time. And so we've had a few, uh, [00:06:00] executives, for example, our former head of privacy and data, um, our former, uh, chief and Information Security officer, uh, becoming fellows.

And the idea is that they continue to represent MasterCard on industry forums. To demonstrate thought leadership as well as having a, a seamless transition of knowledge into the organization, a knowledge transfer. And equally in my role, since I stepped down from the CHRO position in April this year, I've stayed on as a fellow, um, helping obviously with the, the transition, but continuing to represent MasterCard as an ambassador, um, at external forums, things like this, doing podcasts on contemporary.

Areas on human capital and culture, leadership and succession. So that's how we've been using, uh, the role of the fellow. And my time will come to an end at the end of this year. Um, but the idea of this fellow is something that we [00:07:00] will keep as a, as a strategy, uh, to help in terms of preserving some of that institutional knowledge, but for certain key individuals.

Mo Fathelbab: Wonderful, Michael, we're now gonna move to our game segment and we have trivia. Uh, we're gonna do some multiple choice trivia based on recent research on business trends. Uh, you'll hear three choices for each question. Make your best guess. Uh, there will be three questions, and afterwards we'll discuss the impact.

Of these trends. So here we go. The evolving role of the CHRO in the boardroom, what percentage of independent directors on s and p 500 corporate boards disclosed human capital related qualifications and skills? In 2024? Is it 16%, 25%, or 38%? 16%. Thank you. The next question. Based on this report, what is the top workforce related topic?

Corporate board secretaries foresee [00:08:00] gaining more prominence in CHRO board interactions over the next three years? Is it AI and automation impacts on the workforce? Is it addressing generational shifts in the workforce, or is it workforce crisis management? Ai, ai, and automation. Okay. Let's go to the next question.

According to the conference board's 2025 survey, what percentage of companies reported increased CHRO engagement with the board over the past three years? Is it 50? Is it 80? Is it 70 50? Okay, Michael, I hate to tell you, um, your answers, uh, were incorrect for, for question number one, the answer is 38%. This demonstrates that qualifications and skills are highly valued by corporate boards.

For question number two, the answer is addressing generational [00:09:00] shifts in the workforce ranked at 61%. Michael, you are very close. AI is the second highest ranked topic at 49%. For question number three, the answer is 70%, which is a bit higher than one might expect. The value of the CHRO seems to be increasing in value.

Companies are seeing a strong increase in CHRO engagement with the board. So let's unpack the data a bit. Uh, based on your corporate experience, why is the CHRO board relationship growing in engagement? And what shifts have you personally seen over the last few years?

Michael Fraccaro: Yeah, so I think the, um, the change has been quite significant.

Um, so if we think about workforce trends, so the shifting change of skills needed, um, the automation, um, that's a, a significant topic and I think the boards are very much focused around. What are [00:10:00] organizations doing? And that was HR really leading the way around The changes that are happening is around these technological shifts.

So that's sort of one, I think the other one is around geopolitical, um, issues as well. So obviously around the world there is a, a tremendous amount of geopolitical themes that are emerging and, um. Boards are very interested in how organizations are threading the needle and navigating through all of those, uh, debates and changes and issues.

Um, and fundamentally making sure that the organization and its employees remain safe and focused on, uh, what we can control. So I think that's a big, um, area of focus. Um, I think the other one is regulatory, uh, change as well. There's a lot of regulatory, um, shifts, whether it's to do with things like pay transparency as an example, or DEI and so forth.

Um, and so these are significant topics that the [00:11:00] board is really interested in, around how is the organization navigating through all of these particular, um, changes. In the workforce. And I think the other one, um, that does come up is around civility, um, in the workforce. How do you ensure that you are maintaining a level of culture and having the right level?

There you go. Having the right level of dialogue, um, in the workplace. And as you know, uh, with MasterCard, we talk a lot about iq. Eq. We also talk about this notion about the dq, the decency quotient. Um, which is really about how do we ensure, um, that we're there through the, the good times, but more importantly, we're also there for our employees and our customers through the difficult times.

And that's very much embedded into our, our corporate culture and what we call the MasterCard way. So all of these things are really important, um, and important for the HR leader to help, uh, provide some level of clarity, um, [00:12:00] as well as some level of understanding to, um, the members of the board because they're clearly gonna have questions about this, and whether any of those particular factors or all of them.

Have a risk to the performance and the execution of the strategy.

Mo Fathelbab: Michael, I love this decency quotient concept. It's the first time I hear it. Can you give us an example?

Michael Fraccaro: Yeah. I mean, we, we talk about this notion of, um, having our hand on your back not in your face during, uh, times of crisis. So if you think about the pandemic as the most obvious one, um, as a crisis.

Um, we went out, uh, to all employees and said, uh, during the period of, of COVID, um, there'd be no COVID road job layoffs. Um, everyone kept their job and it's things like that, um, that people really see that we take a, a stand on particular issues that we are helping to navigate through these particular changes.

And [00:13:00] so that's sort of one we also, um, have embedded into our MasterCard way. Where 50% of our year-end compensation is on the what, and 50% is on the how. So the behaviors and how we show up for each other is just as important as to what we are delivering, um, to the, to the bottom line. So is that based on

Mo Fathelbab: a feedback process?

Michael Fraccaro: Based on a multi-source feedback process, which we're in the, in the midst of right now. And so this is the third year that we've been doing this, um, multisource feedback and this, uh, 50 50 on the, uh, the compensation. So these are really important aspects around how do you embed, um, and scale culture, and particularly this notion about the MasterCard way and the decency quotient in the way that we navigate through, uh, through different changes, um, in our business.

Mo Fathelbab: Michael, as we think about the top workforce related topics gaining prominence, n [00:14:00] CHRO, board interactions, research revealed that addressing generational shifts was ranked significantly higher at 61% than AI and automation impacts on the workforce at 49%. How do you foresee the aging work workforce impacting the corporate landscape?

Michael Fraccaro: Yeah, it's a, it's an interesting topic and, and it's interesting because. It depends who you ask, right? Um, so there are certain markets and regions where, you know, generational shifts. It's more around, you know, a younger, um, workforce. So if I think about our colleagues in Middle East Africa where the average age is under 30, that is a very, very different.

Set of opportunities. Um, and I would say equally in some of them more developed mature markets like here in the us um, where we do have an aging and a different, uh, workforce. Um, we also see that as an opportunity. And so this whole notion about. [00:15:00] Generational shifts is one where we say, well, look, we've gotta take a step back.

Um, this is more of a strategic opportunity on how we can lean into this. And if we do have, you know, five different generations in our workforce, how do we make the best of all of those different skills and capabilities and, um, mindsets work together to really bring value to the organization and to the culture.

So we view it in that particular way. Um, I think there are a couple of aspects from a practical perspective that we look at. So things like, um, how do we think about the reskilling and upskilling, um, and how do we do that? And so we invest, um, a significant amount of time and effort around looking at entry level employees coming into the organization as well as people like me who failed your test.

About how do we continue to be updated on emerging [00:16:00] trends that are happening in the, in the world that we, we live in, and what skills that I may need to embrace, um, as a mature age worker. So the upskilling and reskilling is something very fundamental, and you have to pivot. Um, the way that you deliver your learning and your training, depending on who your audience is.

So that's sort of one aspect. One example, uh, we have a platform, an internal talent marketplace called Unlock. And we just celebrated a few weeks ago, um, a million project hours that have gone through Unlocked. And what unlocked does, it connects individuals. With opportunities and the opportunities could be a project that a manager in a different location, um, is looking for resources and the resource, the supply side.

Uh, the individual who has got some capacity to go and allocate themselves will be matched to a project, [00:17:00] and this is an opportunity for that individual to upskill, to learn, um, from new colleagues as well. Without necessarily having to relocate from their current location. Um, and to achieve a million project hours through this platform is really remarkable.

And where we've seen, uh, the greatest strength is particularly in some of those markets where we have a multi-generational workforce. We've got, um, early start career hires that are looking for opportunities to broaden their, their skill sets. For the, the more mature age workers like myself, um, having an opportunity to learn as well through reverse mentoring on skills that, um, a younger, uh, employee may actually have more knowledge in a particular area.

So there is significant value and benefit in actually having a platform like this to have this cross collaboration of skills and [00:18:00] learning. So that's sort of that. Um. The other aspects is also thinking through things like, um, your organizational strategy and how you think about, um, org structure and org design as well.

Um, and how you can ensure that everyone thrives in an environment where there are these multi-generational, um, employees in your workforce. So there's some of the things that we've been really

Mo Fathelbab: focused on and, uh, thank you again. I wanna highlight this concept of reverse mentoring. Uh, another, uh, new term for me, so thank you.

And uh, I just love that idea that you can learn from the younger folks as well, right? Exactly.

Michael Fraccaro: Yeah. Actually can

Mo Fathelbab: learn a lot more.

Michael Fraccaro: I learn a lot from my kids is an example on a whole range of different things. So, um, and I think that's a critical aspect mode. It's like, um, having this openness to learn and to share and also to acknowledge where you've got some shortcomings, right?

And, um, and that. Mindset is a [00:19:00] really critical enabler as we think through, you know, the future of work and everyone has an opportunity to grow and, and to learn from each other. It goes hand in hand with the feedback culture that you've put in place. Exactly, yeah. In, in fact, one of the, um, attributes or behaviors we talk about helping others be great.

Um, and this is really, again, a behavior and a mindset around what can I be doing, um, to help someone else, uh, perform better in their job. It could be my coworker, it could be my teammate, it could be my peer, it could be my boss. Um, but I think that mindset is a really important attribute that we've embedded into, uh, the MasterCard way.

Mo Fathelbab: That is also a mindset of sharing and, and generosity and giving. It

Michael Fraccaro: is. Um, and also an attitude of taking some risks. We have another one which is called Learn and Pivot. So quite often, um, the biggest learning is actually from a mistake, um, or an error. Um, and learning and pivoting is [00:20:00] really around taking that opportunity to be, you know, thoughtful in your risk taking, but also be prepared, um, to take a step back and say, what have I learned from that?

I now need to pivot because the circumstances have changed or I got it wrong. Um, and I think that's another important aspect of, you know, a growth mindset in an organization that wants to be here, not just 60 years, but you know, another 160 years or beyond.

Mo Fathelbab: Uh, Michael, if you were in the boardroom right now, what advice would you give to leaders to better address the generational shifts in the workforce?

Michael Fraccaro: I think it does come back to, you know, seeing this as a, a strategic opportunity. Um, thinking about the opportunity to reskill, upskill. Um, that it's not a one size fits all approach. So being very adaptive in terms of your, your strategy and how you are executing on that, um, and that this point about that everyone can thrive in the right environment is also [00:21:00] an important aspect of the way that I would think about a discussion on this particular topic.

On generational, uh, differences in the organization.

Mo Fathelbab: Everyone can thrive. Beautiful. Uh, Michael, when it comes to ai, what should the CHRO and the boardroom be focused on? What's the impact

Michael Fraccaro: on our business? Um, but also importantly, what is the impact in terms of productivity, um, and workforce transformation?

So, uh, this is a, a really important question. I think it's a role that, um, CHROs can really lean into. So a couple of things. One is around, um, this isn't just about. A technological shift. Um, it is profound. Um, but this is also a workforce shift as well. So the way that we think about, um, how we construct jobs or how we think about, um, how we leverage these tools for enhancing employee experience.

Um. [00:22:00] There, there are a couple of the, the real examples, and if you think about that MIT study, uh, that came out a few months ago, which basically reported that I think 95% of companies have seen zero productivity, um, gains or return on their AI investments. Um, this represents I either a big shock or an opportunity around how much more we've got to do to be able to really leverage.

The attributes, the positive aspects of around ai. So couple of the things that we've been doing, one is around, uh, we've been leveraging some of the AI tools ourselves within the HR function. So things like the internal talent marketplace that I mentioned, uh, which we call unlocked, has got AI and machine learning within that.

We've looked at, um, some low hanging fruit on things like in our talent acquisition, uh, area, uh, looking at things like scheduling to enhance, um, the speed in [00:23:00] which we can have a better, um, candidate and manager or hiring manager experience on just basic activities like hiring. Um, and we continue to look at other things like, um, executive coaching, coaching in a pocket.

So we've actually got an app which helps. People managers be able to engage with a, with a chat, um, which is AI empowered within a framework. So it's got some governance in place, um, that helps all of our people managers prepare for a discussion around performance management or career development. And it helps them within the context of the MasterCard language as well.

So there are a number of things, uh, that we've been piloting and using that actually helps us go through those aspects. The big question from a board is like, these are, these are really important and these are great, um, areas to start with, but how we thinking about workforce transformation? Which [00:24:00] jobs do we see?

Can leverage AI from a productivity perspective. Are there jobs that are going to be impacted, um, that we may need to think about reskilling, upskilling, or redeploying to areas where we're looking to grow? And these are significant questions and I think from an HR perspective, we've gotta be front and center of these discussions.

We need to have, um, these conversations backed by data and insights. Then this mindset around these shifts are happening and we've gotta embrace them. Um, and we've gotta get the organization muscle ready for this change and to avoid the fear, um, around another technological change, but more about embracing it.

And so we've done a lot of things like, um. Uh, during our meeting free days, as an example, we would have, um, AI learning days, and we've, we've created various curated learning, uh, pathways [00:25:00] for everyone in the organization to be able to learn and to upskill. Um, there's a heavy focus on things like.

Governance, um, ethics and privacy as well. Um, and so the compliance aspect as well is very important as well, because we're dealing with data and we've gotta make sure that there's a, a level of integrity, um, and protections and security around those kinds of things. So these are all the kinds of, um, questions or themes, uh, from an HR perspective and the board.

They want to see how we are thinking about it, how we are planning this multi-year journey. Of embracing ai, but in AI and enabling a good that comes out of it and preparing for some of the potential risks as well, uh, that come with these, uh, these technologies.

Mo Fathelbab: Great stuff, Michael. Thank you for all that.

So, zooming out a bit and looking at the CHRO, uh, boardroom relationship, what is the biggest communication gap that you've seen [00:26:00] and how can it be improved?

Michael Fraccaro: I think that the one thing I would say is, is more around, um. Clarifying roles and responsibilities. Um, and, and I think I, I hear this quite often from other CHS as well.

What's the role of the board and the, the role of the board is, um, governance. It's fiduciary. Obviously, they have a big role to play on things like, um, decisions on executive compensation, um, and being able to ask the questions about are we heading in the right direction from a strategic perspective, their involvement in things like, um, co succession.

Um, and the quality and depth of talent that we've got to be able to enable our, our business. So they're important things and I think where it sometimes can get misaligned, which gets back to your question is around, um, if the board starts to move over the line in terms of getting into management versus [00:27:00] taking a much more higher level approach to governance.

Um, and so. That, that's a fine line. And sometimes you've gotta make sure, um, that you are, you are, you are steering it in the right direction, um, and allowing the board to know that, hey, these are, these are good suggestions, but allow me, c, e, o, um, to focus on the things that I can do to execute on the strategy.

Because otherwise it can get very um. Fuzzy in terms of the relationship between the board's role and and management role. And I think that's a really important aspect and it's an important learning as well for any new CHRO to really make sure that it's not going too far one way or the other in particular.

Mo Fathelbab: That is, uh, critical. Otherwise you get misdirection from many different folks and, uh, that could be really difficult. I, I, I've been there, so thank you for that. Um, so for someone new to a [00:28:00] board, what advice would you give them to get the CHRO board partnership off on the right start? Yeah, so

Michael Fraccaro: the best, the best way is obviously building that.

The foundation as I started at the beginning about trust, and this is all about relationships. So I remember when I first became Chief People Officer at MasterCard, I actually flew out to meet, um, our chair of the compensation committee and had dinner, uh, with him. He was based in, in Mexico, um, and um, and investing that time.

With the, um, with the directors is a really important aspect of building that relationship, building that trust, um, understanding what are themes that are important to them so you can. Consider and factor them in to your own planning and how you are looking at presenting, uh, yourself and your function to, uh, to the board.

So that, I'd say that would be a, a real key one. And the other one is, [00:29:00] um, it's iterating as well. So an example would be that whenever I would develop our, uh, update on our people strategy, I would leverage key members of the board and to share with them, Hey, here is my. Updated draft of the, of the people strategy.

Give me your thoughts. What am I, what am I missing? What are the areas that I should be focusing more on? And that iterative approach is really important. So I think having that relationship is a really important aspect. 'cause it helps you, it helps certainly help me, um, but also builds this, this relationship because they're there, um, to help the organization be successful.

Um, they're not there to, to pick holes or to, to be critical. They're there to give you feedback and insights. And I think if you take that mindset around leveraging them as a partner, um, in the success of the people and, uh, and the company, I think it's the right place to, to start. And [00:30:00] it's a, it's a foundation for a successful relationship

Mo Fathelbab: between the board and the CHRO.

Wonderful, wonderful. So Michael, as we wrap up our conversation, uh, with some final words here from you as former HR leader, what do you wish more boardroom leaders understood about the CHRO role? The role of CHRO

Michael Fraccaro: is a, a value creation role. Um, I think that's number one. It's not just a support function, but really an enabler.

And so here at MasterCard we talk about the key enablers for our business being. Our brand. Our technology, our data, and clearly our people. Um, and so really leveraging that aspect is really important. So it's a value creator. I think the second one is around, uh, that talent is a critical enabler for the, the business as well.

And so we spend quite a lot of time, uh, with the board, not just on the business strategy, but, but making sure [00:31:00] that. We have the right capabilities to execute on it and the right culture to do that as well. So I think that would be the second. Um, the third one would be around, uh, risk management as well.

So we think about risk, um, in business, uh, discussions, you know, security risk, data risk and so forth. Um, but equally important is human capital risk. And I think the CHRO needs to lean into this aspect around, you know, how we thinking about human capital risk, um, and bringing that into the conversation, whether it's to do with, um, reputational risk, whether it's to do with succession risk.

Um, skill risk. I mean, there's a whole range of of dip. People data, uh, risk. So there's a whole range of different things. And so, uh, risk is more than just a compliance aspect. It's a real key aspect. Um, and I think the final one I would say is around how are you really demonstrating to the [00:32:00] board that you are looking at leadership development and succession planning, not as a single event, um, but part of your operating system.

I think the more enlightened boards are really seeing and embracing that aspect and the role and responsibility they have in shepherding, um, and ensuring that, that they're, um, working together with the CEO in particular and the CHRO and ensuring that you're building something that's really going to last forever.

Um, and that's a really important

Mo Fathelbab: aspect as well. And that's where we'll end it for this episode of People and Strategy. A huge thanks to Michael for your valuable insights. Thank you, Mo. Real pleasure. Thanks for tuning in. You could follow the People and Strategy podcast wherever you get your podcast.

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