Balancing the People Equation in the Midst of Business Challenges
People + Strategy: What is your perspective on the Great Resignation?
Indra Nooyi: Talent is becoming the single biggest competitive advantage for any company, especially as we shift to becoming more of a knowledge-based economy with all these new technologies. How we hire, retain, retrain and retire people is going to be the single biggest competitive advantage of many companies.
Even though the people equation is everybody’s responsibility, the CHRO has now been elevated to a very important position in the company. I cannot imagine a time when CHROs were as important as they are today. We have an acute shortage of talent, and people are everything.
P+S: CEOs have said for a while that people are our greatest asset. Is there a material shift in the mindset now?
Nooyi: The material shift is that in all the knowledge-worker jobs, we have a huge shortage of talent. Today it’s a seller’s market for those workers, not a buyer’s market. How you recruit people and onboard them, and how you allow them to have their job and families and life somehow in equilibrium, has become tremendously important.
For the first time in many years, leaders are going to have to focus on all of these issues as opposed to saying, “We’ll pay you a wage, we’ll have you work as many hours every day you can give us and then you go home.” Those days are over. Now we have to think about how to give people a level of equilibrium in every part of their life for two reasons.
One is that it is a seller’s market. Second is that the pandemic has caused a great reckoning. People have had time to stop and ask themselves, what’s important to me? Life is fleeting. One day we were open, another day we are shut. Who knows what tomorrow is going to bring? I think a lot of people are stopping and thinking about how they want to spend their time and the purpose of their job. Is money everything? Do I want to make a difference in society? That’s the one good thing about the pandemic in this incredible moment of stillness—it’s awakened many people’s consciousness.
P+S: What is the “Great Retention” strategy to provide a counterweight to the Great Resignation?
Nooyi: There’s been so much written about the Great Resignation. But few people are talking about what we are going to do about it. If we want to address the Great Resignation, we’re going to have to look at the different groups of employees who are leaving and understand what companies need to do to provide support structures to get them back into the workforce. This is particularly true for essential jobs, such as the caregivers in our communities. We need to bring them back and provide child care support, higher wages and more predictability in their jobs.
Now let’s talk about millennials, who are saying they want purpose in their job, or Gen Zs, who are saying they don’t want to be in this rat race anymore. They want to go to work knowing that they make a difference to society. That group is looking at society and seeing the inequities, and they’re seeing the struggles that many people are going through. They are asking, is my job going to allow me to do something about it? If it’s not, is my work adding to the problems in society, or is it addressing the problems in society?
You’ve got an awakening within that group. It’s not really about the purpose of the company as much as people asking themselves, why am I going to work every day? They want some hope that society is going to get better in the future. We cannot ignore them because this younger generation is telling us that we have a world that may be a little bit skewed, and that we all need to work together to make it a better place.
The internal culture you create around leadership matters. One thing we did in the last five years that I was CEO at PepsiCo was to shift our bonus structure to focus more on people. We used to have 75 percent of the annual bonus scores based on business results and 25 percent on their people management. We changed it to 50-50, and that was a big sign to people that people management is a very important aspect of your job as a leader.
The leaders welcomed it because they thought it was very consistent with the kind of company we were building. The key is to make sure that the three or four metrics that you are tracking are clearly articulated so that you are rewarding people only if they move the needle on the people agenda.
P+S: How politically active do you see companies having to be going forward?
Nooyi: Government cannot regulate everything, and corporations and capitalism need more humanity. Yes, you should maximize shareholder value, but at what cost? Where corporations can make a difference, they should. And some are. We have to awaken the consciousness of many companies.
P+S: How should companies be thinking about the ESG equation now?
Nooyi: ESG is often viewed as a priority that is separate from running the business, and it cannot be. Many people don’t understand ESG the way it should be understood. Second, there are too many metrics in ESG. We need to boil those goals down to the vital few, pick the ones that are most important to your company and deliver on them.
But make it an integral part of the company. Don’t make it a matter of just appointing an ESG person. It should be about making ESG part of the purpose of the company, so that you are welcome in every community as opposed to being viewed as somebody who creates a problem for my community.
P+S: What do you think is the toughest leadership challenge right now?
Nooyi: Leadership itself is tough because the world around us is changing in such profound ways. Let me mention two or three. One is that everything we know about the workplace is changing. The future of work, especially for workers, is nothing like we were used to. People went to work, you built a culture, you worked together in groups. We’re still trying to figure out the future of the workplace.
We still don’t know whether we’re going to have enough talent for the new disciplines we have to worry about. Digital technologies are pervading every part of the company. If you’re a tech company in Silicon Valley or Seattle or New York, you can recruit people. But if you’re an old-line consumer products company, how do you get the best people to come work for you to help you adopt all those technologies for your company?
It’s a real challenge for leaders today, and the challenge for HR people is multiplied. Leaders today have to worry about being a multinational, given the challenges we are seeing in global supply chains and geopolitics. Leaders are having to worry about foreign policy because they’re going to be players in the big intercountry conflicts. Should leaders lean in, or step back and say that’s politics; we’re going to keep running business?
P+S: Do you think it’s a whole new era for HR? Seeing someone like Leena Nair, the former CHRO at Unilever, taking over as CEO at Chanel, feels like a breakthrough moment.
Nooyi: When CFOs became CEOs, there was the same discussion. HR is a very important job. HR has to step up to the plate and say I count. I count in creating the right environment for our employees. I count in making sure that any bad behavior is visibly addressed as quickly as possible, and our policies and procedures will demonstrate that there will be no discrimination against anybody. It’s very important that HR leaders take their jobs very seriously. It’s not just about the performance that you deliver; how you deliver that matters equally now.
P+S: Final words of advice to C-suite leaders?
Nooyi: If your ranks of middle management are hit by the Great Resignation, you’re not going to have a pipeline building up to the C-suite. Anybody who’s a CEO or CHRO today should be looking at the people who are going to be the future of the company and putting your arms around them, hugging them and then keeping them happy.
If you have promising future leaders, hold onto those people for dear life. It’s more than just saying, I’m going to give you more money. Money talks, but it’s also about making people feel like they matter, their families matter, and that you understand their hopes, dreams and concerns. Don’t treat them like a tool of the trade. Treat them as real talent.
P+S: In your role as board director, if you were hiring a CEO, what are the key qualities you would look for?
Nooyi: One of the things I look for is their level of curiosity, which leads to being a lifelong learner. If people that you’re interviewing for the CEO job are not insatiably curious and creative about wanting to learn the next thing and the next thing and the next thing for the company, then they shouldn’t be CEO.
The second is, do they put the company before themselves? It’s very important that you are always thinking, as you consider decisions, is this good for the long-term health of the company versus is this good for my pocketbook in the short term? How much do they put the company before themselves?
Are they a good mentor to people? Can they spot talent? Can they develop it? How have they developed talent? Where has the talent gone? Are you unselfish in developing talent? Are you secure enough that you’re willing to develop talent? It takes an unusual skill to mentor and develop people. These are the kinds of questions I would ask.
P+S: You have children who are progressing through their own careers. Do you feel that their experiences at work are markedly different from your experiences in your own career?
Nooyi: The difference is that they’re more outspoken, and they call out issues in the workplace, which I never did when I was moving up. I didn’t think I could do that because I was the only woman, I was an immigrant and a person of color. I just put my head down and kept working and working and working. If it got too bad, I just quit, but I never created waves.
With my kids and their colleagues, if they don’t like something, they speak up, and they say that this is not the way you should be treating us. I love them for it, I’ll be honest with you, because they don’t put up with bad behavior. Their point is, treat us like real people. They want their time, they want their vacations, they do not want intrusion into their personal time. It’s a whole different workforce. For HR people to hire and keep this workforce engaged, you better learn what makes these people tick.