Alan Mulally is one of the most acclaimed executives in the United States. He led Boeing's commercial aviation business to success after the attacks of Sept. 11, 2001, which had devastated the airline industry. Subsequently, Henry Ford's great-grandson hired him to rescue Ford Motor Co. from financial disaster. Mulally brought Ford from the brink of ruin to a leading position in the automotive industry. Ford's stock went from a low of $1 per share to more than $18 per share during his service, a 1,700 percent improvement. At a unionized company, his employee approval rating was over 90 percent. You can learn more of his story in the best-selling book, American Icon: Alan Mulally and the Fight to Save Ford Motor Company (Currency, 2013).
Now retired as the CEO of Ford and serving on the boards of Alphabet, Google, Mayo Clinic and Carbon3D, Mulally reflects on lessons learned about working together and the importance of the HR profession.
Working Together, Continuous Improvement and HR
Mulally has nurtured what he calls "our working together management system." It's a value creation road map for including stakeholders in the business. People work together as a lean, global enterprise, pursuing a compelling vision with a comprehensive strategy and a relentless implementation plan. This includes making a commitment to a culture that supports "a smart, healthy and high-performance organization based on humility, love, service and deep respect for all participants and stakeholders, where we help each other individually and as a team while continuing to grow and improve."
Continuous improvement isn't just for products and services, Mulally said. "It is also for all the people involved. And no group is more important and can make more of a difference in this continuous improvement than HR."
HR as a Process Owner and Leader
Most corporate leaders undervalue the HR profession. "All too often, HR is not part of the leadership team," said Mulally, who believes this is a huge lost opportunity for the entire organization. "HR can and should be part of the leadership team and the process owner for everything associated with the employees, including recruitment, performance management and continuous leadership development. When the leadership team decides on organization goals, objectives and initiatives, including what will be measured and when, HR's job is to hold all the elements of the company accountable for ensuring that they deeply understand and keep their commitments.
"It is critical that HR be part of the leadership team and lead and nurture the people processes that the entire leadership team follows."
I shared with Mulally my experience when I asked a senior HR professional to explain the manufacturing process at her company. Although she'd been there for 12 years, her response was, "I have no idea. I'm in HR."
"At any of our companies," Mulally said, "that would never happen."
At the companies he led, Mulally established weekly three-hour business process review (BPR) meetings. At these meetings, the person in charge of each department, group or unit presented his or her team's goals and candidly shared the team's progress against the plan to support the organization's objectives. The other leaders then offered support, input, suggestions and help.
"HR was a full, active member of our leadership team and our BPRs, which were critical to our success. Our HR leader knew everything about the business, whether it had to do with product development, finance, IT [information technology], manufacturing or anything else of importance." Mulally said this knowledge enabled HR to effectively contribute its expertise and service to the organization and its vision, strategy and plan.
From Shareholder to Stakeholder
For most of his career, Mulally was a member of the Business Roundtable, an organization made up of CEOs from the biggest companies in the U.S. Mulally encouraged the organization to expand the organization's mission statement, which centered on maximizing shareholder value to include and create value for all of the stakeholders.
Last year, the Business Roundtable made the shift from shareholder to stakeholder. This means CEOs are not only charged with making money for owners, but they also must add value for all of the stakeholders, which include customers, employees, suppliers, the broader community and the environment.
Mulally believes this dramatic shift in CEO responsibility creates a significant opportunity for HR. A broader focus on stakeholders rather than on shareholders reinforces the need for and importance of HR in making sure objectives, needs and values are being served for and by all.
Mulally is a huge proponent of personal development coaching, having been coached himself by Marshall Goldsmith. "If you work in HR for a company that supports coaching, you have a great job and opportunity to continuously improve the performance of the individuals and the team. In addition to your own coaching work, you get to vet and deploy coaches throughout the organization to serve."
Mulally added that "HR oversees the employees' 360-degree assessment, performance management, and employee growth and development as the people process owner, coach and facilitator. This is important, exciting and fun!"
I told Mulally about a retired CHRO friend of mine who began his career in operations. On his first day at work, my friend was shown around by his new boss, the vice president of operations. "As he took me down the hall, we passed an office that said 'personnel department,' " my friend explained. "My boss said, 'Don't go in there unless you want to feel small and stupid.' "
Mulally's reaction? "Not in our companies!" Mulally believes humility is essential for all leaders. "It's never about you; it's about us and our company vision, strategy and plan to serve all the stakeholders and the greater good."
In American Icon, author Bryce Hoffman points out that most of the decisions that saved Ford were made as a group working together.
"I believe strongly in humility, love and service. No matter what the occasion or circumstance, we can remain humble and respect others' dignity. This will enable everyone to bring their best selves to work together to accomplish the organization's objectives."
Humble leaders see their job as serving others. According to Mulally, "that's exactly what good HR does."
Mulally believes there is a tremendous opportunity to improve HR-administered progressive discipline. (In this column, you can read my thoughts on this topic.) He recommends replacing write-ups, warnings and punishment with timely and respectful conversations. If things aren't working out with an employee, see if there are development actions that might address the problem, and get a commitment to the agreed culture, operational process and expected behaviors. If not, it's better for everyone that the person moves on.
Mulally shared a tale of two leaders: "One leader was absolutely brilliant in his functional discipline. However, he treated others with condescension and abrasiveness. At our BPR meetings, his behavior chilled discussion and inhibited working together. People felt intimidated and wouldn't speak up.
"I pointed out to him that this kind of behavior ran contrary to our clearly articulated culture and its values and expected behaviors that we had committed to in order to create a smart, safe, healthy and high-performing team.
"He said, 'But that's just the way I am. I don't think I can change.'
"I said, 'That's OK.'
"He smiled and said, 'So does this mean that because I'm so good at what I do, I can continue to behave this way?'
" 'Not exactly,' I said. 'It's OK if that's how you want to be. But you are also choosing to move on for the good of our entire leadership team, including all of our stakeholders.'
"He chose to leave Ford.
"On the other hand, we had a leader who likewise was brilliant and had some behaviors not supportive of our working-together expected behaviors. I had a similar conversation with her about our commitments to working together.
"Her response was, 'This is how I was taught and what I've been around, and I've been very successful. However, I do understand why our working-together behaviors are important and needed, and I'm open to learning these new ways of working together and communicating with others.'
"We got her an executive coach and did a 360-degree [assessment]. She focused on three behaviors to change. She became one of the most trusted, valued and appreciated executives we had."
Working Together Works
According to Mulally, working together using stakeholder-centered leadership and coaching creates exciting, smart, safe and healthy organizations delivering value for all the stakeholders and the greater good. "And it creates a great career opportunity for HR to serve."
After reflecting on Mulally's observations, Society for Human Resource Management (SHRM) President and Chief Executive Officer Johnny C. Taylor, Jr., SHRM-SCP, had this to say: "When one hears directly from one of America's most successful CEOs that HR people matter to business, it makes clear SHRM's work to equip and prepare HR leaders with business and human capital knowledge is mission-critical now more than ever. The point is, HR people are businesspeople."