Patrick Tuttle reveals: Why HR needs to be part of the exco

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Patrick Tuttle
Non-Executive Chair & Director
Azora Finance

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What was most challenging about leaving Pepper after so many years?

The first 12 months were very hard. I had the expected CEO-deprivation issues – I had gone from CEO of a global company to CEO of nothing. Realistically, it took around 12 months to kind of make that transition.

But here I am five-and-a-half years later and it was probably the best thing I did. In hindsight, the timing was right because if I hadn’t left then I would probably still be there. And I would have been very bitter and twisted had I stayed because there are many people who have never gotten an exit. They’re still sitting there waiting to cash out after 10 or more years of investment.

I’m the lucky one actually, given the benefit of hindsight. I’ve been able to do all the things I wouldn’t have been able to do had I stayed.

How did your opinion of – and interactions with – HR change over the years?

Philosophically, I was always a big believer in having the head of HR on the exco (executive committee), whereas other businesses didn’t have the same opinion. I was also someone who didn’t like when HR leaders were ‘agony aunts’ – they weren’t independent in terms of assessing situations as opposed to seeing the bigger picture. Sometimes you’ve got to be firm with people to get the business where it needs to be.

I’ve had some very tough situations. Going into the Global Financial Crisis (GFC), we had to make some hard decisions around making lots of people redundant in order for the business to survive. But the way we did it at the time was very empathetic to the individuals involved. It was tough, but after we got through that period we ended up re-hiring a bunch of those people. We were transparent throughout the whole process and they appreciated that, enough that they were willing to come back and work with us.

I’ve been in different situations when we’ve taken over companies. We acquired some GE Capital companies in Europe that had been gutted by the GFC, and often I’d be the guy who had to go in. After we bought one of them and convinced the staff that we wanted them to stay on and help us take the business to another level, I’ll never forget sitting in their Dublin office with some of the staff. They were looking at me with their arms folded cynically, probably thinking, “You’re going to get rid of us all.” Two years later the company was humming, and they loved us. When I went back they said to me, “We didn’t believe you back then, but you guys were true to your word.”

That was down to getting the HR team to deliver on our promises in all of those jurisdictions. It was a joint effort between management and HR.

What intrinsic value can HR provide when they are firmly linked with the executive branch?

I always wanted the HR team on the exco, because I felt it was very important. They were never siloed away. They needed to understand, from my perspective, the context of our multi-market strategy so they could buy into it. That helped them understand that, at times, we would have to make tough decisions that would involve hard messaging to staff. For me, it was critical that HR were part of that whole process – not just an appendage.

The other reason I wanted them in the exco was to provide a direct line back to us. We could get answers to all our questions like “What are you hearing on the ground?” “What’s the intelligence?” “What’s working and not working?” We wanted to hear everything – the good and the bad – and create a two-way feedback loop.

Did that end up delivering more commercial outcomes?

Totally. I’m someone who is always looking for an edge. If we were hiring people in multiple jurisdictions, we needed clarity on why they would want to come and work for us, and what we could do differently.

I also had the philosophy of: a bad hire can wreck a fast-growing business very quickly and set you back years. In fact, the thing I always said to the exco – and this was unvarnished – was we had a ‘no-d***heads policy’; we would only hire executives who we felt were a good cultural fit. We didn’t have to be best friends, but we would be spending a lot of time together in the trenches, so there had to be a degree of chemistry and trust.

If, for example, we were hiring a Global Chief Risk Officer, it had to be someone who we knew would fit with the entire exco. If we got it wrong, it could take anywhere from a month to two years to replace that person. By the time you hire them and realise they are the wrong person, it could be catastrophic – especially for a fast-growing business.

Despite all the various recruitment strategies and tools out there, why do you think the ‘wrong fit’ still happens?

Part of it is a lack of self-awareness. I used to work with a marketing person who, every time she walked into my office, it’d be like a black cloud. I couldn’t get her out of my office fast enough.

Some people just have a fundamental lack of self-awareness. That’s often the most common reason – they don’t realise the impact they are having on people around them. They are the ones I would seek to weed out from a recruitment point of view because they can end up doing the most long-term damage to companies, especially if you end up with someone like that in a key position.

That is my experience over a number of years and across multiple jurisdictions and cultures. A lack of self-awareness is the same issue, whether you are in Australia, the UK, Spain or anywhere else.

Do you believe HR needs to be able to understand their people at a granular level in order to succeed in their role?

I think the head of HR, firstly, should be someone who is aligned with the culture and overarching strategy of the business. If I had an HR person in Australia who I thought was very pragmatic, and they were up for a world of constant disruption and change, I would be confident they could adapt to that situation. But if I had someone who wasn’t like that, it probably would have been a massive roadblock to the business.

You don’t always have to hire in your own image. But it’s important that the head of HR gets it at the senior corporate level around what the strategy is likely to be. Because if they don’t, there will be an immediate disconnect. Then you’ll have the CEO not buying into their role because they are simply not hitting it off at that very senior level.

Where could an issue like that arise from?

Sometimes HR can be walled off from the C-suite, especially if they don’t involve them in the strategy. The HR person, to some extent, is then operating in a bit of a vacuum. They have to try and guess what’s required, or they just assume, and that creates a disconnect that neither they nor the CEO are ever able to figure out because they don’t communicate in the way that they should.

I’m not blaming it on HR. It can often be CEOs who operate in a way that siloes everyone. They’ll say to the finance function, “You’re really just bookkeepers. You keep the score. I don’t want you involved in other stuff.” And to HR, “You just hire people. I’ll give you the job spec, and you go and do it. But I’m not going to get too involved.”

I liked to involve the teams and have transparency. I wanted HR working with the finance function, because they had to hire for them as well. They needed to know the whole business.

That’s why at the exco level, HR needs to get involved in all those discussions.

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