Steve Potter, Partner, Odgers Berndtson USA: To begin with, what is unusual about your role at Dow compared to other CHRO functions?
Johanna Söderström, Corporate Vice President of Human Resources and Aviation, CHRO, for The Dow Chemical Company: At Dow we have had a very strong HR function for many years. HR is part of the executive team, which I believe is becoming more the case for many companies. But the big difference with Dow is that our Chairman & CEO, Andrew N. Liveris, is dedicated to people and employee development, and is personally involved in strategies related to employees, including succession planning as a key part of business growth. That makes my role unique in that I am his partner and advisor in setting these strategies.
SP: So, it’s a very strategic role?
JS: Yes, imperative to securing our future growth by having the right people, and yes, imperative to understanding a business decision’s overall impact on people and the organisation.
SP: As you know, this issue of Observe has human capital as its overarching theme. What is Dow thinking about in terms of finding, training and retaining talent?
JS: I would say there are different angles to this question. One is specifically the US situation; another is the global situation. Yes, everyone in our field is fighting for the same talent, no question. And I think the talent that can be successful at Dow in the future needs to be adaptable and mobile. So it’s not only about finding the one with the right skill, but finding those that are able to The talent that can be successful in Dow… needs to be adaptable and mobile succeed anywhere in the world. People tend to be more restricted in how they want to move around these days, which is different than before. Another angle is the education systems. The system still produces a lot of talent, but they are not necessarily prepared for the work environment. So it’s not just about the skill, it is about finding employees with traits like adaptability to change and wanting to win – all the time, and being able to reinvent themselves. We have four generations working side-by-side at Dow.
There are some companies today that already have the fifth generation. We’re not there yet, but we will be, and that creates a lot of interesting dynamics among diffrent generations.
SP: Do you use any kind of assessment tools to look at the personality-driven issues, people that are flexible, people who move?
JS: Yes, in the interview phase we’re actually looking for agility, change readiness and adaptability. In the US, what we’ve realised is that the skills we need in our manufacturing facilities are akin to those found in the traditional blue collar worker – but with a new skill set.
SP: The entry-level job has changed: a truck driver used to be a truck driver. Now a truck driver needs to work a computer. He’s a member of the supply chain. Educational training, vocational or otherwise, has become much more demanding at virtually every entry level, so what are you doing about training?
JS: In 2015 we embarked on a totally new era. We started an educational program that we are conducting in five different locations in the US. We are partnering with community colleges and using a selection process where we look for the right personality traits. Safety, as an example, we feel, needs to be in your genes if you work at Dow. You can teach somebody, but if it’s not in your genes, you’re not going to care for it.
At Dow, safety is number one. You have to have that desire to go home safe every day from work, so part of the screening process looks for that. If we think they have the right personality, then we’ll enter them into the community college, and also place them in either one of our facilities or a manufacturing plant. We’ll split their time half and half for about two and a half to three years. So, they get the theory side in college and then they get the educational hands-on with our operators in the plant.
SP: Do you find that creates corporate loyalty or a talent pool others try and poach?
JS: We are six months into it so we haven’t yet gone through the whole process of actually delivering people with our diploma. But, I have no doubt that these people will be extremely hot on the market.
SP: But hopefully very loyal.
JS: Yes exactly, you always hope you get loyalty when you invest in educating your employees.
SP: Right now you’re probably facing your biggest challenge ever as a CHRO with the pending merger with DuPont. I understand you can’t get specific about what you’re doing but how do you approach such a monumental challenge, the bulk of which is going to be people?
JS: I think the positive side is that Dow has been through a lot of transformation in the last five to 10 years. We’ve changed our portfolio significantly. We acquired Rohm and Haas [a major US specialty chemical maker]. We divested. We invested. We’ve restructured the workforce to be sure we tackle the right future needs. Change is an everyday phenomenon at Dow.
I would say if someone asked us if we have change readiness, the answer is yes. In the last five years we hired 20,000 people and one-third of our workforce has less than five years’ experience with the company and almost one-third are millennial generation employees. In any M&A deal, it’s about talent assessment, including the structure and making sure productivity never suffers when you map out the new organisation. And most important is to get to those specific answers employees are looking for as quickly as possible, without making promises you can’t keep.
SP: Some companies do a really good job at measuring their return on human capital, for others it’s much more intuitive, or they don’t do it at all. How do you approach that?
JS: Initially, we measured the same things everyone else measures, but l have to say it wasn’t very satisfactory because it was only benchmark metrics. Things like employee count or salary information. Everyone does that. We wanted to go further, so we began to look at analytics. Three years ago everyone started to talk about HR analytics but no one really had a solution, so we created our own. This meant we put all the different data we had on people – whatever it might be – engagement survey, recognition, where people are based, promotion rates, turnover – anything you can think of that touches our people. We pulled all that into a system, and then started to derive many diffrent data and correlations. So with the analytics, we know exactly what’s happening, and can create models to understand a variety of scenarios. Whenever the organisation changes we can see what it would look like with a different set-up. That is unique.
What we’re getting to now are those hidden patterns we couldn’t detect before. As an example, we wanted to know what the return on investment is for an international assignment. Is it really paying off to send someone to China and pay additional premiums versus hiring a local person and training them? Return on investment for expats and international assignments has been something we have wanted to do for a very long time, so we’re pulling in everything we know like market share change, how fast does this employee develop and change his or her career trajectory after returning from the assignment – all of these different parameters. Then we can answer the question: ‘What is the return on investment for an assignment?’ We haven’t cracked the code yet, but we’re close.
SP: Let’s talk a little about diversity. It’s on everybody’s mind. In Europe, governments are getting involved. But the US is not doing that yet. How does Dow approach the subject of diversity and create a diverse workforce and a diverse environment?
JS: It took us too long to figure out what to do, but we’re on the right path now. We established a real business case for diversity at Dow – that it isn’t about compliance, but really a corporate leadership imperative to have diverse teams. As long as you focus on diversity of thought, you will get to the right answer.
SP: How do you innovate in human capital?
JS: In my opinion, human capital is all about internal and external marketing. If you can convince your own people to do their very best and to always go beyond, you will attract others who want to be on that same winning team. It’s all about marketing, and I believe this will translate into good strategies for the people in your company.
In fact we started a new recruiting campaign called ‘The science to your success’. It’s about science, which is what this company does. We’re actually changing the planet here at Dow through our innovations that focus on improving humanity. And that’s very appealing whether you’re a millennial or baby boomer – being on a winning team that’s making a difference in the world.
Everyone knows that you have to source and recruit and find the best talent, yes. It’s how you do it, how fast you do it, doing it better than your competitors. That’s how you compete to win the talent.
SP: Do you have any examples of recruitment outside of Dow’s comfort level, outside your core businesses maybe internationally, maybe in digital where the process worked?
JS: Yes, we used the channels everyone else used. We did the same as everyone else did in terms of embarking on ‘What can LinkedIn do for you’ and all these other things because they’re tools. Now the question was: ‘How can you get to that additional niche that others haven’t figured out yet, how can you always be a step ahead?’ So, for example, we knew everyone was going to mobile devices two to three years ago for everything; you don’t sit in front of your desktop anymore. So we asked ourselves, ‘How can we make sure all our applications have easy access to apply?’. Dow was among the first companies to meet all the criteria of the Corporate Mobile Readiness Report. Who would have thought that a chemical company would be among the first in driving this type of innovation for recruitment?
SP: What do you think the biggest strategic challenges will be over the next five years for HR and for someone in your role?
JS: Two different answers: one is that the overall marketplace will change, the number of players will continue to shrink and they will continue to fight for the same talent. The other thing is the way in which schools and universities are educating for this profession. I personally don’t think it’s the right way. Right now, it’s the traditional ‘Here are the basics of HR’; fine. But how do you teach HR with a business acumen? How do you understand the environment and get the context of it so that you are not afraid of looking from the outside in and then tearing things up and doing things differently? That is the future challenge for everyone who wants to be in the HR profession. We need to think about it differently.
SP: Talk a little bit about training at the executive level.
JS: We have a succession plan with our C-suite roles. We watch it continuously, and review once a year with the board, three times a year with the executive leaders themselves. And we’ll look at what has been done in terms of their development, what specific needs do they have? We map progress, we use executive leadership team members to provide a light mentoring touch and also suggest additional mentoring with external coaches, when and if needed. And then we try to give them experience with external boards, or on joint venture boards to gain exposure to a variety of business situations and depending on their development needs.
SP: My last question is something I haven’t yet touched on. Do you have any advice for your peers or people aspiring to do what you do?J S : In this role you have to make sure you see the big picture, you keep calm, you calm the troops, you make sure you know this is the context and broader impact, and paint the picture of now and the future.
JS: In this role you have to make sure you see the big picture, you keep calm, you calm the troops, you make sure you know this is the context and broader impact, and paint the picture of now and the future. You have to do your job, you have to make sure you know your stuff know the organisation, and know what’s happening all the way from the plant floor to the executive wing. You have to know what people think, stay on top of things, but never be superior to the workforce.
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