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The Rise of the Chief People Officer

As an increasing number of fashion companies appoint their first chief people officer, BoF asks, is the CPO a key business hire, or a HR rebrand too far?
Chief people officer Deena Gianoncelli and Jet.com's talent team | Source: Courtesy
By
  • Kate Abnett

LONDON, United Kingdom — This season, a fresh face appeared in the fashion industry. Not on the catwalk, but in the executive suite. In the last six months, British fashion behemoth Burberry, menswear e-tailer Bonobos and e-commerce start-up Jet.com have all hired their first chief people officer.

A CPO is the highest rung of the Human Resources ladder, responsible not only for a company’s staff, but also its culture — in other words, its values, ethics, mission, and how it creates a working environment in which employees can thrive. And the stakes are high: according to Pat Wadors, chief human resources officer at LinkedIn, 80 percent of a company’s operating expenses are talent related.

In February, Jet.com, an online marketplace — and rival to Amazon — announced an $140 million round of investment that saw it valued at almost $600 million. In May, Deena Gianoncelli, a former HR executive at Amazon, joined the business as its first chief people officer ahead of the site’s launch in July. “It’s expansive,” she says of her role, which oversees all areas of HR, from talent acquisition, to performance feedback, to benefits, and how these areas relate to company culture.

One of Jet’s core values is transparency. The company has installed electronic boards in its offices, which display business metrics including the largest order placed that day. After a board meeting, the unedited board deck is shared with all employees. “Those are things that are simple but they are really important to building that sense of engagement, emotional connection, loyalty to the company, where people feel like they’re really owners here,” says Gianoncelli.

You can't have a strong strategy without having a people person helping to drive the strategy through the organisation.

At Jet, Bonobos and Burberry, the CPO has the strategic vision and sign-off for all HR functions, and reports directly to the chief executive. The role is not a board position, but is invited to join board meetings.

“You can’t have a strong strategy without having a people person helping to drive the strategy through the organisation with the other leaders — helping them evaluate how people are feeling,” says Sara Patterson, who joined Bonobos as CPO in September. A strong culture, she says, is one where each employee understands “how what they do impacts the organisation.”

For Gianoncelli of Jet.com, the key is the reporting relationship. “If the top HR person is reporting to the chief operating officer or, in some cases, the chief financial officer, then you’re just combining it with what other companies refer to as back office functions,” she says. “People are not a back office function.”

Indeed, poor talent retention can cripple a company’s ability to grow and harm its bottom line. According to Deloitte’s 2014 report, Global Human Capital Trends, which surveyed 2,500 organisations worldwide, 79 percent of business and HR leaders believe their company has a significant retention and engagement problem. Strengthening a company’s culture aims to create employees who are happier — and, therefore, more productive, loyal, and motivated to collectively achieve the business’s goals.

Last year, Burberry chief executive Christopher Bailey named culture as the company's sixth key business strategy. Since, Burberry has expanded its employee freeshare plan to 34 countries; become the first luxury retailer and manufacturer accredited as a UK Living Wage employer; and globally rolled out the open-plan office structure of its London HQ. To bolster leadership of the company's culture — which encompasses its employees and its responsibility to the environment and wider society — last week, Bailey appointed Leanne Wood as Burberry's first chief people and corporate affairs officer.

According to Deloitte, only 17 percent of business and HR leaders feel they have a compelling and engaging employment brand — something an attractive company culture could help fix. But when a company’s story has traditionally been about the product — as is often the case in the fashion and luxury sectors — this inward-looking focus marks a major shift.

Many fashion and luxury companies do not have a C-level HR role at all, but employ as the highest HR function a "director" or "manager," who generally reports into a COO, not the chief executive. But brands including Michael Kors, Under Armour, Cartier and Pandora, and retailers like Macy's and Neiman Marcus, all employ a CHRO (chief human resources officer).

Some companies see the CPO and CHRO as synonymous, in that both are C-level roles overseeing human resources. “Some companies see the CPO as a legitimate and distinct role, while others view it as yet another example of precocious business speak,” admits Mike Myatt, chairman of management consultancy firm N2Growth.

Rebranding the CHRO title to emphasise the people in an organisation signals "a philosophical difference," says Andy Dunn, chief executive of Bonobos. A CHRO is concerned with "benefits," but a CPO values "culture and human beings," adds Dunn. "It's the same role but with a different prioritisation."

Sally Barrow, consultant at London-based executive search firm Rees Draper Wright, agrees that the move is a way to rebrand the HR function as “personal,” rather than an “intimidating body” concerned with “hiring and firing.”

Some see it as a legitimate and distinct role, while others view it as yet another example of precocious business speak.

The chief people officer first emerged within tech, just over a decade ago, as part of the sector’s pioneering focus on the culture and values of a company — in part a response to the fierce competition for top talent.

According to Myatt of N2Growth, the title is used mostly by start-ups — Marc Lore, chief executive of Jet.com, began looking for a CPO shortly after the inception of the company in April 2014 — but has “struggled to gain momentum in larger organisations.”

For bigger companies, which are often bureaucratic and less nimble with their resources and systems, building company culture can be tough. At Burberry, a public company with over 10,800 employees, culture might mean focussing on diversity in management (women currently occupy 37 percent of its senior management roles) or philanthropy through the company’s charitable foundation.

At a fast-growing start-up, the challenge is, “How do you continue to create the intimacy that you have at a start-up through the culture? That is ultimately my number one mission here,” says Gianoncelli of Jet.com, which has grown from 170 employees in May to about 600 today, and expects to reach 2,000 by the end of next year.

Sticking to those initial start-up values gets tougher as the ranks fill up, even just on a practical level, she says — all 600 Jet.com employees are still invited to bring their ideas to quarterly think tanks, and the company operates a “no office hours” policy, meaning employees often have to text one another to find out where they are. “It’s a huge risk, but that’s what trusting people is about,” says Gianoncelli. “The business of creating and shaping and evolving a great company culture is not a practical matter. There’s no easy way to do it and there’s no cheap way to do it. You have to invest.”

In the US at least, where the improving economy means people can afford to be more picky in choosing an employer, and as the suit-averse, socially-conscious millennial generation continues to make waves in the workplace, culture is increasingly viewed as important compensation in a job.

According to Barrow of Rees Draper Wright, the rise of C-level executives whose focus is people shows companies are, finally, “championing” the idea that “business success is intrinsically linked to a happy and successful workforce.”

There are few sectors of the economy that offer as wide and interesting a range of career opportunities as fashion. For more information, visit BoF Careers.

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