HR Technology Webinar with Josh Bersin and Alex Badenoch
In this third webinar in the CHRO Series, Josh Bersin speaks with Alex Badenoch of Telstra about the business transformation she has helped the company go through in the last two years. They discuss some of the key aspects of the change, the catalyst that made it happen and what insights she has gained so far.
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Paul (Moderator): 00:20
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With that, I'd like to hand it over to your first speaker for today, Elizabeth Clark. Elizabeth, you have the floor.
Elizabeth Clarke: 00:13
Hi and welcome everyone. Thank you for joining us for part three in our CHRO series. Today we're talking about HR's role in business transformation. And I want to introduce our two speakers, Josh Bersin, global industry analyst and dean of the Josh Bersin Academy, and Alex Badenoch, transformation, communications and people group executive with Telstra Group.
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And now Josh, I'd like to turn it over to you for our conversation.
Josh Bersin: 02:54
Thank you Elizabeth, and welcome everyone. There is a good group of almost 400 of you and probably more joining. And I think I know why so many people showed up, because we have a very, very highly esteemed guest, Alex Badenoch, who I'm going to introduce to you in a few minutes, to talk about business transformation. And for those of you that are core HR people, business transformation is an enormous topic. And before I introduce Alex, and you can read her background, I'll talk a little bit more about her background in a minute. Alex is one of the few CHROs that also run a business transformation function or a part of the business. It's unusual for me to run into that, but in particular it's an important theme because this is what's going on in the world. And of course Telstra, as a telecommunications company, is in one of the most disrupted, and constantly disrupted, industries of all.
My experience in telecommunications is my wife worked for Pacific Bell, which then became part of AT&T and you know what happened there. But these companies are service providers, technology companies, media companies, they do a lot of things. So you're going to hear some interesting things from Alex. And Telstra is probably one of the leading companies in the implementation of agile work practices all over the company.
But before we get into that, let me tell you a little bit about why business transformation is the topic. If you go back to the last major economic cycle which was back in 2008, we have been on a transformation journey since then. We've been through digital transformation, we've been through the increasingly automated roles in jobs, the reduction of the manufacturing economy, the growth of the service economy, digital products and services. And then of course what happened last year and this year, is we digitized everything that wasn't digitized, because we had to. We digitized the way we do retail, delivery, entertainment, music, healthcare, consulting, anything I can think of suddenly got a shot in the arm. Which means that you've all been dealing with organizations that not only have had massive disruptions on the people side, but the business itself. And one of the things that I think I want to talk a lot about with Alex is this fact that what we do in HR may seem like it's important on its own, right? Which it certainly is. But it must be done in the context of what the company is trying to do.
My experience over the last 12 months, and some of you have seen this in some of the other things we've been doing here with HRE, is that every company we have talked with over the year has been going through a hyper accelerated transformation, to something they didn't know they were going to have to do a year ago. Most of the companies in most industries weren't planning on going digital so fast. They weren't planning on delivering products and services in a low touch environment. They didn't realize there was going to be so much demand for toilet paper or cleaning supplies or masks, or whatever the product may be.
In fact, one of the interesting stories I ran into is Target. I think we are going to have Target or we had Target on one of these calls. Target actually plotted the transition of our home life through the pandemic, through the shifting things that they were seeing people buy in the retail stores. They could tell in the early stages people were buying health and cleaning supplies. Then they were buying technology, then they were buying lighting, then they were buying furniture. So it was changing so fast that they basically had to reinvent the business they were in, in real time.
And I think that's true for almost everybody. The only companies that have not had to go through quite so much is the tech companies, because they were in some sense already prepared for this. But even tech companies have seen staggering growth, demand for products and services like they never saw before. Cybersecurity threats, use cases for their products that they never dreamed of. And in fact, as you know in the HR tech world, everything you bought for HR tech a year ago got used for something you weren't planning on using it for last year, and resulting in all these issues on the right [of the slide].
So let me just talk about the issues on the right [of the slide] for a minute, because this is one of the things we're going to talk about with Alex. Not only have our businesses been transforming, and we've had to accommodate and support that, and we'll talk about how they're doing that at Telstra, but there's been a huge transformation in the workplace and the work experience. And most of you are, I know, in the middle of trying to write the playbook or develop the policy for work in the ending or post-pandemic environment, which we haven't quite gotten to yet. Although I think you have in Australia, but we haven't in the United States at all. So we've had remote work, work at home, working in teams, which we'll talk about with Alex. Tremendous amounts of uncertainty leading in an experience where we don't always know what the business plan is, because the business plan that we built six months ago didn't seem to apply anymore. Dramatic improvement in need for digital skills. I just read a report this morning that the demand for software engineers and digital people went up by 30% this year, that's even more than it was before the pandemic.
The extension of demographics — people in the United States, at least I think this is true in the UK and probably in Australia too — are working longer in their careers, they're working to later ages. So we have expansion of the workforce on both sides, five to six generations of workers. And of course the leadership pipelines in companies weren't designed for that, so we have this inverted leadership pipeline problem. The massive issues of racial justice, diversity, inclusion. We'll talk about that with Alex, and it's a combination of the political topics that we're all reading about every day and every minute, but also this interesting finding that in every single study of employee engagement this year, including the one that I just read and talked to somebody about yesterday, the number one driver of engagement is a feeling of belonging. Because people are under so much stress from the pandemic and other aspects in their life, that they really want to feel like work is some place safe. So this issue of diversity and inclusion, which is maybe a sideline issue in most HR departments, is now core to the value proposition.
Belonging, inclusion, skills. There's another piece of data that I just picked up in the last 24 hours. I think it was 84% of CHROs in the DDI study — which had more than 2,000 people respond to it, mostly HR people at all levels — 84% said that skills, re-skilling and up-skilling was one of their top priorities. It was the number one rated topic. It wasn't safety and health, and it wasn't productivity, and it wasn't wellbeing. It was skills. And the reason for that is every disruptive technology that we were worried about before the pandemic arrived in the last 12 months, and is being used at a pace of adoption that we didn't plan. Chatbots, AI, predictive analytics, facial recognition, voice recognition, sentiment analysis. You name it, you're now doing it. So there's a massive amount of skills upgrade in technology, skills upgrade in empathy, skills upgrade in leadership going on. And I know you guys are all dealing with that.
Contingent work, and when I ask Alex about this. I wrote a research report with HRPS two years ago. Studied the alternative workforce, which I called the pixelated workforce, this idea that there's all these small groups of workers in different places doing different things. And what we found is that roughly 70% to 80% of companies didn't really have a strategy for contingent work. But actually that is no longer possible. One of the practices that came out as a very highly correlated practice of success during the pandemic was recruiting and hiring and staffing contingent people. So if you thought about it as a sideline before the pandemic, it became core. And I want to have Alex talk about that.
And then this issue of where we work, and when we go where, and how we schedule where we are. You heard the ServiceNow promotion in the beginning. I mean, ServiceNow has become a company that's bigger than Workday by selling tools to help you find your desk and schedule it and open a case with IT and so forth, all those things.
So we've been through a lot on HR too, but enough from me. Let me move beyond that. I want to talk to Alex, and there's a lot for her to tell you about. But why don't we start, Alex, let me just introduce you and tell us a little bit about two things. First of all, what's going on at Telstra and the agile transformation, and then your role in the company, because I think you have a very, very unique role. And thank you, by the way, for getting up at 5:00 in the morning, because I know it's 6:00 in the morning for you now, to join us. I really appreciate that. I know you have many other things to do besides this.
Alex Badenoch: 13:28
No problems at all. Thanks for having me. And look, I'll give a little bit of context about Telstra and my role just to orientate people to it, because it is a very Australian company. So most people listening probably don't have a good feel for it, but Telstra is Australia's largest telecommunications company. It is like many others across the globe. It was originally a government body, and then fully privatized some time ago. But about 10 years ago, the government decided to re-nationalize our fixed network. So for us that meant losing about a third of our revenue. We, like many telecommunications companies, are challenged by different players in the market who are the top providers, who are often accessing a lot of the revenue for the capital investment we make in the infrastructure. So about three years ago, the impact of different competitive environment, losing about a third of our revenue meant that we were seeing our share price massively challenged.
We were seeing market sentiment turn against us in terms of frustration with where Telstra was at. We weren't where we wanted to be with customer service. And we were seeing employee engagement decline significantly. So for us, we needed to do something fundamentally different. And that's where our current transformation, which has been going for about two years, emerged. And at that time, I was lucky enough to play a critical role in defining the company's new transformation strategy, which we affectionately called P22, not the most creative of names. But the job I do is quite unique and an amazing opportunity because I get to lead the title company's transformation delivery across all elements of the business transformation, as well as staying very, very focused on the people and communications component of that change. And our transformation strategy is built around four pillars.
The first one's all about transforming our customer experience, how products and services, and really re-inventing what telecommunications is from Telstra. The second is about building or separating and creating standalone infrastructure business for the infrastructure components. And I'll skip to the fourth and then come back to the third. The fourth is probably some of the more traditional things around our economic performance and our costs are served. Importantly our third pillar is all around people, culture and leadership and the capabilities we need to succeed. And it's been a pretty important anchor component to the success of the strategy so far. And it meant redesigning our entire organization. We've taken two to four layers of management out across our entire business. We've reduced our workforce by... We're getting close to 25% over the last two years, and are on track to take about $2.5 to $3 billion of cost out of the business.
But an important part of that, which has been a cultural change catalyst, but also has improved our speed to market and seen fabulous employee engagement shifts, has been a significant shift to agile. And we're finding what we're doing is probably going a step further than many organizations, especially if we exclude digital native organizations. We're an old traditional, clunky telco. And we've now moved about more than 30% close to 40%, and by the end of this year I'd expect us to be over 50% of our entire business into agile ways of working. And we've redesigned everything from how we plan our business, how we manage our financials and how we allocate our people across the organization, into what we talk about as agile at scale. And interestingly that's also meant HR, Josh. We've gone 100% agile in our HR function, and we probably don't look much like an HR function anymore these days.
There's no such thing as a business partner. We run agile missions, we work on our quarterly planning cycle and we're driven by the business priorities of the day. So it's been a fun two years of transformation across Telstra.
Josh Bersin: 18:34
Well, let's talk about agile and a little bit of specifics first. I've read a lot about it and talked to a lot of... Actually there's a lot of companies in Australia that are doing it or experimenting with it. For some reason you guys seem to be the nucleus. I don't know why. But maybe can you talk a little bit about the fundamentals of what agile means in your model? There's this idea of teams and how people are managed and how they work on projects. Maybe give us the high level overview, and then I want to hear a little bit about how it's applied to HR.
Alex Badenoch: 19:13
Absolutely. So anyone who's read about agile constructs, if you think about that Spotify model of... There's different terms for it. We talk about it as groups and chapters. So chapters are what we've created, which is the home of the people. So a chapter lead doesn't manage work, they are responsible for actually planning the mix of skills and capabilities, focus on people's career development, and allocating resources to work in the right mix and at the right cost construct. So, for example, we have a chapter that specifically is around customer experience. They've got customer experience designers, they've got a range of people that are all about designing the customer experience. In HR, for example, we've got a chapter that's on change and implementation. So our chapter leads are fully dedicated to caring about our people, which is actually a critical part of, in my mind, a big step change in organizations and changing employee experience.
Our group owners run the work. So on a quarterly basis — we have an annual plan, we have a three to five year strategy — but on a quarterly basis we decide the cross-company priorities. Generally about maximum 50 priorities that are critical to deliver. And the group owner builds the game plan for that. So what is going to be the definition of done, the measures of success for that piece of work of the quarter, and has to say what resources they need. So I might need some customer experience people, I might need some product designers, I might need some go to market resources. Whatever those are, I've got to build up basically my resource demand profile. I come into a marketplace and I have to, one, get my work prioritized. If I get it prioritized I get it funded both in OPEX and CAPEX, and then I have to compete for the best resources to build my cross-functional team to deliver on that.
So I basically got this matrix of the people who run the business and the people who run the work. And one of the critical things for us culturally was about changing those very siloed hierarchical concepts. It flattens up your organization and it embeds true collaboration in how you work. It drives a much faster speed to market in the cadence that you work at. And you're very clear as a company about where you're investing your money and your people's time to drive outcomes. So high-level sort of thumbnail sketch, that's agile at Telstra.
Josh Bersin: 22:06
So let me just [dig] a little bit more on the model. So is it a quarterly, do the groups change, review their goals and then reallocate resources once a quarter based on the projects, is that how it works?
Alex Badenoch: 22:18
Yeah, roughly. I mean, it's important and especially for a company of this size and scale, you don't want to be changing what you're doing every single quarter. So the annual plan becomes very important in terms of what we're going to deliver, whether it's customer outcomes, market commitments, our financial results. We're very clear on what our overall goal is for the year. And we've got this broader four year strategy, which defines a roadmap for what success is going to look like at the end of that strategy. But on a quarterly basis, we get very specific about what we want to do, need to do, and have the capacity to do.
Josh Bersin: 22:59
So for companies that are thinking about doing this in various areas to get started, what areas of Telstra were maybe the most easy to start with in agile, or did you just break the glass and just say, "This is it. You guys all have new bosses, you're going into new groups."?
Alex Badenoch: 23:20
Look, we went pretty hard at it. And there's different ways to do this for different companies. I do think you've got to be reasonably bold. I watch a lot of people experiment in very isolated pockets, and it's very hard to get the scale and pace of change when you're playing with little experiments. And the other thing that's pretty fundamental for me for agile, is it's really about driving collaboration and cross-functional capabilities. So if you're starting in a really small spot, it's hard to get that benefit quickly. We did a couple of things pretty much overnight. We redesigned our business to be what we talk about as a functional model. So we broke our traditional business unit silos, and we created a new scaffold on which to put agile. And then some of the functions were built overnight as agile native functions.
So our product and technology function was literally designed to go live as a hundred percent agile. And we had a very clear roadmap to say, the minimum requirement is we needed product and technology, we needed network and IT, we needed our core customer design teams, which we call segment, all going agile pretty much day one.
We flipped about 5,000 people into full-scale agile in our first step. And then we got a few surprises along the way, Josh, groups like procurement suddenly thought they absolutely had to go agile. And amazingly they have, and it's delivered really great benefit. And then in HR we thought we should actually lead our own change. So we went there as well. So we're now about 15,000 people in a hundred percent agile ways of working, and we'll be close to a hundred percent of our teams working in some form of agile within the next 12 months. That's pretty quick.
Josh Bersin: 25:29
Well, let me ask you one more before we get into the HR part of it. I've talked to companies that have done this for years and visited companies that do it, and it always struck me that the biggest challenge was changing the paradigm for each individual on what your career is going to look like and how you're going to be rewarded. How did you get through that? Or tell us a little bit about that journey, and being a traditional telecommunications company. I mean, I go back to my wife's days at Pacific Bell. You worked there your whole life in the old days, I don't know if that's the way Telstra used to be, but that's a big change.
Alex Badenoch: 26:12
Yeah. It is. And you're right, Telstra is not that dissimilar. We have a lot of people who have worked their whole life at Telstra and are very traditional in their mindsets about hierarchy and career. And it was one of the big issues and huge emotional tensions in the organization, both from our most senior executive levels. The day we announced some of the first changes, we exited 50% of our executive leadership team. 90% of our executive leadership team no longer had the job they had the day before. And we took out 25% of our management layers on day one. So one of the reactions was, "So where's my career? Where's my progression? I've defined myself by how many people I lead, what budget, cost or revenue I control. And you're now telling me those two things don't sit together anymore."
So it has been pretty disruptive and there's no perfect models you can go and pick out that are out there to find. So you've got to build it. For us there's been a couple of things that we've had to think about. It's really working with our people to think about career development and growth; it's about skills acquisition. How am I growing my skill base? How am I actually starting to make myself more marketable in our own internal marketplace, but also externally? How can I align remuneration and reward to skills acquisition? And how do I actually make sure that there's a career path that lets me navigate from doing the work in a group, to being in a chapter and managing people, and helping people go from one to the other and creating this far more diverse experience.
One of the big sales we're able to do, is in an agile world, the flexibility or the breadth of experience you can get on amazing work and actually keep evolving quite naturally. I don't have to change jobs. I'm moving onto a different mission this quarter and I'm getting new skills. And now I've got a chapter lead, whose sole purpose in life is to think about my skills development, my career development. So we've seen since we shifted to agile in the last two years, we've gone from quite significantly declining employee engagement, to by the end of last year, heading back to global high-performing normal employee engagement. And a lot of that is about actually telling the right career development stories for people, but also the role of that chapter lead.
Josh Bersin: 29:03
Let me dig into that just for a second. So I was on the phone with somebody, an ex-CHRO of a very large company, and she said... She keeps saying this to me, but it's sort of a glib statement, "Well, we want to pay for capabilities, not for level." How do you do that? I mean, in the old world we could pay you based on your job level, how many people reported to you, now how do we know what your capabilities are? How do you pull that off?
Alex Badenoch: 29:34
I'll say we're still working on it, Josh. But I think some of what we found we had to do anyway, was go back and redefine how we thought about jobs. So if you want to do this, you can't leave your old traditional structures in place, which do, regardless of what system you use, they look at what job level I'm at, what revenue I'm accountable for, and how many people I manage at a rough view. So we went back and we redefined what we talk about as our career architecture. And we started redefining our job levels based on skills mix index. So what breadth of skills does a role need, and do they need to be novice? Do they need to be masters of those skills?
And basically have fully redesigned all of the backend architecture of our organization, and then brought our remuneration and job sizing alongside that. So I can sit at exactly the same level, I can have exactly the same job title, but I can be paid 50% more than the person sitting next to me because of my skills breadth or depth. It takes time and you have to break your whole system and redesign it. If you want to use a traditional... And to be blunt, most of the traditional job sizing tools don't do this today.
Josh Bersin: 31:05
To me, what agile is really predicting in many ways is that most companies are becoming more like professional services companies every day. In terms of just that one topic of, this person is making 50% more than the person sitting next to them. Is there some trick to evaluating this person's capabilities? Is it reputation? Is it from the performance management process? Is it an assessment? How do you avoid it being very political? Because even when I worked at Deloitte, it was supposed to be the same way, but there was an enormous amount of politics under the covers that you just had to be a part of.
Alex Badenoch: 31:52
Again, I'm not sure there's a perfect system in this space because it's a combination of science and art in terms of assessing people's capability. But there's a couple of different things. One, being very clear with people what the skills mix required per the role was. We let them start off by self-assessing. So where do I think I'm at? And then we have started to use some artificial intelligence in our system based on either people's qualifications or the work they've done, the specific projects they've done that substantiate that assessment. So I may claim to be the best data analyst in the world, but have I got the qualifications, am I working on the projects that reinforce that? And it starts to bring that insight together to effectively validate my qualification level or my skill level. And there's increasing capability in agile —
Josh Bersin: 32:54
In your model, does the chapter organization take care of that qualification? Not the job project people, right?
Alex Badenoch: 33:04
Correct. The chapter does it. The group owner and the people running the work will have inputs. So our chapter lead and chapter area leads will be talking to group owners about how people are performing, but that chapter area lead is a hundred percent responsible for testing the qualifications or the demonstration of skill and capability and assessing that. And they're making sure that they're putting them on the right development path and that we start to accredit their mastery or their skill level, and that assessment —
Josh Bersin: 33:37
Let me just repeat that for people on the phone. By the way, anybody that wants to ask questions start typing them in. So this big paradigm shift, and let me summarize and see if I get this right. The chapter organizations are like the talent owners or the talent managers of these functional groups. So they make decisions on your capabilities and skills and your level of experience, independent of the project people, right? Is that correct?
Because in the old world where it's all mixed up, I'm a manager, so-and-so did a good job, I give them a promotion. That's the end of that. And maybe it's because I just like them. It has nothing to do with their skills.
Alex Badenoch: 34:19
That's where laws of politics comes in, Josh, is there are people who are fabulous at managing, there are people that I just like and I get on with, and my perception of their skill may be better. Whereas that chapter area lead, their sole purpose is to really think about what skills this person has, how they've demonstrated them. And actually they can see some of that by who's in demand, who is a contended resource that everyone needs on their project. And you break that sense of my gang, my group of people who I really love and like working with, because I may not have them tomorrow. So I've got to have the people that have this right skills.
Josh Bersin: 35:05
Okay. Then we just got a whole bunch of interesting questions. I'll just run these by you, just see your thoughts. Where do you track this stuff? What kind of a system do you do? What happened to job descriptions? Do you even have them? And how do you prevent bias, if possible, in this other model of reward and recognition?
Alex Badenoch: 35:31
There's lots of questions in that. So let me try to hit a couple of them quickly. We don't have traditional job descriptions anymore. We do have role profiles but it's at a very high level: What's a chapter area lead responsible for? What's a group owner responsible for? Then we actually break down by assessing, if I'm a group owner, their job description is their game plan. It's, What am I doing this quarter? What metrics or measures am I going to deliver? And how am I going to deliver the return on investment for whatever investment in people or money that's been made into my work? So it's far more dynamic and we run that every single quarter. We assess and apply that at a quarter like many people do.
We have a lot of data. We have the best data we've ever had on our people, their performance, and how work actually is delivering return on investment, which we didn't have before. We used to have an annual basis, we'd allocate out OPEX, CAPEX. And then every king of the castle ran their own fiefdom on delivering their work. For years and years we did a really good job. And as long as the financials reflected that at an overall level, it was pretty good.
Now I can see exactly what composition cost in people is being allocated to a specific piece of work. And then I can see, did they deliver the outcomes or not? Where did they miss? Sometimes it's okay, but did they deliver on that return on investment? And I can now... I've brought together the view of people and a view of financial. So one of the big pieces that's really important is to bring HR and finance views tightly, tightly together, so I can understand what every team costs. I can understand what financial or customer outcomes they're driving.
And there's a range of technology out there. We use Jira to plan our work, so I can see work plans at a more granular level than I ever could. I can see if a specific epic is missed or moves or cost more than we've said it would. And I can see actually how much work, how much actual individual contribution each person is making to the delivery of that piece of work, because you track and plan your work at that granular level. So I have a better sense of performance management. I can better then tie what each individual in each team has delivered to reward and recognition. And it takes out a lot of bias, because it's actually tied to hard facts and data. We still bring in behavior and our values, but the underlying performance is more objective and more data-driven than it's ever been.
Josh Bersin: 38:31
One of the things that you brought up that I'm noticing on some of the questions here is, because your job is bigger than HR and you were dealing with the whole company, the financial measures and the financial operational measures and the talent measures were all re-engineered at the same time. Whereas a lot of these people are asking questions like, "How do I do this, when the reward system is the old way, the career system is the old way, the budgets are the old way?" I don't know what's your answer? Not very many companies get to do it in one big fell swoop like you have.
Alex Badenoch: 39:13
And that's why I say I'm privileged in the job I've got. But I will say that when we first designed this transformation, my job was, it was predominantly HR. And I remember sitting in a meeting, listening to the same conversation I've been listening to time and time again, about all the challenges we were facing and why we couldn't change, et cetera. And speaking to my CEO at the time and saying, "It's time to make a real change." And he looked at me and said, "Well, what do you mean?" I said, "Well, I've got an idea about it. Let me put it down on paper and I'm going to give it to you." And it wasn't the CFO who woke up one morning and said, "I've got to transform how we allocate budgets or how we think about the financials."
Josh Bersin: 40:04
Let me ask you, what was it about your background that gave you the perspective to push this through?
Alex Badenoch: 40:13
Yeah, I think I've been lucky. I mean, I've worked in a very broad range of industries. I have strong financial and commercial capability. And I don't tend to think about my job as just being in the bubble of HR, because HR should be one of the most commercial functions in your organization. When you think of HR, in many organizations you're accountable for the resource that is 50% or more of the company's cost base. And that should be a very commercial function.
And I think it's about shifting how you think about it and tying together the cost of my human resource, how I effectively allocate that resource to drive the best customer or financial outcomes for the organization. That's the HR mindset. And now I need finance to come alongside me. So I sit with finance, still to this day, two years in, I sit with finance every single week and I talk about how we're going to redesign the planning process, how we're going to redesign and bring the allocation of CAPEX and OPEX together.
Josh Bersin: 41:28
So you're really bigger than an HR. I mean, I don't know what the right job title is, but you're looking at the productivity-effectiveness, cost-effectiveness of the people in the company, not just the HR programs around that, right? And I'll tell you that most HR people don't think about their job that way, frankly.
Alex Badenoch: 41:55
Yeah. I mean, it is probably one of the challenges, the process of function, Josh, because you put out that chart about business transformation and you talk to what companies have gone through in the last year. And we've all gone through that collectively. In the past we were all transforming at different rates. We've gone through the most collective and shared experience of most of our lives in the last 12 months. And it means it needs HR to show up very, very differently because reinventing yourself won't just be done through a health and wellbeing program. It's really important and we should have it, but reinventing your company at a pace none of us were really prepared for, most of that's about your people. Most of that is about your people, your culture and your leadership and you can put in technology.
Josh Bersin: 42:44
You're very good friends with the CFO I assume.
So another question that came up and it's more on the HR operation itself. You made a comment that you got rid of the business partners, and of course a bunch of people immediately jumped onto the chat about that. How do you apply the agile model to the HR function? And if there's no business partner, how do people get help?
Alex Badenoch: 43:16
So there's a couple of things, because a lot of people are confused when I say that. There's a couple of things. We've been on a journey for a long time, I suppose to automate and simplify what we would see as a very transactional side of HR. I need advice on a policy, I need advice on handling this employee issue. All of that for us has moved to online or chat or call.
So we have been taking the years taking the transactional components of HR out. And about two years ago actually moved it out of HR. So it actually sits in our shared services, our global business services function. And that's got payroll, I need help with anything from a level zero, level one, or level two HR inquiry, sits there.
But I still have strategic ownership and accountability for HR policies, practices and processes. So I haven't given that away because that's the important lever to keep. That's a pretty important prerequisite to what we've done in HR, because people still need help, and still need some of that stuff.
Josh Bersin: 43:32
So let me ask you about the global business services thing [which] has been around for a while, and I've seen different companies do it in different ways. And I've seen companies pull it back into HR because it tended to become more like IT or sort of... Maybe explain a little bit about how that works. Is global business services a partner? Or do they have... Tell me about it.
Alex Badenoch: 44:59
Global business services, and it provides a whole range of services, but if we focus on HR, they're like a service provider for me. So they have performance metrics and standards that they have to deliver too.
But there's a couple of things. In terms of why people put it out and bring it back, it's like outsourcing something that's broken. If you outsource something that's broken, you're just giving something to someone else to usually take the cream off the top in terms of productivity, but you still actually just outsource the bad process or service. What we did before it went to global business services, is we spent some years actually going through the change management with our people, with our leaders of transitioning HR into effectively first of all a call center, and aggregating all of our basic HR transaction there. Then moving and building quite a sophisticated HR platform for queries, which now have bots that can help you navigate all of the information you need, simplify all your policies, redesign your processes. So clean up your landscape first, because otherwise it's just handing your problem to someone else.
Josh Bersin: 46:16
So they become accountable to you and you become accountable to them in a sense, where you have to give them processes that are well-defined and well adopted. And then they have to implement them in a highly effective automated, cost-effective way.
As opposed to them resolving. So for those of you that are listening to this conversation, the problem is if you don't do that, every business partner is doing this on a micro level poorly.
Alex Badenoch: 46:45
And it just means you dis-aggregate your capability and each business partner was responding to individual needs. Now I have the data and insights to understand which of my company processes are broken. So the agile part of HR, the non-business services part, works on missions. So what are the biggest company priorities at the moment? And for us, implementing agile remains a big company priority. So I've got a big team who is still redesigning the organization, who is measuring, managing, and building agile capability and functionality in the team. We are about to go through another major restructure, which is the next level of productivity.
I've got agile missions that are all out there working with the business on their redesign and their implementation of change. You'll be amazed to know, probably like many companies, I have an agile mission around the future of workplace and what that's going to look like.
So that's what HR works on now, and they work on the biggest issues and the biggest challenges for the business. So they're more valued and loved and in demand by the business than they were in a business partner structure, but they just don't sit there responding to each individual business unit's needs, they look at the company's needs.
Josh Bersin: 48:10
Well, and I would assume that once the reputation for this work gets out outside of Telstra, people will see this as a huge career opportunity to have worked in this environment, having these kinds of responsibilities as they look around in their personal careers.
One of the things that goes through my mind as I listened and look at some of the questions... Somebody really wants to ask you about compensation, I'll ask you about that in a minute. If you're a CHRO, and you don't feel comfortable with agile, but you know it's a good idea and you've read about it, and maybe your CEO does or doesn't care about it. You're in a traditional company. Maybe you're a CPG company or you're a manufacturer or whatever, what should you do?
Should you hire a head of agile? Should you talk to the CFO and tell him we got to reorganize the whole place? Go look for another company to work in? Like I said, there's something in the water in Australia. When I visited different companies, there's a lot of people that have lived this way, but in many parts of the world that's very uncommon and unfamiliar.
Alex Badenoch: 49:30
All right. Let's just start with your business context. So yeah, I didn't wake up and go, "Gee, I want to be agile today." I was looking at what business problems was I facing. I had to take out a massive amount of cost in the organization. So I had to be able to deliver work in a more cost-efficient and effective way. I knew I had massive cultural challenges around deeply siloed hierarchical organizations with people at the most senior levels clung on to managing those systems pretty, pretty strongly. I knew that I lacked customer centricity in our product and service design.
So you have to start with what problem am I trying to solve? And you have to start with being able to articulate, then, why you're going to do certain things to solve those problems. And hiring a head of agile won't let you do that because agile fellows are really lovely and really important, but they’re often not that commercial and they can't tell your business story. So the first job you've got to do as a CHRO: understand your business context, be able to define the problem you're trying to solve, and then start building a roadmap that's going to help actually sell that story — whether it's to your CFO, your head of strategy or your CEO — and start the conversation. But don't start with agile.
Josh Bersin: 51:08
So as I understand your structure, and I don't know the details, you have a product and technology organization that deals with all of the products and technologies for Telstra, right? And then you have market-driven groups based on different market segments?
Alex Badenoch: 51:21
Josh Bersin: 51:24
That's org design at the highest level, right? Do you think HR people should be thinking at that level? Is that what we would have? By the way, we are working on a program in our Academy, and it was designed to try to give you guys this opportunity.
I mean, I certainly believe in that because that's the essence of making the people function work — is having people organized effectively. I remember when I was at Deloitte, just one more thing and then I want you to talk about it. We would get hired by companies to do this, and some smart consultant would come in and there'd be 150 slides. And then all of a sudden there's a new model and everybody's looking at it like, "That's interesting. How does that work?" Because they didn't build it. They couldn't really use it.
Alex Badenoch: 52:15
Being your internal HR and the internal CHRO, you've got an advantage over all the consulting firms. And I think whether it's HR itself for businesses have long thought that you, with all due respect to Deloitte and other providers, Josh, that you bring these people in and they've got some magic set of slides that they can produce and design your organization.
But you've got to understand again, what your business does, how work flows through your organization and also, as I've said, understand what business problems you're trying to face. Because there are many org designs that are okay, but which one do I need now and why? What outcomes am I trying to deliver? So I think HR has to become the organizational design consultant for the organization. And when you design that top scaffold, because product and technology didn't exist as part of our business, it was embedded in each group. We had to have a really clear case for why we thought this design ship was going to solve company problems.
One of the things is by building the product in tech group, we could have one consistent product and technology roadmap, rather than have people who are building either networks without a plan of what products we were going to hang off it, or people who were building products without understanding or having a clear plan for how we were going to commercialize and monetize those. Or people who build a product 10 years ago, which really should be retired, but loved it because they built it and were hanging on to it even though only one customer has it. So by building that one team, highly commissioned product and tech team, I can start to direct my investments.
I can also look at the reusability and scalability of products. So when you think about org design, you have to understand why that design matters and what's going to be able to deliver to the business. That's going to be one of the most important skills, because once you can build that scaffold, then your ability as an HR function to think about how I want to change leadership, how I want to change culture, it becomes a lot easier. So I think it's a core competence of HR now and for the future.
Josh Bersin: 54:47
Well, we're going to talk some more about that. By the way, for all of you that are interested, Alex has joined us as a senior faculty in our Academy. So hopefully we'll get more of her time.
One more question while we wrap up. Again, I really want to thank you for getting up early, by the way. What went wrong? What would you do differently? What were the landmines you stepped on as you went through this, now that you can think about it from about a two-year experience that might help people think this through in advance?
Alex Badenoch: 55:18
Yeah. I think there's probably two things that still stand out for me. In our original organizational design, we were even more radical in actually removing the subsegment of our customer-facing groups. So we said, "Let's get rid of Telstra Enterprise, let's get rid of Telstra Consumer and put them all into a segment layer and put everything into channels." It's still one, but I'm not sure we should have compromised on, because we left a couple of victims in the middle of the organization, which I think still today cause us some challenges in control. People trying to hold on to traditional control ways of leading. And I suspect in the next 12 months, it's a topic that we'll improve.
Josh Bersin: 56:13
In customer service or in the whole business of selling and everything?
Alex Badenoch: 56:18
In the design of our segment proposition. So while someone builds the product, if I run segment, I do pricing and proposition to my segment. It's in there that I think we still have a next level of change that we could have gone after harder and faster to accelerate the shift in business and drive better productivity.
I think the other is that while we had a very clear [idea] of how we were going to change the financials and the operating model of the business, we found finance harder to change than we would have liked. And, Josh, you're laughing because it really shouldn't have been a surprise. But we should have gone after that harder and faster because aligning your financials... People follow money in organizations. And aligning that faster and earlier in the journey would have saved us a lot of pain, a lot of frustration.
Josh Bersin: 57:29
I don't know the finance function super well, but I know a lot of P&L content. I don't know if there are a lot of financial systems that are designed to run this kind of a company well. I think most professional services firms just wing it.
Alex Badenoch: 57:45
Yeah. We're building most of the capability in our HR systems. So our resource management and team costing, all of that, we're building into our HR systems and then interfacing into finance.
Josh Bersin: 58:01
So maybe these companies like SAP and Workday and all of them, they haven't really built systems to optimize this kind of an organization yet. I mean, that's my sense.
Alex Badenoch: 58:12
Yeah. We've had to use some overlay technologies from small boutique technology, because even your best systems are still built assuming a very traditional organization.
Josh Bersin: 58:26
Well, that's a big gotcha. For those of you that are drinking the Kool-Aid here, is that you have to have the systems and finance people to support this.
Wow. You know Alex, I can talk to you for four hours, but I think we better stop so you can get to work. Thank you so much. This has been absolutely incredibly interesting. I know from the people online there's still close to 450 people left, have asked a lot of questions. We'll go dig into these questions and get you guys more answers.
And I just want to thank you for getting up early and helping us with this and all of your leadership. You've really, to me, created a role model for the profession in many, many ways. A lot of people made the comment that you're a chief strategy officer, a COO, you're really much, much more than a CHRO. And I think that's an inspiration to everybody in the HR profession. Thank you.
Alex Badenoch: 59:17
Elizabeth Clark: 59:21
All right. Well, thank you for that fascinating conversation. Alex, I’ll second that, thank you for getting up early. And Josh, great to see you. Thank you very much.
Josh Bersin: 59:29
We will try to answer as many of the questions as we can in the post-production. Bye everybody. Thanks Alex.
Paul (Moderator): 59:39
Thank you for joining today's session. You may now disconnect and have a great day.