Smooth Operator: Kimberly-Clark’s Liz Gottung

Soon after taking on a corporate HR role at Kimberly-Clark in 2001, Liz Gottung found herself at a turning point.

The company, maker of such iconic products as Kleenex, Scott tissues and Huggies diapers, was struggling. Profit margins were increasingly under pressure, earnings per share were sluggish and investors were rethinking their approach to the 140-year-old company. At the same time, a comprehensive review of the company’s HR practice for its 60,000 employees across the globe identified a serious disconnect between HR and business leader stakeholders.

“We were a 100 percent hire at entry-level, grow-your-own company,” Gottung said. “We started to believe as we looked in the mirror that maybe we were drinking a little too much of our own bathwater because we thought that two-thirds of this group of 100 were exceptional leaders, but our business results did not bear that out.”

Kimberly-Clark’s business was ripe for transformation, and Gottung was in the right place at the right time to lead HR’s contribution to the cause. It turned out she had the right mix of experience and skills, too.

From Factory Floor to the C-Suite
A veteran Kimberly-Clark operations manager, Gottung moved into the top HR spot in 2001 after being recruited to the corporate headquarters by Thomas Falk, then the company’s chief operating officer.

In some ways it was a return to her roots. A student of business and language at the State University of New York at Albany, Gottung had dreamed of a career as a diplomat, jetting off to far-flung locations to conduct bilateral negotiations and solve international crises. But after graduation Gottung found herself closer to home when she landed a labor relations job at a Kimberly-Clark manufacturing plant in 1981.

“I was solving problems but I wasn’t in Italy. I was in Memphis, Tennessee,” she said with a laugh.

A succession of local HR roles followed during the next 10 years before she moved into operations, inspired by a boss who encouraged her to expand her portfolio.

“[In HR], I would give people advice and they would say, ‘You don’t understand what it’s like at 2 in the morning on the night shift when everything is going to hell in a handbasket,’” she said. “I thought, if I go and do that job I’ll be much better equipped to help advise and counsel later. I fully intended to go back into HR, but when I got into manufacturing as an operations manager at a tissue plant I just loved it.”

For the next decade, Gottung honed her operations experience in manufacturing and operations roles at four Kimberly-Clark plants, eventually becoming manager of a plant in Connecticut and later Mississippi. The abilities she developed as an HR professional — bringing people together, doing root-cause analysis of problems and finding and connecting technical experts — proved to be an unexpected boon.

“It was very unusual for Kimberly-Clark to put non-technical folks in our key operations roles, but I found my HR background was a perfect fit,” she said. “So frankly, when the COO called me and said I’d like to talk to you about coming back into HR, I was initially very reluctant.”

Falk, who would go on to become CEO in 2002, thought the company was underestimating its HR function and saw potential in managing its human capital more effectively.

“He convinced me that he had a different vision for HR at Kimberly-Clark, which was to some extent a forgotten function,” Gottung said. “We were more back-office paper pushers and compliance type of folks.”

Gottung was named vice president of human resources in 2001 and became senior vice president and chief human resources officer in 2002. In Gottung, Falk had a lieutenant whose 10 years of operations experience gave her a broad network and the ability to speak the language of the business. That experience gives HR leaders a couple of advantages, said Peter Cappelli, professor of management at The Wharton School at the University of Pennsylvania and director of Wharton’s Center for Human Resources.

“The big thing is awareness of the needs of line managers,” he said. “The second thing is credibility: HR people who have that experience are more persuasive with line managers and with the top executive team.”

It also allows HR leaders to see the direct connection between programs and results, whether those results are good or bad.

“In HR, so much of what we do is a bit indirect,” Gottung said. “We’re coaching, we’re providing advice and counsel, we’re making recommendations. We typically plant the seed, we water it, we have to put fertilizer on it, we hope it grows, we nurture it over long periods of time. In operations, it’s very immediate. If you make a mistake, you see the implications generally quite quickly.”

That kind of operational experience in HR executives may be a casualty of increasing career specialization. Cappelli estimated that about 45 percent of corporate HR heads began their career in HR and did not appear to have ever had P&L responsibility.

“A generation ago, it would have been very common because all top execs had rotational assignments that gave them such experience,” he said. “It isn’t a requirement now.”

Manufacturing a Global HR Function
One of Gottung’s first tasks after moving into the corporate role was to bring together the regional heads of HR to chart a path forward.

“We started working together really for the first time in the history of the company,” she said. “As we started to deliver some success … it started to become a little more clear that we weren’t leveraging our scale very well. We had massive duplication — 42 different on-boarding programs and so on — and that was wasteful and inefficient.”

They also decided that programs were too North America-centric and needed more global flavor. Balancing global and local priorities is tricky, and one danger as companies navigate their international waters is that local HR managers can go rogue, said Ed Lawler, professor of business and director of the Center for Effective Organizations at the University of Southern California.

“One of the important things to do is to rotate them back from that position to corporate so that they don’t become too embedded or too much of the mindset of the local country and fail to pay attention to the corporate side,” he said. The same holds true for corporate HR staffers: They should be rotated into the field so they don’t become too focused on corporate priorities at the expense of regional needs.

To tackle this problem, Kimberly-Clark designated program managers in every region who were tasked with bringing regional needs to headquarters. They were also given joint leadership of projects and initiatives “so that we could make this feel and taste and smell like we’re a global organization instead of a North American multinational who happens to have operations in other places,” Gottung said.

Next, the HR team tackled leadership assessment and development, creating new leadership competencies, implementing cognitive skills testing and 360 reviews and interviewing external candidates for leadership positions. But the real spark to change was a review of the top 100 leaders conducted by an external consulting company. Instead of the 70-plus exceptional leaders they expected to have, the company really had only 10.

“That was a real wake-up call for us,” Gottung said. “That also lent some credibility to me and my organization that had been pushing the talent agenda — that we needed to differentiate performance, we needed to get much more rigorous on assessment and selection, we needed to do a lot more around our leaders. Suddenly there was a head of steam to support this.”

Ensuring Smooth Operation
Now in the top HR role with global responsibility, Gottung harnessed that steam to create the company’s first human capital strategy and HR roadmap tied into Kimberly-Clark’s five-year business plan, implemented in 2010.

First up was the promised revamp of executive development and succession planning. Her team put in a new development program using Harvard Manage Mentor alongside language learning from Rosetta Stone and began looking outside corporate walls to recruit new leaders.

“Twelve years ago when I started, 85 percent of our hiring was done on campus,” Gottung said. “Today 25 percent of our hiring is done on campus. You can imagine the culture shift in bringing in so much external talent in the last five years and bringing in people that didn’t grow up here.”

That shift was complicated by external corporate pressures. In October, the company announced it was giving up on its diaper business in most of Europe, a move that could eliminate as many as 1,500 jobs. In addition, the company’s ongoing cost reduction plan has wrung out $1.6 billion in savings during the last eight years with an additional $400 million to $500 million targeted by the end of 2013.

That poses a challenge to HR, a traditional cost center. To overcome that barrier, Gottung puts important HR implementation decisions into executives’ hands and arms them with facts about the implications of their decisions. It’s important that HR leaders don’t “overpromise and underdeliver,” she said.

She pointed to a recent instance where she had to tell the executive team she needed an extra $24 million for a talent management program. At a time when all departments were directed to keep overhead growth to zero, she articulated the tradeoffs that would have to be made to carry it out.

“If you want more than this or you want to change this, then we have to have another conversation,” she said. “The group ended up saying, you have to do all of this, and you have to do this faster, and you can’t take anything off the list … and there’s a few things we want you to put on the list.”

They found the money, and what they couldn’t find HR committed to saving in other areas. Running a lean department has become a core strategy for HR success, delivering $13 million savings in 2010, $14.5 million in 2011 and almost $8 million in 2012, Gottung said.

“That is not reducing head count in HR and it’s not reducing services,” she said. “It’s getting really smart about what we’re going to do. It’s eliminating duplication. It’s getting very targeted in our negotiations with vendors.”

Gottung also deploys executives as champions for specific HR initiatives. The CFO sponsored the company’s performance management redesign. Two unit presidents led a global compensation review, and the head of the international business oversaw the implementation of Workday, a new enterprise resource planning software system.

“We have found that bringing the senior leaders in to help shape and design on the front end has been a huge breakthrough in terms of stakeholder management and take up of these initiatives,” she said.

In the end, it’s watching the finished product of her HR team’s work that gives Gottung a thrill. It’s the same feeling she said she got as a plant manager when the products her team produced appeared on the shelf at her local grocery store.

“That’s what has kept me here all this time, to be given the opportunity to create something so transformative in this company,” she said. “We call [our strategy] unleashing the power of our people. The thing I’m so excited about is I’m watching it happen here now every day. Every day.”