'What has made it work so well is just generating that really deep trust': CHRO Ken Johnston on his relationship with Purolator’s CEO
When John Ferguson started his role as CEO of Purolator in 2016, he had a big task ahead of him: a big transformation agenda of the over 60-year-old company, including significant changes to his leadership team.
One of these changes included promoting Ken Johnston to senior vice president and CHRO in 2017, after he was VP of HR and labour relations for more than three years at the company. Since then, the relationship between Johnston and Ferguson has grown into one of “deep trust” that’s collaborative and strategic relationship – and aspired to by others.
HRD Canada sat down with Johnston to find out what makes this unique relationship tick, and how other HR leaders in the C-suite can foster similar relationships with their CEOs.
‘Modern CEO’ drives strategy through people, culture
“What has made it work so well is just generating that really deep trust between him and I,” says Johnston.
“That he can throw out good ideas, bad ideas, and being willing to hold up the mirror to him, tell him when I think he needs to speed up, slow down, think differently … but always in a way where it was never threatening to him, or where he'd worry that things he tells me are going to have impacts or go further than just between the two of us.”
It’s a “dream situation” from a CHRO’s perspective, says Johnston, and as the relationship evolved, he and Ferguson began talking about more than just people or culture issues, but the wider strategy of the business as well.
This development is a sign of the overall widening scope of HR as a function, a trend that reflects significant new attitudes towards working life that began with the pandemic, he says.
“I think CEOs – modern CEOs – are starting to see that the most effective place to drive strategy is through people and culture, as opposed to through a CFO or a sales leader or an operations leader,” Johnston says. “All those are super critical roles, but there's not the same viewpoint, if you will, at 10,000 feet as you can have with a people and culture leader.”
Pandemic accelerates CHRO’s role
The COVID-19 pandemic was a catalyst for the HR space, Johnston says, with many CHROs being forced to quicky reassess and change the roles they played within their organizations.
This necessarily led to many HR leaders getting involved in areas they never had before, as workforce and people issues became central to business success for many organizations: operations, health and safety, business continuity, ESG, mental health, even government relations.
“All these things became massive business issues that we had to confront during COVID, and I was in the same place as I think any other CHRO at the time, to say, ‘Wow, we've got a really important role to play,’” says Johnston.
“Coming out of COVID, we learned a lot of lessons about the strategic impact of people and culture decisions, that we took advantage of. There are some companies that I think reverted back to life before COVID, without making a lot of significant changes. We really used that to springboard our culture into what it is today.”
HR-related issues become enterprise-wide
The new CHRO role doesn’t solely involve HR leaders wearing more hats – it also means distributing traditionally HR-exclusive areas to other business areas, Johnston explains. For example, with DEI becoming a more relevant and pressing concern in all industries, those strategies are being shifted to other departments that hold equal responsibility for following through with their own teams and personnel.
At Purolator, DEI doesn’t report to HR but directly to the CEO, says Johnston, “sending a message” that DEI is an organization-wide priority. Plus, every executive, including Ferguson, has compensation-attached targets around improving inclusivity and diversity.
“That doesn't happen if you don't have a CEO that's really focused on people and culture at his level,” Johnston says. “So, all those things are elevated, but the way we’re elevated is not just by having the CHRO have a bigger presence, it's by making sure that all of our business conversations have those items attached to it.”
A strong CHRO – CEO relationship equals balanced decision-making and profit
Another tangible benefit that Johnston has experienced at Purolator, notable since he and Ferguson began working together, is more balanced decision-making at the top that can be felt throughout the organization.
A CEO who has a neutral party to confide in on important decisions can be crucial, Johnston says, especially with sensitive people decisions where they might have no one else to consult within the organization.
It can be lonely for the CEO, he says, and if the CHRO can successfully create a “safe zone” for them to air ideas and get trusted second opinions, the whole organization can benefit.
“Since John came in here, and since we've been able to totally reshape this culture, our revenues have more than doubled,” he says. “Our earnings have more than quadrupled just in the last six years, seven years, and we really didn't change anything else, other than really reinvigorating our culture.”
CEO-CHRO relationship building must be organic process
Although he seems to have it figured out now, Johnston admits there isn’t a “magic formula” to forming an ideal working partnership with a CEO.
It does come down to personality, he says, and it’s a process that must occur organically – but the CHRO is uniquely positioned to be the “neutral, strategic leader” to have those difficult conversations with and co-strategize on solutions.
“Sometimes, you get a great CFO that can be balanced and do it, but outside of that, all of the other functions are really leading a silo that is really tough to break out of,” he says.
In giving advice to other HR leaders who would like to foster such a collaborative relationship, Johnston advises assessing the life cycle of the business and where the CEO is positioned within it, and endeavour to provide the support they need.
“It's not easy. It has to be a bit egoless, and you have to be willing to have a lot of early morning, late night conversations on drives home, things like that. And it takes time to build,” says Johnston, adding that like any relationship, it has to be a two-way street.
“Both of them have to want it. You can push, it's like any relationship – if one person's trying harder than the other, then it's not going to be effective.”