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Instituting a Gold Standard for HR Services

After reinventing herself, Hertz CHRO LeighAnne Baker helps the world’s biggest car rental brand do the same through selective outsourcing.

by Andy Teng

The Hertz Corp. has seen a lot of changes during the past few years, bouncing between various owners and public and private status. In 2005, after a private equity group bought Hertz from automaker Ford and took it public the next year, newly anointed CEO Mark P. Frissora turned his attention to streamlining the company.

One of his priorities was to name a leader to revamp Hertz’s HR operations. He quickly found LeighAnne Baker, who had served in a similar role for Reynolds and Reynolds and whose career, in a sense, embodies the possibilities of transformation.

“I was the first member of his team,” Baker recalled. “I came here because of the excellent brand of Hertz and to be part of the team to transform Hertz from top to bottom.”

Baker, who joined the company in April 2007, wasted no time in her efforts to transform HR, inking one of the largest recruitment process outsourcing (RPO) deals ever, signing providers CDI and Spherion this past June to a five-year global deal that will eventually encompass much of Hertz’s global hiring. In August, she made another bold outsourcing decision when she approved a five-year deal with Affiliated Computer Services (ACS) to provide all of the company’s learning services. But more than just signing two HR services contracts, Hertz’s decisions clearly affirm the market’s move toward point-solution HRO instead of comprehensive contracts, which in many instances have proven more unwieldy and taken longer to implement than expected.

Baker herself is no stranger to transformation, having worked her way up from small-town Ohio to the highest reaches of Corporate America. She grew up in the tiny town of Monroe, OH, where her father was a teacher and coach. As one of five children, she recalled, “I learned competition and teamwork very early.”

But Baker’s transformation is about more than just her journey from rural America to corporate leadership. Along the way, the one-time industrial engineer also cast herself in new roles, continuously evolving and developing personal and professional skills. Today, as senior vice president and chief HR officer overseeing services for 30,000 employees worldwide, she is helping to support the human capital needs of one of the biggest global brands in the car-rental business, and Baker is leaning on HRO to get the job done.
Although Baker noted that Park Ridge, N.J.-based Hertz, was “clearly looking for the economics of outsourcing,” there were other, more strategic motivations.

“We wanted to focus less on the tactical administrative chores of HR and move up the value chain to where we were doing more strategic pieces of HR, mainly around talent management and organization advancement,” she explained. “The basic belief we have is our true competitive advantage comes through people and processes, and the HR function is here to deliver those.”

Hertz’s recruiting was formerly performed in the field, so an HR manager in San Francisco was using different systems and processes from one in Boston. Now candidates are all subject to the same screening process.

“By the time we see the candidates, we already know because of working with our recruiting partners, they’ve got the qualifications,” Baker said. “They’ve passed the basic assessment; they can do the job. The way we did it before, we had to interview people and do the background checks.”

Along with quality, efficiency played a big role in Hertz’s decision to outsource. “By pulling it together and outsourcing it, you’re going to get a lot of efficiencies plus higher-quality candidates coming through the door,” Baker said. “But we would not have done it without a clear business case showing it was the right thing to do.”

As for why she chose Spherion and CDI, Baker noted that they were able to put together a deal that addressed Hertz’s needs, from its front-line hourly workers to those near the top of the organization. Spherion is recruiting the former, while CDI is focusing on the managerial level and above, an area that Baker said is CDI’s sweet spot. In addition, CDI, which is serving as the master vendor, provides overall product management.

“Our partnership is really with CDI,” Baker said. “They’re the best at developing a
comprehensive program to meet our strategic hiring goals.”

But the hands-on executive added, “For really key hires, if we’re going to hire a top-level executive, we’re keeping that in-house. Those are hires I want to be personally involved with.”

Baker pointed out that both CDI and Spherion have global reach, as does ACS. That was a key requirement for Hertz, which has a presence in nearly 150 countries.
In transforming HR, RPO was just one piece of the puzzle. Baker saw learning as another service that could be best handled by an external provider. As part of its deal with ACS, the vendor is charged with designing all of Hertz’s training programs as well as administering them—via the Web, a podcast, or an instructor—and tracking results.

“They have great technology to help manage the learning processes,” Baker said. “They’re going to do everything in the life cycle of an employee, from on-boarding to on-the-job training to special development—for example, for a new manager who has to learn new-manager 101 training.”

The deal allows Hertz to offer more training and keep the emphasis on where the company wants it: the employees. “We have the stated goal to be an employer of choice,” Baker maintained. “It was a good global move for us to be able to scale up, but also we have increased demand for learning and development of our people. It was a way for HR to deliver the services for those demands.”

There may be more outsourcing deals down the road for Hertz. “We’re reorganizing our centers of expertise around the core competencies,” Baker said. “If it’s not a core competency, either you reengineer it to make it really lean and mean, or you look for other alternatives, like outsourcing.”

Understanding Lean
If any HR officer is best suited to understanding the concept of lean, Baker is it. As a professional who started her career as an industrial engineer, she brings to her role as chief HR officer all the disciplines and process expertise of an operations insider—a quality that old-school HR leaders typically lack.

After attending Capital University in Columbus, she joined Timken Bearings as an industrial engineer and worked her way up to plant manufacturing manager.

“I gravitated to manufacturing because I had worked in a factory during a college summer, and I saw how much influence the plant manager had on improving the working lives of the people,” Baker recalled. “As a plant manager, you focus on managing the supply chain logistics and materials, and it’s about improving productivity through people. My plant won the governor’s award for excellence in manufacturing. We empowered people and did a lot of things right.”

She said she also found the work engaging. “I liked the environment of manufacturing,” she added. “There’s always activity. You see products being made. There’s a lot of analysis—back to my focus on outsourcing and making sure there’s a return on investment.”

In 1999, as part of a career development program, Baker attended a 10-month Sloan Master’s Program for mid-career executives with leadership potential at the Stanford School of Business. There she further honed some of the management skills she brought to Hertz. The training also grounded her for the shift into the HR profession.
In 2005, she left Timken to take on her first HR leadership role at Reynolds and Reynolds, a provider of IT, software, and services to auto dealers around the world.

“Timken is a very solid company, but I was approached to be the top HR officer for a global company,” she explained. “I really liked CEO Fin O’Neill [at Reynolds and Reynolds], and I knew we could do some excellent leading-edge HR work.”

While becoming an HR executive might seem a radical shift from plant manufacturing manager, Baker said the two positions shared certain fundamental similarities. “Many of the issues I dealt with running a manufacturing plant were people-related. Having grown up in operations, I had a lot of credibility in HR; people knew I had the experience.

“Chief HR officers must know the numbers as well as anyone else on the top team. My operational experience has given me business acumen. But more importantly, business leaders can count on me to come up with practical solutions because I’ve walked in their shoes, and I know the pressures they are facing on a daily basis. That’s where the credibility comes from.”

In 2007, Reynolds was taken private, and Baker left for Hertz because she wanted to continue her career with a global public company, she said. Baker said she’s afforded an opportunity at Hertz to recast HR in a new way, partly helped by HRO. But regardless of whether the solution is internal or external, Baker said her mission always has been about giving employees a better experience.

“You think back to the gold brand of Hertz; it’s always about excellence. Sometimes it comes from outsourcing as opposed to reengineering or doing something internally. For the HR department, it’s all about giving the same service to our employees that we give to our customers,” she said. “But I think [embracing outsourcing] is a company by company situation and decision. It depends on what you’re best at. For us, it’s all about our employees because they’re so visible to our customers. So for us, it made a lot of sense.”

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