CV HIGHLIGHTS

2011-PRESENT: Global managing partner – people

2007-10: EMEIA managing partner – accounts, industries and business development

2004-07: EMEIA managing partner – people

2001-04: Global managing partner – markets

1998: Joins UK executive team

1992: Joins Ernst & Young as a partner in the UK financial services group

1980-92: Various roles within financial services

Taking the world view

How to work globally across 147 countries while fitting in with local rules and regulations.

A?s part of the 16-strong global executive at Ernst & Young, Mike Cullen knows his numbers: 152,000 people, 8,500 partners, 147 countries, combined global revenues of circa $23 billion (£15bn). A former financial services partner and now a global managing partner, his favourite number adorns his office – a football scarf emblazoned with the number seven, worn by his Liverpool FC hero, Kenny Dalglish. But the numbers that concern him currently are to do with global expansion, consolidation and renewal.

The firm has invested more than $1 billion in the past five years in emerging markets, in particular Brazil, China, Africa and India. In 2011, the Brazilian business of Ernst & Young (E&Y) achieved revenue growth of 26 per cent, while India, Africa and China increased revenues by 22 per cent, 19 per cent and 18 per cent respectively. Largely because of growth in those regions, 11,000 was added to the headcount last year. This was achievable thanks to a move away from local control towards a global – and, in some ways, more centralised – approach.

“For the first 160 years or so, E&Y was largely built around a franchisee model. Each of the Big Eight firms, or the Big Four of today, would say ‘Come and join our organisation, be part of the global brand, but largely run yourselves as self-contained entities,’” says Cullen. “But in a global economy, clients demand that you have to evolve very quickly from that model to a more globalised approach.”

Cullen asserts that there is a difference between globalisation and centralisation. “We can globalise our approach: for example, we now have a global financial reporting system, as opposed to 147 independent local systems – what you might call a global backbone with a global L&D system and a global account management framework.” But there are certain things that cannot be centralised: “Everything we do is against a backdrop of local rules and regulations,” he adds. “We have a global approach to management, while being respectful and compliant with local regulators.”

But as shifts in the macro-economy accelerate E&Y’s move toward a global approach, it leaves the company with a paradox: “How do you move towards the global approach to business that clients demand, while maintaining the spirit of partnership?” asks Cullen. “Some people liked partnership in a franchisee model, where they could effectively do what they liked.”

One answer is an E&Y strategy known as ‘the spirit of partnership’. This says that the working environment needs to make partners more effective in the field, rather than have a management structure that makes them feel more inhibited. “You change the mindset: the principal job of anyone in a global organisation is to focus on enabling and empowering the partners to be more effective and to deliver exceptional client service,” he says.

Another important aspect of globalisation is E&Y’s move toward shared service centres and “talent hubs”. There are three global shared service centres in India – Bangalore, Gurgaon (in New Delhi) and Kerala – as well as ones in Dalian in China, Wroclaw in Poland and Buenos Aires, Argentina. These increasingly handle much of the global firm’s back office requirements, including basic HR functions, with the global talent hubs based within three of them – Buenos Aires, Bangalore and Gurgaon – taking on some of the more basic professional front-line tasks.

Cullen explains: “The key is our price point. Many clients ask us in tender documents where we expect to do the work. If we said ‘in New York’, they’d presume we must be expensive. But saying: ‘We expect to cover this aspect in New York, but our processing centre in India or Poland will be handling this aspect’ – that’s what global clients expect now.”

The quality of the work is high, adds Cullen: “All of our people servicing clients in India are graduates, and 70 per cent of them have second degrees too. The inherent quality of the emerging middle class in emerging economies is incredible.” So is there a temptation to move even more responsibilities to the service centres and talent hubs? “The future model of the business has got to be further movement – subject to local regulations – in that direction, because of the pricing pressures on our business,” he says.

With the added trend for Western workers to move out of the workplace and into remote or flexible working arrangements, Cullen predicts that while the business will continue to increase “we will have to adopt more flexible approaches and a technology-enabled workforce”. Any increase in premises, he feels, will largely be in emerging markets.

Engagement and the bottom line
Proving the business link between engagement and performance, and engaging with alumni

Cullen believes that employee engagement is central to building one global E&Y. Unusually, however, he has sought to prove it, describing it as an attempt to “link people’s hearts and minds to their wallets”.

“All the academic surveys out there say the most engaged employees drive business performance,” he explains. “So we said OK, but what does it mean for E&Y?” The answer was to run a major global survey within the business to establish the link between engagement and performance – coined ‘business linkage’ – by comparing the global engagement survey with the brand favourability index (scores given by clients).

The results surprised even Cullen. The survey – which used comparisons against local market norms to ensure there was no regional bias – found a clear correlation between the performance of engaged employees and brand favourability. There was also a 11 per cent difference in the 12-month retention rates between the most engaged and least engaged business units, a gap equating to tens of thousands of pounds.

“All of a sudden we got people’s attention,” says Cullen. “We could now demonstrate a direct link between engagement, retention and what clients think of us. We could show that the academic research was real in the context of our business, through global data.”

The study had a huge impact, feeding directly into the new people strategy. It also backed up the firm’s approach to employee engagement. This maintains that employees should feel part of the organisation even after they leave – an important issue when you consider that while in the last year, 38,000 people joined the firm worldwide, 34,000 people left.

“A significant proportion of those who join E&Y will not draw their pension from here,” says Cullen. “They will be out in business, running businesses, entrepreneurs. The essence of our engagement approach became this ‘whole of life’ concept. If 34,000 people leave, what was their experience – do they talk about E&Y at dinner parties? Are they proud to have worked here?”

Cullen describes E&Y as a “recruitment and development machine”. It’s the modern reality that “not everybody can progress through the pyramid structure that is inherent in professional services”.
“For every thousand graduates you recruit, you’ve only got 250 manager slots,” he says. “Most of the people who come through our doors now live somewhere out there in the economy. How they feel about E&Y is crucial to our proposition. We want them to feel a lifetime member of one of the best business networks in the world.”

Dedicated alumni magazines share news from past colleagues, and directories help alumni to expand their personal and business network, search for fellow alumni and see what they are up to. In the US, 50 alumni serving on Fortune 500, FTSE 250 and other boards attended E&Y’s second Global Board and Governance Forum. Other annual alumni events take place every year, from Azerbaijan to Austria.

“We have a day one alumni strategy where we take alumni with us to on-campus events – they explain to potential recruits how they trained at E&Y, then left to run a business, for example. It’s about presenting the opportunities both inside E&Y and outside,” says Cullen. “That’s pretty revolutionary.” The concept of developing future leaders for business and commerce, not just for E&Y, may seem more applicable to a professional institute than an organisation. Cullen admits a group of external analysts were recently taken aback by the idea, as it runs against the grain of more conventional HR thinking, where retention is the golden rule. But he is more than happy with bucking trends. “Our job is to create career value for people. However long they stay, their exceptional experience here will last them a lifetime. It’s a completely different value proposition.”

Benchmarking best in class
Developing a single global HR strategy that people will buy into at a local level

Cullen’s “business linkage” work meant that the proof for engagement was there. The problem then, he says, was how to drive engagement.

A new global people strategy – running to 78 pages – was duly drawn up and disseminated. Central to the strategy was a “maturity framework”, which – as with business linkage – aimed to unify hearts, minds and wallets. “We started with what best in class looks like, both from the business linkage work and research with a professor from Harvard Business School in January 2012,” says Cullen.

“From there we determined the required E&Y baseline. What we’re doing at the moment is asking every one of our business units around the world to assess themselves against that baseline.

“For example, one part of the framework says ‘the objective is to provide a best-in-class candidate experience and be the choice of future leaders’. If you are below baseline, you’ve got to get to baseline within one business cycle. If you are at baseline, we want you to transition to best in class. And if already best in class, then we want you to become innovators in the business, because what is best in class today will not be best in class tomorrow.”

The maturity framework is designed so that every part of the business, no matter where it is in the world, can use it. “One of the historical push-backs to any global strategy is... ‘this global strategy is great, but we’re already far ahead of this, so we’re just going to carry on doing our own thing’. The other side of the same coin from a developing country is: ‘It’s been written by Anglo-Americans who have obviously never set foot in an emerging market. We’re a million miles away from what you’ve set out... so we’re just going to carry on doing our own thing,’” he says.

Cullen believes he now has a benchmark framework that will avoid those pushbacks as every business unit can find itself on it and plan development activities accordingly. Initial self-assessment will also be checked against client and employee feedback surveys to ensure accuracy.

This, says Cullen, is an example of globalisation rather than centralisation: a global people strategy that can be used as a local tool. He describes it as a “generational shift”, and has recently returned from a global roadshow presenting the strategy across the Americas, Asia, Russia and EMEIA.
It is a blueprint for HR for years to come. “I don’t allow my HR team to say ‘because it’s the right thing to do’,” says Cullen. “We have to demonstrate the business linkage of everything we do – at the end of that you can say ‘and, it’s the right thing to do’. But if you lead with it, you get lazy.”