$29 Billion CPO Reveals how they Manage 70,000 Employees - Michael Bowes

0:00This is going to shock you, but when we looked at our annual bonus, we had over a thousand different calculations for how it was paid because it was so kind of based on individual business units. And so if you were running this brand in this country, you were paid on a different bonus then. And so we said, nope, there's nine different business units and that's it. And so, you know, so everybody is kind of rowing in the same direction and winning or losing on the same metrics.

0:37What would happen if we just told the truth? Welcome to TruthWorks, where we dig into the nitty gritty of leadership and work. And what needs to change? I'm Jessica Neal. And I'm Patty McCord. Our journey together started in HR, but trust us, it's evolved into something wild, honest, and well, a bit rebellious. So throw out the handbook. We're here to redefine rules to work for us, not against us. Let's dive into another episode.

1:15Hi, everyone. Welcome to another episode of TruthWorks. I'm Jessica Neal, your host, and today I'm here with a very special guest who I'm excited to have on the show, who I just know we're going to have so much to talk about and we have so much in common, but Michael Bowes, welcome to the show. Let me tell you a little bit about Michael. Michael is the Chief People Officer at Estee Lauder, and Estee Lauder is one of those iconic companies, iconic brands. tell us a little bit about Estee Lauder because everybody knows Estee Lauder. I know Estee Lauder. Everybody knows it as, you know, women's makeup, but I know that it's much more than that.

1:56You guys have a very, very large business. You don't just do makeup and, you know, products for women. You are a large company of cosmetics and I think expand all over the world. So tell us a little bit about Estee Lauder, but also I just want to say you were promoted to be the chief people officer, I think last year. Yes. April, April of 2025. So almost a year in the role. Yes. Almost. Almost. So we're going to talk a little bit about that too. So, and erase my childhood memories that are not. No, no. I'm sure there are good ones. Actually, probably the other memory that you have is Clinique 3-Step, which is, so that's an Estee Lauder brand.

2:43Okay. That was my, so Clinique was the first makeup I ever got. Of course. And the first skincare routine and the first sort of sense of like, oh, I'm going to do this in a ritual way. And it's the lotion. Yes. Dramatically different. Yep. Dramatically different moisturizers, still one of the most popular moisturizers on the market 70, 60 years later. So Estee Lauder is, as you said, large portfolio company, you know, company of many brands, but started with a female founder in her kitchen in Queens. Mrs. Estee Lauder, you know, really sort of made her initial creams and scents in her kitchen and then sold them to department stores in New York.

3:29So really started as a real founder brand. How long was she involved in the business? All the way up until the 2000s. So I think obviously differently. And then her son, Leonard, became the CEO and really oversaw the expansion of the company and oversaw the development of the Clinique brand as a second Jerry brand. And then obviously, we acquired Mac, which is one of the most famous makeup brands and Bobby Brown and Joe Malone London fragrances. Love me some Joe Malone. Oh, good. Yes, the beautiful fragrance brand. And so it really over the years grew into a portfolio of amazing, uh, really only prestige and luxury brands, La Mer, uh, the skincare brand that you may know is one of our brands that was developed with a, um, with a scientist in, you know, in part, um, in our labs in Melville, Long Island, which we still have today.

4:37Yes. So, um, La Mer and I, you know, it's, I just wish it wasn't as expensive as it is. I'll only buy it at duty. It's a treat. Oh, yes. Well, that is I mean, when we talk about the shape of our business, I can tell you that, you know, travel retail is a huge part of our business. It's a way that we recruit consumers. It's a way that we, you know, consumers can access our brands. It gives us I mean, it's a multi billion dollar business for us now travel retail, just that channel alone. Yeah. In Asia, you know, you travel to Asia. you know the airports are like the greatest shopping malls. It's actually so smart because you're a captive audience.

5:23Yeah. What else are you going to do there? That's right. You're going to walk around and shop. That's right. And you get all the tax advantages. That's right. Right. So whenever I buy big purchase items, it's always at an airport or, you know, or overseas. Yes. Yeah. So Estee Lauder, you know, as I said, It's a multi-category. We have Aveda, the hair care, the vegan hair care brand. And it has a history of finding brands, nurturing them, helping them grow, working with founders, and really trying to deliver something special to the consumer, whether it's efficacy from a skincare standpoint or representation from a makeup standpoint like MAC.

6:12But at a core, you know, a female entrepreneur who built a business from nothing while raising a family. I mean, that is who we are. And that DNA is still in the company today. For sure. How does that, how do you, how does it, how does it play out? How do you feel that in the company? I mean, first of all, we are 87 % women worldwide. So, you know, and a large percentage of that is our sales force that are as counters and all of those things you see. But even our corporate population is 70 percent women and our executive team of VP and above is in the 60 60 percent. So we are really a sort of female represented organization that helps us sort of think of the market in a different way.

7:04Yeah. Well, it's kind of, you know, it makes sense, too, because I think that especially at the time that the company was founded, to have a woman founder at that time was kind of unheard of. Right. Not many of them. And then as you were growing the company, I'm sure other women were able to see a woman in that role and say, wow, this is a place where I haven't seen at the table. Right. Right. The place where I can grow. Yeah. Yeah. And so it's a little harder to do when it's the inverse. Yeah. I mean, I have to say, you know, I've hired many women, especially into senior roles from outside the company, from different industries who will say, you know, it's such a change to sit around a leadership team table and not be the only woman or not be one of two, but have it be a much more balanced.

8:06The energy is different. The way decisions are made. It is different. And, you know, we see it as a competitive advantage. not only because our consumer base is not exclusively women for sure, but predominantly women, understanding that point of view, thinking about things. And then from an HR perspective, a human perspective, it means, you know, there are elements of the work life kind of proposition that we have to think even more deeply about because we know that our workforce is balancing multiple responsibilities in many cases. They are. It's just a fact. Yeah, that's right. I'm one of them.

8:49And, you know, I have been the only woman at the table many a times. And it got better when there was a number two. But there weren't more than that a lot of times. But it's wonderful to see that you have that in the company And hopefully other companies can look at what you're doing and maybe learn from you because you're setting an example. And you don't just have to make, you know, predominantly women products to do this. To do that. That's exactly right. You can do it without that. Yeah. And if you think about it, you know, we're half the population. And so half of your consumers are likely us anyways.

9:35And in most cases, more than half of the actual spend. Right. Who's buying groceries? Who's buying athletic wear for kids? Who's buying, right? Like, I mean, you know, I know my wife is doing 90 % of the shopping in our house just because that's how, you know, she's part of keeping the household together. So understanding that, you know, women are at the heart of consumer decision making is incredibly important. And, you know, we learned that from our founder who thought very much about how women want to interact, want to interact with products, want to interact with salespeople. salespeople, you know, she really pioneered Mrs.

10:16Estee Lauder really pioneered the concept of touch in the sale. So really, you know, applying the cream to someone's hand and rubbing it in and showing in a very visceral and connected way. Yeah, this is how it's and I think that's an insight that, you know, cannot maybe that can't only come but definitely comes from being a woman who knows how women want to engage in that way and understanding that there's a special way to connect. Yeah. Yeah. No, I mean, if you're going to buy these products, you want to know how they feel, how they smell, how they, you know, it's so true. Okay. So you have all these iconic brands and I'm guessing thousands of people around the world.

11:05How many employees are you? 70 ,000 employees around the world. 70 ,000. And where are the majority of them? So our retail population is relatively spread. We have a huge population in China because China is one of our second biggest markets. Obviously, the US as our home market is still our biggest market. We're in 70 plus countries in some way or another. And so we have a big Europe and UK. UK was the second international market we went to. So it's always a very strong place for us. So a lot of it depends on the retail model. Some places are more online driven. And so we have fewer employees there.

11:44So, you know, some are more traditional, and we still have a lot of in-store employees. And then our corporate population is about 14 ,000 with regional centers in the US, of course, in Europe, Hong Kong, Singapore, Japan. Which is very big. Yes. And complex. So let's talk about you for a second. So you and I were talking earlier and you were telling me about the new CEO. He's been in the job for a year now, January. This is your anniversary. And then you got tapped to come into the chief people officer role after that promotion for him, right? And tell us the story of how that all came about because you had a whole history before Estee Lauder working at Tapestry, which is a very well-known organization and many others.

12:44And then you come to Estee Lauder in 2015 and you spend 10 years there and then they knock on your door and say, hey, do you want to do this job? So tell us the story. How did it happen? So, I mean, the kind of through line of the story going all the way back to the start of my career is iconic American brands. So I love, I worked at Nike. I worked at Saks Fifth Avenue in Saks Fifth Avenue's better days. I know. It's so sad. You know, I read that, you know, when it came out And I love Saks. But they have not innovated. Yeah. Yeah, I think it's a tough, I mean, department store channel. Yeah, Neiman, I think Neiman, I don't know.

13:34I don't know their financials, but I would say they're likely not. Well, they're now owned. So actually, Saks bought Neiman. So they're owned by the same. Oh, they're together. Oh, I didn't even know that. Well, there you go. Then they're on the shopping block, too. But I think it's like they're not other brands that are still elite, expensive, have figured out a way to be accessible to more than just the people that can afford them. And I think Saks, in my opinion, hasn't done a good job at that. Right. Has lost that. Yeah, I agree. I mean, I have, it's been 25, 30 years since I worked at SAC.

14:16So, you know, they've done a lot of different things since then. But, you know, certainly the concept of luxury and aspiration, it evolves because the nature of it is about the people that have those aspirations and people change and generations change and what people get excited about and what people feel good about and are looking for changes. And, you know, the ones that survive and adapt are the ones from a brand perspective or a retailer perspective are the ones that know that and have a core that they stay true to, but also know how to evolve with their consumer, with the zeitgeist and with, you know, sort of how people are seeing the world.

15:03and luxury is one of those things that's really changed a lot. And how to excite those consumers is really different. But I really love the concept of iconic American brands. I worked at Tommy Hilfiger and Nike. I mean, you've done them all. I'm older than I look because of our great product. So, you know, but I always had this, and always within different functions in HR. and you know when I was at coach and which became tapestry was when I really found talent as the sort of core I had been an HR generalist which was more typical at the time and I had done a lot of the different functions of HR but then at tapestry I really discovered that you know a that's what I love is the talent piece is finding the right people making sure they're positioned to be the best possible version of themselves that they can be, making sure that the organization is structured in the way to get the best value from that investment that it's making in the talent.

16:07That I really loved and thinking strategically about the growth of the business and where it was headed and what it was going to need from a capability standpoint and how do you ensure you have the right talent strategy to do that. So when I shifted to a state-of-the-art companies after doing a brief stint, as we talked about before in head hunting, executive search, you know, I came in in a talent role. And that's what I did for almost 10 years before I was because it was a month before my 10 year anniversary that I was appointed to the chief people officer. And I was in essentially the same job for most of that time.

16:47And, you know, a I loved it, because we were in growth mode and we were expanding and we were bringing new capabilities in. So talent was at the top of the agenda. So that was great. And I got to work with great people and bring great people into the company and help them grow. But it also meant that when it became time to think about who would be the next chief people officer, you know, I had all of those relationships with the executive team, I had, you know, build credibility with them, as it relates to kind of, you know, who I was and how I do things. And so that was hugely helpful. And I participated in the CEO succession conversation.

17:30So I had been a part of that, not leading it. Of course, the incumbent CHRO led that process with the CEO and the board, but I was involved. And so, you know, I was part of the discussions. Yeah, fascinating. And, you know, positioned me to be a candidate for the role when it became available. Right. So did you did you know you were a candidate or did they just come to you and say, guess what? I think I knew at least that that I was part of the consideration. And I'll be honest, maybe now I told you at the beginning that I was an open book. So now I'll be really open book. I wasn't 100 % sure that I wanted it.

18:14And I don't mean here, but I was never, yeah, I was not one of those HR people who was like, I must get to a CHRO. That just wasn't my motivation. My motivation was always the work and the cool things that I wanted to do and great brands that I wanted to work with. But I really love talent. I would have been, you know, okay continuing to do that. Um, but yeah, that's probably why you got it. Yeah, maybe, maybe. Right. It's like, right. Uh, but the other thing was truthfully, I, I believed in Stefan. I mean, it sounds very, you know, who became the CEO. It sounds very right or I'm not sure what, but the reality is I believed in his vision.

19:00I believed in what he thought the company, he had, you know, had very similar ideas about what we thought needed to change and evolve and what needed to stay the same. And so, again, it became for me less about the title and more about the work, right? Like I was really excited about the work that we could do together, our belief in the company and the power of the brands and the, you know, so the fact that, because, by the way, I took this job over in the middle of a massive restructure of over a billion dollar restructuring program, thousands of people in impacted across the globe so it wasn't a fun time to take the job right it wasn't the time that i was going to be you know rolling out amazing programs and doing you know yeah doing the hard stuff yeah but i believe in this portfolio of brands and the idea that i could play a role in positioning them for the future and we're in our 80 year anniversary this year and the idea that i could play 80 years in positioning this company for another 80 years was the hook.

20:09Wasn't the title. Wasn't the, you know, I mean, conversation is always important, right? But it was the chance to do that. I would be lying. It doesn't hurt. But truthfully, it was about the opportunity to do something really amazing with this iconic set of brands. and, you know, this amazing company. Yeah. Well, let's talk about it because that, you know, every company needs to evolve. And, you know, that's just part of the job, right? And you don't make it for 80 years unless you're doing that. And you don't make it for the next 80 years unless you're doing that. So talk to us a little bit about just you and Stefan thinking about the things that needed to change and what is the vision?

21:03Like, how do you have an operating culture with 70 ,000 people around the world that scales and works? Yeah. So I think the step one, which, you know, again, the advantage of Stefan also being someone who is elevated within the company is that he knew what the issues were. You guys get it. You, like, have the context. Yeah, he knew the culture. So very quickly, you know, it starts with he just had a business strategy that made sense so that there was a kind of, OK, here's a plan. It has five pillars. It's very clear. Everyone in the organization immediately. It's called Beauty Reimagined because, you know, we're a marketing company, so everything has to be branded.

21:46Of course. But, you know, like that. Yeah, it's a good one. um so you know so but everybody immediately understood okay yes you know we need to be where the consumers are that's what we need to invest in consumer facing we need to have innovation at the core these things all and then what are the real tactics behind this that are going to change so it starts with a business strategy that makes sense right and then you do all of the work of like so what parts of our culture support this what parts of our culture need to evolve because they're going to work against our ability to execute this strategy and you start with the executive team to think through those things and you kind of we talk about roots and anchors right what are the roots that help us and we want to keep and nurture but what are the anchors that are holding us back from moving and how do you see the difference between those so that you can evolve in the right places and maintain values and culture in the right places.

22:49And so for us, it landed on a sort of series of commitments that we are making as an organization around how we're going to operate that we think are going to help us sort of make that next cultural evolution. And so it's just things like, I mean, one of my favorites is, we say yes. And it's a simple thing. But when I joined this company, there were a lot of people who felt their job was to protect. There's a very deep sense of protection of the brands. And over time, that started to translate into no. My job is to say no. My job is to protect by saying no. And so really saying, we say yes. Our job is to say yes.

23:34Our job is to find ways to do these things, not ways to stop them. We need to operate like one team. When you get big and complex, and I'm sure Netflix, I know you went from, you know, Netflix, which was still kind of scrappy to a Netflix that was huge. Yeah, we were like 250 salaried to 10 ,000, but not 70 ,000. No, but still, 10 ,000 is a lot. And when you, you know, when you do that, you start to build silos and you build functions and you do all the things. And then suddenly this company that could easily easily kind of galvanize around one idea and act like one team has a harder time doing that.

24:12And so for us, it was like really saying we're one team, we have one set of goals, we, you know, if one wins, we all win. And so we change the compensation design to match that to better reinforce. So it's a lot of things that you look at and say, you know, there's amazing things about this culture that we want to keep. There are great things about this culture we want to evolve. and what are the things that we can do to do those. Yeah. But it is, you know, having sat in your seat, it is very hard to get people to change behavior. Yeah. And so are you finding that challenging or, you know? Yeah, of course it's challenging.

24:57Because you can't, you know, I mean, you and I both know, like you can say be a team, we're one team. today we are one team okay everybody but that doesn't mean that they're gonna actually do it no so how do you get them to do it so i mean some of them are things like incentive design right so right this is gonna shock you but you know when we looked at our annual bonus we had over a thousand different calculations for how it was paid because it was so kind of based on individual business units. And so if you were running this brand in this country, you were paid on a different bonus then. And so we said, nope, there's nine different business units and that's it.

25:40And so, you know, so everybody is kind of rowing in the same direction and winning or losing on the same metrics. Yeah. And you're just, you know, you're like, you're saying, you're sort of getting into the diagnostics of where the complexity is and where the tension is, and you're removing the friction. That's right. And galvanizing everyone around this idea of one team, right? And this idea that, you know, we're, and it also then freed us up to make more strategic choices in your daily operational management, because now you can shift money around if you're a business leader in a different way because you're not constrained by the impact you might have on someone's ability to deliver their bonus.

26:29So suddenly it was like, no, I want you to make a decision from an enterprise mindset. What is best for the enterprise is best for everyone. Yeah, exactly. We had gotten away from that. Yeah, yeah. And it's hard to get back to it, but I'm glad you guys are. So the journey, it's, you know, it's always a journey and nothing. things ever perfect. So I want to know how you're liking the role because having been in the role, this is something that folks on the, that listened to the podcast heard me say, I think it is the hardest role in the sea level. Okay. It can be very lonely. And, you know, there's, there's all kinds of things that you have to do like um of course hr strategy and the talent strategy but then you're the chief medical officer and the chief diversity officer and you're the coo for many many things you know almost for the whole organization and now you're the chief ai strategist which you know congratulations on that promotion yeah and and um and then the other you know massive headwind that i think that this role has that others don't is because it is people focused and you have all these people in the organization everyone thinks that they can do your job because they've worked at another company where they did this or you know hire someone for their team or they do you know performance management for their oh yeah yeah and nobody questions the chief product officer or marketing officer or financial officer as much as they question the chief people officer.

28:20And so I just think it's a very complicated role. It can be magical and the impact can be massive, but it's hard. So how are you doing? How are you enjoying it? Is it what you thought it was going to be or is it different? So first of all, it's a great question. The only thing I kind of left is, you know, everybody thinks they can do your job until you do something really difficult in HR. And then everyone tells you how much they are so glad they don't have your job. Right? You dealt with this very difficult person or this very difficult situation. And suddenly it's everybody tells you they're glad they don't have your job.

28:57But the day to day for sure, everyone thinks they can do. Yeah. So it's, it's a much like I thought it would be and then there are ways that it's dramatically different i think the loneliness part which you know often gets talked about uh is really true you cannot there there is almost no one at the company that you can engage with in the same way that you could when you were in a different role you can't commiserate in the same way with people you can't um you know you can't They can't vent. Yeah, they can't vent in exactly the same way. You also can't just capitulate to your CEO in the way maybe you can in other roles, right?

29:40Because your job is to help them often see things that they don't see or see things differently. And so you, in some, at least again, in how I've observed it, to do it well, you have to have some of the highest levels of courage in dealing with your CEO. The other thing that, you know, no one sort of fully prepares you for is the board and the board dynamics. And suddenly, you know, it's like there's this whole organization that you thought you knew everyone and everything. And then suddenly there's this whole new group that has a lot of say in a very. opinions and opinions and you have to figure them out uh in a very different way and that is uh for sure for sure challenging um and then for us uh we are a family majority share company so i not only have a board to deal with but you know family members and you know that have been very involved in the business in amazing ways and they're we're lucky they're an incredible family and I've you know had the great time of working with lots of them but it is an additional complexity right that you're kind of navigating and then you have a whole team and a whole function that's like what is he doing all day because he's not in meetings with us all the time I know I had I had a woman from my team at Netflix um she she was one of my VPs and she reported to me and um she became the chro for reddit and then called me one day after she got that job and she was like i'm really sorry yeah yeah right i'm sorry i didn't think you were doing anything because i did not appreciate all the things you were doing yeah she's like i just want you to know how sorry i am if i ever gave you a hard time and i was like it's okay it's okay But I mean, they don't know.

31:38You don't know. Yeah, they don't know. And a lot of it you can't share. No, of course. Well, that's, I think, why, right? You can't, you know, you can't talk about it. You can't, you know, they don't see it. It's not like other meetings, you know, that happen very visibly. Those meetings often happen in a more closed door. Yeah, kind of not so visible way. And so that part, I think, is really true. with. So I'd heard it, but like anything else, you know, you know, until you've actually done it, you don't really, you don't get it. I'm lucky. I have a great relationship with Stefan. And that to me is the most important.

32:19If anyone asks my advice about should I take this job as CHRO, you know, my number one thing would be only do it if you feel that level of connection, and you feel like you can have the conversations that you need to have, and that you have them. That's the only way. Because it's so true. And I think, you know, there is high turnover in this role. And I think a lot of it is because of that connection and that chemistry. It has to be there for this to be successful. And, you know, it's both of these roles are very complicated and both of them can be very lonely. The CEO and CHRO. But when you kind of mentioned in this role, you have to have a lot of courage and you're oftentimes the mirror for this person.

33:13For sure. They don't always want to hear that stuff that you're telling them. And when you don't have that connection, then when you're bringing that information feedback, then it's just so much harder. And I think deteriorates, you know, whatever relationship there was faster. Yeah. And you also need to know when to let it go. I mean, obviously not for something that feels valued, you know, so I'm not. You got to pick the hills. Yeah, but you got to kind of go, you know what? Not what I would do, but you're the boss. And so then it becomes knowing what are those, how do I make this, how do I mitigate whatever my concerns were to the degree possible?