[Transcript] Leading Microsoft with Kathleen Hogan

Edaena Salinas: I’m Edaena Salinas, Software Engineer and host of The Women in Tech Show: technical interviews with prominent women in tech.

Transforming the culture of one of the largest tech companies in the world has unique challenges. Kathleen Hogan, Executive Vice President of HR at Microsoft explains why a culture shift is needed even for a successful company. Kathleen highlighted how the logistics change when you run a large organization. We also talked about what needs to happen to accommodate different generations of employees. At the end Kathleen explains why HR is a technical job.

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I’m here at Microsoft with Kathleen Hogan, Executive Vice President of Human Resources. Kathleen welcome to The Women in Tech Show.

Kathleen Hogan: Thank you, great to be here.

Edaena Salinas: Prior to being Executive Vice President of Human Resources, you were leading the Microsoft Services Division, which consists of about 21,000 employees. What are the logistics of leading an organization of this size?

Kathleen Hogan: Well I loved leading Services and having that organization. At the end of the day a lot of it is about thinking about how do you attract, develop and retain exceptional talent. A lot of the lessons from focusing on leading Services I think are applicable to HR as well. When we have something of that scale, it’s really important that you’re super clear on the vision, you are able to be very clear on the priorities and then figuring out a way that you can communicate and connect with 21,000 people is very different than when you’re leading a team of let’s say a hundred people. For me, over the years scaling from smaller teams to ultimately leading a team of that size has been something I have grown and developed I think.

Edaena Salinas: How are those communication channels different? For example you mentioned an organization of a hundred people versus 21,000.

Kathleen Hogan: Well when I had a hundred person organization I would literally be able to have all hands and all 100 people could be in the room and you could really communicate and you had a sense that there was that one-to-one ability to communicate. When you’re in an organization with 21,000 people and maybe five, six, seven layers, it’s how do you make sure that you know all throughout the chain people are seeing the same set of priorities and people see how they accrue to that and they’re also hearing the same message all up and down the chain.

Edaena Salinas: So you rely more on other people to communicate down the chain.

Kathleen Hogan: Absolutely, you rely more on your managers. You’re relying on more of a one-to-many construct, whether it be All Hands or different forms like Yammer. We’ve used a lot to try to scale the communication. The communications function is very strategic. It was really important for me when I moved into first CSS, which about 9,000 people and then you know continuing as I lead all of Services and even in this role from an HR perspective thinking about how do you communicate you know when you have 110,000 people in the organization and yet still try to be authentic and accessible I guess.

Edaena Salinas: What does the Microsoft Services Division do?

Kathleen Hogan: The prior one that I was leading it’s our consulting and support arm. So we have all of our consultants that are out there implementing all of our products with customers. As well as our support organization that supports all of our products and customers from the Fortune 500, all the way down to consumers.

Edaena Salinas: After Satya Nadella became CEO of Microsoft, Microsoft began to go through a culture change. Why does a company that’s already successful need to go through a culture change?

Kathleen Hogan: Well I think it’s the old “what got you here may not get you there”. There are so many different disruptions in the industry. You had to pause and say what about our culture is really helping us and maybe what needs to evolve. It was a great opportunity with Satya coming into role. He’s only the third CEO we’ve had in the entire company and so that’s always a unique time to say, what are the things about our culture that we want to preserve and there are a lot of things about the culture here that are amazing over the last 40 years. If you think about our culture of giving, I love The Giving Campaign where every year the employees donate over 100 million dollars and they volunteer. If you look at our founder Bill and what he’s done in the world, it’s amazing. I think our culture of big bold ambitions and taking on big challenges is something that we’re really proud of. But when we reflected on the mobile-first cloud-first era and what we were going to need to succeed going forward, there were elements that our employees were telling us that we needed to evolve. In some areas culture of fear and maybe that notion that the competition is on the outside as opposed to the competition is internal. Those were some of the things that ultimately we looked at. Satya would say it was moving from a culture of a know-it-all to a learn-it-all. When you’ve been very successful, sometimes you can fall into the trap of thinking you have all the answers. But if you’re really going to be relevant for the next 40 years, how do you step back and have that open mindset, that growth mindset where you’re listening and you’re seeing around corners and you’re not thinking you have all the answers.

Edaena Salinas: How does a company of over a 100,000 employees begin to go through this culture change towards a growth mindset?

Kathleen Hogan: I would say humbly and intentionally and where you’re seeking to get input and support from a lot of people. It would be foolish to think that you can do this overnight and it would be foolish to think you can do that by declaring it and then just making it so. That first year we spent a lot of time getting feedback from a lot of employees. We looked at and conducted lots of surveys where you 7,000, 10,000, people responded. We did focus groups where we looked at very different dimensions. Sales versus engineering, millennials versus non millennials, men versus women, US versus non-US. You go through the 38 dimensions of diversity. We really tried to come at this from many different angles to say how our culture can be as inclusive as possible. We then took it to our executive off-site where with the CVPs, we have a three-day off-site and really ask them to engage on this topic. We broke into 17 breakout groups. Each of the leaders became what we called the culture cabinet. Where they gave feedback and that was in March and then we just continue to iterate until June when Satya finally declared that we were going to ground our culture to growth mindset and really apply that growth mindset to be more customer obsessed, more diverse and inclusive and then really focused on one Microsoft. Ultimately in service to making a difference and back to your original question that making a difference was what we thought was true before and we thought was true now. But really the emphasis needed to shift to that growth mindset. So I’d say it was a very long but hopefully inclusive process such that when we landed that culture you it was what a lot of people wanted to be a part of. But then you begin the process to say okay even if you’ve declared it, how do you make it real? And so for the last few years we’ve really tried to focus on what we would say our big symbolic changes where people go, “oh wow they really are trying to do”, you know we are looking at changing here, but coupled with what we would say are more just day-to-day changes. The big and small things you could think of or maybe changing the performance review system or you could think of that as changing the company meeting to one week and hackathons and really moving from a model where you know we would stand on stage and talk to employees versus how would we have a week where we’d really engage employees, that was meant to be symbolic. The parental leave and benefits and how we’ve tried to use those to symbolize what we’re trying to be about. Even if you think about mid-year review, which was something that was pretty iconic for a long period of time, but represented some of the culture that people thought was getting in the way. You know symbolic to change that. You know at the same time we’ve tried to do things like introduce the top 10 inclusive behaviors which is just day-to-day how do you show up. how do you listen, how do you acknowledge people in meetings, how do you make sure everybody in the room is heard and that’s just sort of the day-to-day grind that we know we have to earn every day from a culture perspective.

Edaena Salinas: Those things that you’ve mentioned, ratings, hackathon, parental leave are these sort of metrics to measure how well we’re implementing the growth mindset?

Kathleen Hogan: Not really. I would say that was more of the strategy which let’s do big symbolic changes as well as let’s realize that it’s how you show up day to day. How we’re measuring this is, ultimately we’re measuring it by people buying our products, because we believe that the culture should be in service to our mission: “Empowering every person, every organization on the planet to achieve more”. Ultimately we’re measuring our success if we’re achieving our mission and we’re seeing you know customers love our products. In the short term, we do a pulse where we started out looking at “are people even aware of what the growth mindset is?”, then that became close to 100%. Then we shifted to, “do you think we’re role modeling the growth mindset as well as being customer obsessed, diverse and inclusive One Microsoft?”. We’ve been monitoring that. As those numbers have climbed up, then we’ve dissected it even more to say ok within the growth mindset do you feel like we’re really living the value that you know potential is not predetermined but it really can be developed. Are we really encouraging risk-taking and as you start looking at those different dimensions then we start to see where we’re making more progress and frankly where we’re making less progress. So I’d say those are sort of the short-term things we’re looking at to see if the cultures change. We also look at externally what our customers are saying. When we show up do customers say “wow! You guys are more open and humble.” we’re seeing a change from a culture perspective. So some of that is how we measure it as well.

Edaena Salinas: Carol Dweck’s book titled “Mindset” has been a catalyzing influence in this culture change at Microsoft. To understand this a little bit better what would be an example of a decision Microsoft or another company can make under a growth mindset?

Kathleen Hogan: Well first Carol Dweck was really inspirational. In fact, when Satya and I first started talking about the culture, I was asking him what he really believed in. He was talking about this notion that potential is not predetermined and also risk and failure is essential to mastery. That’s when he said “I’ve read this book Mindset”. In fact I think his wife Anu had recommended it to him. He said, “I think there are a lot of the concepts in there that are articulating what we’re talking about here”, and so I read the book and I said ” wow! It really is a powerful book” and so we ended up engaging Dr. Dweck and she has been one of many external folks that we’ve reached out to who’ve given us input on this. And then she came and did an outside-in speaker series and so she’s been terrific. One example I would say is, when we introduced Tay and it did not go as we wanted. And it was obviously not good. But I think the growth mindset that Satya had is, “Look I know everybody was well intentioned, I know you guys took a risk. Let’s learn from this risk and figure out how we take these learnings and figure out what’s going to be next which is going to make us even better”. As opposed to, “how did you let this happen, who’s to blame.” In which case I think everybody would have been in the mode of, “oh my gosh let’s retreat.” Then you move into self-preservation. I think it’s in those key moments, how you show up as a leader, I think makes a huge difference in terms of whether people think that you appreciate taking risks and you realize that sometimes risks don’t always turn out perfectly. The real key is are you learning from that and propelling the business forward as a result of that or are you just taking risks that you know we’re not learning from and you really have to distinguish between that. When we met with Dr. Dweck we had dinner with her the night before she did the outside in speaker series. She really talked about how important it is to distinguish between the people who just are playing it safe, you know the people who are taking risks and being successful. I mean ultimately that’s what you want. But also how do you think about people who’ve taken risks and failed but have moved the business forward. Because we’re learning versus the people who are just taking not strategic or not well-thought-out risks and then just continuing failing. It’s really going to be important for us on this journey to discern between those different concepts and show our employees that we want to recognize and value the people who take risks even if it doesn’t always pan out. Because otherwise that will breed cynicism.

Edaena Salinas: We’ve been talking about risk as one of the key components under the growth mindset. But sometimes, like you mentioned, risk can lead to failure and how we react to failure is important. You wrote a post on LinkedIn titled “Failure is only failure if we fail to learn from it”. Here you mention that when Satya asked you to be Executive Vice president of Human resources, that your internal questioning was the opposite of the growth mindset. Do you remember some of the things that you were questioning at that time?

Kathleen Hogan: I do, in fact I remember exactly where I was. Only because I was driving from Chicago to Milwaukee with my sister and to celebrate my other sister’s birthday, her 50th. And Colleen’s daughter was in the back watching a Brady Bunch rerun video and that’s when Satya called and said “hey I’ve been thinking about this and would you consider it?” I was certainly excited. I mean the idea of working with Satya and trying to make a difference was extremely exciting. But to your point, you also go into the “oh my gosh what if”, I don’t have a background in HR per se and so can all of my learnings thus far translate over there. So of course you have those fixed mindset thoughts and then you really have to in your mind say, well why not try.

Edaena Salinas: Or then you remember you were leading an organization of 21,000 employees and those things can translate to human resources somehow.

Kathleen Hogan: Thank you, you should have been in the car with me. Everybody has fixed mindset and growth mindset. I think the key is not to think hey you know in fact we laugh about when we first rolled out the growth mindset and it would be like let me point out the people who have a fixed mindset and really the point was not to be identifying those with fixed versus those with growth. But really looking at yourself and saying what percentage of your time do you live in the fixed mindset versus the growth mindset? And catching yourself when you really start to have those, “oh my gosh it’s about failure or “oh my gosh how.” well you know maybe I won’t be perceived as smart or whatever those doubts that everybody has. How do you then, what’s your self-talk to say no let’s have that growth mindset.

Edaena Salinas: Another key component of the growth mindset is this notion of anything can be learned. As head of human resources, we’ve talked earlier you mentioned Millennials and knowing about different generations. What I’ve seen is for Millennials it’s common to take breaks and switch jobs frequently. But by 2020 there will be more millennials in the global workforce. How do you balance giving employees enough opportunity for personal growth while also making sure they understand that work needs to be done?

Kathleen Hogan: Well, I think that the work itself is an opportunity for personal growth. A lot of times they talk about 70% of your growth comes from on the job and then 20% can come from you know training or mentoring, or 10% can come from the mentoring. A lot of the learning is in the job itself. So I think it’s really just, I don’t know that I subscribe to the either/or versus the and here in terms of I think you can learn a lot in the job itself. At the same time, I think to your point on Millennials it’s recognizing that we’ve got a very diverse workforce and we’ve got a lot of different ways that people want to work. And how do we make sure that we at Microsoft are flexible enough, agile enough to allow for different ways people are going to want to work today as well as in the future.

Edaena Salinas: Another thing that you’ve identified from your experiences, that employees go through different cycles and that companies need to adapt to this changing employee. What are the different cycles of an employee?

Kathleen Hogan: I think it really varies. I think if you’re referring to my invest versus harvest piece that I wrote, it really is recognizing the lifecycle of any individual and there’s certain times in your career where you really can be all out and really investing and going that extra mile and that’s when I encourage people to when you are in that space invest and build that capital if you will. You never know when you’re going to have to harvest some of that and maybe go not as, you know not as hard whether it be your own health or you need to take time off for kids, or you know ailing parents, or whatever happens in life. I think it’s important that we look at that life cycle of people and recognize their times in people’s life where they can be investing more and then other times where they’re more harvesting and being okay with that, and making sure that we don’t lose people through the ups and downs of what happens which is called life.

Edaena Salinas: This is why there are programs in place right they allow you to take some time off and things like that, right. That’s how we adapt to these cycles.

Kathleen Hogan: I think that’s one of the ways which is trying to have like you say the benefits whether it be parental leave or family leave. And then also it’s working with managers and trying to continue to help our managers recognize that and how their actions can really support whether somebody comes back or not. I really think it ultimately, my own experience has been empowering yourself to say hey this is a time where I’m investing and it’s okay that this is a time where I’m harvesting. When I was at CSS and I was diagnosed with breast cancer, I decided to keep working, but I was pretty clear that that would be a year where I might be harvesting in terms I was relying a lot more on my directs and asking them to take on a lot more and frankly help me more get through that year as opposed to I was just trying to take on more and more and grow my career and that’s okay. Sometimes you’re really trying to take on more and grow your career and sometimes you’re not. I think that’s okay too. Looking at it as a marathon versus a sprint.

Edaena Salinas: Every HR manager has to resolve conflicts. What has conflict resolution taught you about human psychology and the way people work?

Kathleen Hogan: I would say the thing that I have been profoundly impacted by is the human in human resources. You talked about Millennials, but I would say everybody at the end of day is a human being. Everybody I think wants to have purpose. Sometimes they talk about that as something from Millennials. I think everybody wants to have purpose and at the end of the day what they do has meaning and I think everybody has what’s happening at work. But everybody also has other stuff going on in the background that make it easier to be here or harder to be here. I think that’s true for everybody here. And so I think that notion of being empathetic to everybody and recognizing that everybody’s human as part of the human resource. I think maybe that’s what I’ve come to appreciate even more being in this role. And getting to hear people’s stories and really understand. You may see one person in the meeting, but then when you really get to know them, there’s always a story behind everybody.

Edaena Salinas: What is your relationship with other senior leadership within the company? For example how often do you meet with them, how does that communication span out?

Kathleen Hogan: Well it depends on who you mean. You know with Satya, I meet a lot. We also talk a lot on the phone. So I would say it’s many times during the week. The SLT meets every Friday and so that’s been phenomenally efficient. Every Friday we get together, and that’s an opportunity for me to connect with my peers at least every Friday. Sometimes we’re in different meetings together or we’ll have one-on-ones. But that is part of our OB that makes it really easy to stay connected with my peers in terms of the SLT. There are other ways that I stay connected with the, you know go down the list there. The CVPs, we have you know I mentioned the off-site we have. We’re also doing these CVP dinners where we’re just trying to connect with different people from across the company to try to make those connections.

Edaena Salinas: And to make sure everyone’s on the same page regarding the mission and the culture shift right?

Kathleen Hogan: Yeah, I would say Satya tries to do that, not just with you know the CVPs. The monthly QA that is recorded, is an attempt to try to reach all 110,000 employees, and so for everybody to hear straight from the CEO what’s happening to try to really drive that clarity and that consistent message up and down the chain.

Edaena Salinas: People might not see head of Human Resources as a technical job. But there’s actually math and technical decision making involved constantly. Your background is also in Math and Economics. Explain why HR is a technical job.

Kathleen Hogan: Well for me first, I started my career at Oracle where I was a developer and then I was development manager and while right now if you ask me go be a developer, it would be very difficult, because it’s been a long time. But I do think being a developer and being technical has allowed me even in this role to at least understand more about what’s happening in the engineering and that context I think has been very helpful even though you might say ” well why do you need that as a head of HR? ” Having come from the field, but also have been an engineer myself, being able to have an understanding across all the different roles has been really helpful. There’s certain parts of my job that really, I rely on my background at McKinsey from a strategy perspective and then back to your just question about math. If you look at a lot of the discussions around compensation, a lot of it requires a pretty keen understanding of math and statistics and some of the things that we’re looking at there.

Edaena Salinas: And analyzing the workforce and identifying groups and things like that too right?

Kathleen Hogan: Yeah absolutely. I’ll even tell you a funny story. It was the first time I was doing the compensation with Satya and he came into my office and I had the Excel spreadsheet up. And he starts asking me to do things in Excel and I’m thinking oh my gosh thank goodness 20 years ago I learned Excel, because right now with Satya we’re using Excel and lots of different pivot tables etc. to do some what-if scenarios that just as related to compensations.

Edaena Salinas: You mentioned having worked in Oracle and in the field as a developer has helped you as head of HR and also having used these tools like Excel, they enable you to quickly project numbers and switch data. In what other ways is HR a technical job?

Kathleen Hogan: We are becoming so data-driven, and really leveraging data and our people analytics is definitely a competitive advantage for us and a real asset. And frankly something that a lot of HR BDMs now really are interested in and how they can leverage you know the power of data to really influence how they think about people. One example, just as we’ve leveraged our HR BI team to look at people who have graduated from a certain type of school versus students who didn’t. There used to be a theory which is we could only hire from certain schools, and when we looked at five years out and we realize that independent of school the performance was the same. That’s a really powerful insight to debunk a myth which is we can only hire from these schools. and really opening our eyes to look there’s lots of great talent and we can get great talent at lots of different places and still have great performance. That’s just one of many examples of how we’re using data to influence people. It’s becoming really important. I use power BI as my dashboard. I use it with Satya, I use it with the board, and I use it when I ramp up people. I’ve used it to demo it to customers. Just to show the power of having all of your people data right there and being able to use that to make more informed decisions real-time.

Edaena Salinas: Last question, what do you personally do to maintain a growth mindset outside of work?

Kathleen Hogan: I think that well certainly may be the one that I would that comes to mind most is just working with my son. When you’re trying to instill in your own child that growth mindset it forces you every day to look in the mirror and you know physician heal thyself. And you know my son he’s 15, as he’s continued his journey whether it be in school or in soccer or different areas where he may have shown up with a fixed mindset. As I try to coach him about really the power of the growth mindset and it’s not about whether you fail or not it’s about whether you learn and moving forward. That’s probably one of the best ways I’ve explored my own growth mindset.

Edaena Salinas: Well Kathleen, thank you for taking the time and coming on the show. It was great talking to you.

Kathleen Hogan: Thank you for doing this. Good for you. I’m really impressed that you’re doing this and helping a lot of other people through your actions. So thank you for making a difference.

Edaena Salinas: Thank you.