Les Hayman’s Excellent Adventure

By Patrick Kiger

Jul. 30, 2004

Sprawled lackadaisically, sans necktie, across the sofa in his luxury hotel suite in Manhattan, Les Hayman entertains his visitors with a tale of how the KGB accidentally developed a miraculous hangover cure. “They actually set out to create a pill to keep a Soviet agent sober while he got his source drunk as a loon to pry information out of him,” says the chief officer of global human resources for German-based software giant SAP. “Unfortunately, it turned out not to work. The KGB guys got just as drunk as whoever they were with. But they never got hangovers. Since the fall of communism, of course, you can buy the pills for a euro a box. Now, when we go to dinner in Bordeaux, instead of just taking a bottle of wine, we also take a supply of those pills. They’re absolutely brilliant.”

    The ruddy-cheeked 58-year-old with the still-lush tangle of silvery-brown hair tells the story with a rollicking Australia-New Zealand accent, punctuated with a droll chuckle. His genial barroom-philosopher manner gives scarcely a hint of his life struggles–from his days as a child refugee in post-World War II Europe to his adult battle with cancer and his string of careers. Hayman is a man who has led a succession of lives on multiple continents–from would-be doctor turned computer programmer in Australia in the 1960s to Silicon Valley executive in the 1980s to Asian business mogul in the early 1990s.

    Now, as a top executive for SAP, he is reshaping human resources at the world’s leading business-software company. It might seem a daunting task for someone who notes, almost gleefully, that he’s never before worked in human resources. SAP, which controls half the worldwide market for software that companies use to administer everything from customer relations to supply-chain management, is a sprawling enterprise that employs more than 30,000 people in 50 countries. But that hasn’t stopped Hayman from jettisoning scores of programs that he found irrelevant, totally overhauling the corporate training program and telling his 500-member staff that they should spend time in jobs outside their specialty so they can learn what sort of help other departments really need.

    Hayman is not satisfied with a supporting role, either. He is determined to make human resources a player in shaping strategy at SAP. To that end, he aims ambitiously to develop a uniform method by which Wall Street can calculate the precise worth of human capital, just as analysts and investors now evaluate revenues and depreciation. Though skeptics wonder if Hayman’s idea could ever work, they also acknowledge that it could revolutionize the valuation of companies–and elevate human resources departments to vastly greater influence everywhere.

Thinking big
    Hayman’s lofty ambitions don’t stop him from treating human resources with an almost exhilarating irreverence. “Human capital is like pesto,” he declares. “Five years ago, nobody had heard of the stuff, and there were maybe three restaurants in New York that had it. Today, you stop at a hot dog stand, and the man asks you if you want mustard, relish or pesto.” He pokes fun at other current buzzwords and popular “paradigms.”

    “A few years ago, it was talent, and how you recruit and retain it and so on,” he says. “Now, they’re all asking, how do you get people to be engaged? I wish I could say what’s driving this is that executives are getting smarter about people. But that’s not it, really. The truth is that everyone is nervous, now that the economy is improving and the job market is freeing up at last. It’s always your good people, the top performers, who leave. These executives know there’s this backlog of people ready to jump, and it scares them.”

 “I remember a lot of great companies from the 1970s that have since disappeared because their focus was on products, not people.”

    As a 15-year cancer survivor, he’s got a no-nonsense perspective on engagement. “Life is too fleeting,” he says. “I’ve never been able to understand people who just muddle through the week, waiting for the weekend. You have to be able to get up and say, ‘I’m going to be working another day at SAP–that’s fabulous. I can’t wait to get there.’ If you don’t feel that, you’re wasting a big part of your life.”

    Hayman’s experiences as chief of SAP’s Asia Pacific operation in the 1990s left him feeling passionate about the importance of people management but dubious about the practices meant to foster human capital. “I found that human resources had wonderful theoretical understanding, but no sense of my pain points,” he says. “They’d want to put in an absolutely marvelous three-year program that was designed ultimately to not only solve all of my major business issues, but end world hunger in the process. The problem was that I didn’t have three years. I had one year. I had to make money.” Too few human resources people, he discovered, had ever actually worked in other parts of the business, something he now requires for advancement. “I tell them, ‘Go out and spend two years selling software, or working on a development team,’ ” he says. ” ‘Find out what it means to have to meet a quota. It’ll totally change your perspective.’ ”

    When Hayman took over SAP’s human resources department, he discovered to his shock that it had more than a thousand different programs in various stages of development. “We promptly culled them by two-thirds,” he says. “Everyone in human resources was under tremendous stress, but a lot of it was wasted. They were doing things that had no impact on the business.” Instead, Hayman surveyed the rest of the company and asked what they actually needed. “There were a lot of places where what we had built was really out of step. We had areas where the board had set a business strategy, but it wasn’t translated into compensation planning at the level of the field organization. If you don’t align the organization behind the strategy, it’s a hope rather than a strategy.”

    Hayman also revamped much of the curriculum at SAP University, the company’s internal training organization. “They were spending more time worrying about generic training courses, such as negotiation training and time management,” he says. “You can hire outside people to do that.” Instead, he and the institute’s director, Karen Tobiasen, devised new courses that focused on specific tasks that SAP managers handled in their jobs, such as giving performance reviews. Drawing from his own career experience as an autodidact–he taught himself computer programming, for example, by designing a computer game–Hayman also reduced the role of training in staff development. “You learn best by doing,” he says. “So we build 10 percent of development around training, and another 20 percent around coaching. The other 70 percent comes from on-the-job training.”

    He’s convinced that most companies go about development in the wrong way. “They basically treat people as if they’re buildings or equipment, that you can divest yourself of when they’re obsolete,” he says. “They rush people along too quickly, promoting them until they fail. And they do fail, because when you’ve got people on the fast track and they’re in a new job every 18 months, there’s no time to really measure them and evaluate their growth.” Instead, SAP employees stay in a job for at least three years, so they can be brought along gradually, like a boxer who takes on progressively tougher opponents.

“You learn best by doing.
So we build 10 percent of development around training,
and another 20 percent around coaching. The other 70 percent comes from on-the-job training.”

    Ambitious career-climbers may chafe at such a non-meteoric pace, but there’s a positive trade-off. What might be a career-stunting flub at another company is simply part of the development process to Hayman, who nonchalantly notes that his up-and-coming talent will screw up one of every three tasks. “You have to give them an understanding of how to cope with failure,” he says. “You don’t just discard a boxer the first time he gets beat up. That’s how he learns to take a punch.”

    Hayman seems to relish giving up-and-comers an opportunity to make mistakes in SAP’s six-month global development program. Mid-career executives are given a strategic assignment that they must complete while still keeping up with their regular jobs. Hayman prefers to set deliberately vague goals, allocates scant resources to them and provides little guidance. “After all, that’s the way it works in reality,” he says. “Your first job is to narrow things down. You can’t solve world hunger. You’ve got to find something you can do and focus on it.” Additionally, he teams executives on several continents, so they’re forced to adjust to other business cultures.

    “The Germans will ring me up to complain about the Latin Americans and French because the Germans are very time driven,” he says with a chuckle. “But Asians and Latins think, ‘Friday gives me until Monday morning at 8. I’ll finish it over the weekend.’ And they do. But the Germans see that as lack of commitment. They’ll ring the guy before they leave the office and ask, ‘Have you finished your work package?’ Meanwhile, the Spanish and Italians ring me and say, ‘The Germans are so anal-retentive about time, it’s unbelievable.’ “

    Gradually, however, participants pick up on how to communicate and understand one another’s style. It’s a skill that Hayman himself is a master of, says Pranay Mital, director of SAP’s small and medium-sized business software operation in Singapore. The freewheeling New Zealander “had to work with Indians such as myself, who have a very conservative culture, and hierarchical cultures like the Japanese and Koreans, while also dealing with headquarters in Germany,” Mital says. “If someone can manage this region and communicate with everyone, he can do just about anything.”

    Hayman has moved among different cultures throughout his life. He is of Polish ancestry, but was born in the Soviet Union, grew up in Australia and travels on a New Zealand passport. (“He’s from either Australia or New Zealand, depending on whose rugby team is on TV,” says Martin Metcalf, SAP’s managing director for the United Kingdom, Ireland and Africa.) He’s lived in Singapore, northern California and Bordeaux, in southwest France, where he presently resides. He spends two-thirds of his time shuttling back and forth between an office in Paris and SAP headquarters in Waldorf, Germany, and the rest on the road–sometimes crossing the Atlantic several times a week. “A laptop, a BlackBerry and a phone, that’s all you need.”

    Such roaming is nothing new for him. He was born in the Ural Mountains in what was then the Soviet Union at the end of World War II, the son of a Polish cavalry officer who’d joined the Russian invaders to fight their common enemy, the Nazis. “He said it was time to flee Russia when he went to a meeting and a communist said that if all the world’s wealth was fairly divided, each person would get 1,000 rubles. My father had 2,000 rubles saved, so he knew he’d better go.”

    Hayman’s parents hiked across Europe carrying their infant son, using their old Polish documents to slip across borders. Eventually they emigrated to Australia, where young Leslie spent his youth doing gymnastics and dreaming of becoming a doctor. Those ambitions were dashed in medical school, when he worked nights in a hospital. “I realized that sick children broke my heart, and sick adults never stopped complaining,” he says.

    Fortunately, he took an elective computer-programming course and became fascinated with the school’s primitive 1960s-vintage computer, a room-sized Elliott 803. “I passed the course by writing a tic-tac-toe game for it,” he says. “Actually, it was one of the most creative things I’ve ever done.” He became a programmer for International Harvester and then in the 1970s jumped to Digital Equipment Corp., a major player in mainframes, where he tried his hand at sales. In the 1980s, he cofounded Calyx, a successful business software firm. At the same time, he and his wife Victoria were raising two adopted daughters, now grown.

    Then, in 1988, Hayman learned that he had colon cancer. “It was a total shock–I’d always been a gym junkie, a fitness freak. I’d already quit smoking. Nobody in my family had it.” The afternoon that he got the bad news, he went home to his wife, who covered him with a blanket as he lay on the couch watching TV. “After a while, I got up and said to her, ‘Let’s get dressed up and go out somewhere nice for dinner.’ She reminded me that I’d just been told that I had cancer. I said, ‘Look, there are two possibilities. If they got it early and I can be cured, that’s reason to celebrate. And if they haven’t gotten it early enough–well, I can’t afford to lie on this couch because I don’t have a lot of time left.’ ”

    After fighting for a year to regain his health, he decided to retire. “But then a guy from Sun Microsystems came around and convinced my wife that I would live longer if I worked instead of tending tomatoes in the garden,” he says. He worked in Palo Alto for five years before joining SAP in 1994. In eight years, he built SAP’s Asia Pacific business from a paltry $6 million in sales to an astonishing $800 million. Hayman credits his success to getting the most out of his staff’s talent. “If you talk to technology companies, you always hear them say that what they really need is a killer application,” Hayman says. “That’s rubbish. That’s really the by-product of what you do. You need a good strategy–not a brilliant one, but one you can execute. And you need a performance-driven culture and people who are emotionally engaged. If you have all those things, you’ll create the right product.”

    When Hayman, who was tapped for SAP’s board in 1999, decided to step down from the Asian post, he took the job heading human resources in the belief that he could have an even bigger impact. “I remember a lot of great companies from the 1970s that have since disappeared because their focus was on products, not people,” he says.

But his pragmatism tells him that human capital will be taken seriously only if it’s shown to relate directly to profits. While many are developing and utilizing metrics for measuring the effectiveness of human resources, Hayman wants to go a lot further. He aims to take the mountains of data generated by SAP’s software and crunch the numbers to calculate the impact of executive retention, the ratio of internal promotion rates to external hires, the workforce’s skills and other present intangibles on the bottom line. He’s funding a research and development effort by Boston Consulting and Accenture, a spinoff of Arthur Andersen, to see whether it’s feasible. His dream is an objective standard for human capital, similar to the Generally Accepted Accounting Principles, or GAAP. “I want people to be able to compare company A and company B. The ultimate step would be that you’d integrate it into the balance sheet.”

    Some human-capital experts, such as David Larcker, an accounting professor at the University of Pennsylvania’s Wharton School, question whether such a valuation system would work. Hayman himself boldly predicts that within five years, companies will be reporting standardized measures of human capital.

    “Of course, in five years I’ll be retired, so nobody’s going to be checking back to see whether I was right or wrong,” he says. In the meantime, he’s forging ahead with a customary sense of urgency. “I tell the younger people at our company that I’m 58, but this time yesterday I was 28, and I’ll be 88 tomorrow if I’m lucky enough to be around. That’s how quickly it seems to go. So you’ve got to make the best use of every moment you have.”

Workforce Management, August 2004, pp. 41-44Subscribe Now!

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