Episode 154: How to Position Employee Experience at the Centre of Corporate Culture (an interview with Aaron Falcione, Chief Human Resources Officer at Organon)
In this episode of the Digital HR Leaders Podcast, David is joined by Aaron Falcione, CHRO, and instrumental figure in the formation and culture development of Organon – a company dedicated to the health and well-being of women.
From policy creating to employee listening, Organon’s HR strategies have all been created with the company’s mission in mind – women’s health.
Key topics covered in this episode, include:
Unveiling the role of HR in shaping Organon's empowering culture and mission
Pioneering policies that champion women's health and well-being
Unleashing strategies for fostering an extraordinary employee experience
Harnessing the power of employee voices in decision-making for remarkable outcomes
Uniting employee feedback and organisational data to drive impactful initiatives
Revolutionising performance management processes for enhanced results
Gaining invaluable insights and advice for aligning culture with the company's mission
If youre looking to unlock the secrets to driving organisational success through an employee-centric approach, then this episode is for you.
Support from this podcast comes from Charthop. You can learn more by visiting: charthop.com/digitalhr
David Green: Hi, I'm David Green, and thank you for tuning in to the Digital HR Leaders podcast. It's safe to say that if you're in the HR and people analytics profession, you know that a positive employee experience is the foundation of any successful organisation. But how do you create an experience that not only meets the needs of your employees, but also aligns with your company's mission and purpose?
Today we'll dive into this topic with Aaron Falcione, the Chief Human Resources Officer at Organon, who will share the remarkable journey of Organon, a global healthcare company dedicated to women's health. In the run-up to, and ever since Organon was spun off from Merck & Co in 2021, as CHRO, Aaron has been instrumental in shaping Organon's people strategies and driving a mission-aligned employee experience. And together, we'll explore the pivotal role HR played in the formation and growth of the company, as well as the key strategies implemented to create a nurturing and engaging environment for its employees.
Aaron, welcome to the show, it's a pleasure to have you on. Before we dive into the interview, could you please share with our listeners a little bit about yourself and your background, and also your role at Organon?
Aaron Falcione: Yeah, thanks for having me, David. Currently I'm the Chief Human Resources Officer here at Organon. Organon is a global healthcare company, it's really a company focused on women's health. For those that don't know, Organon spun off of Merck in June of 2021, so we're almost two years old as an organisation, and it's been an extraordinary experience, an incredible journey. It started probably almost two years prior to that date of June 2021, just all the preparation and getting ready to stand up a brand new organisation. And it honestly has been one of the more incredible experiences I've had professionally and one of the more rewarding ones.
As you can imagine, being the head of HR at a new company where you had to articulate and define the culture that we wanted to create, the kind of experience that we wanted to have for our founders, and just being at the ground level of those discussions is a really unique set of experiences. It's a 10,000 person global startup, if you will. So it's this idea of having a startup, but having it at scale, which really creates just a unique set of opportunities.
Prior to Organon, I worked at Merck as the Head of HR for a global commercial organisation, a human health organisation. Prior to that, I spent a number of years at Siemens, a large German industrial company, and I started my career at PricewaterhouseCoopers in their M&A team. There's a group of consultants at PwC that focused entirely on mergers and acquisitions, and my specialty in that area was specifically on post-merger integration, always through the lens of workforce integration, leadership integration. You know, if two organisations decide to merge and they realise quickly they don't need two CFOs, they don't need two CIOs or two Heads of HR, they have to figure out what that journey is going to look like. And so my role as a consultant was helping the organisations navigate through that. I leaned on that experience quite a bit as we started forming Organon.
David Green: I was just about to say that, you almost did it the other way around. Instead of merging, you were spitting off. So yeah, I mean it's amazing how your earlier life can prepare you in unexpected ways for later on in your career.
Aaron Falcione: Yeah. I leaned on all of those experiences, honestly, and it really was a demanding time and again, the most rewarding thing I've ever done professionally.
David Green: Well, I'm really interested to talk about this, because it's not every day we speak to someone who's leading HR at a 10,000-person company that's been spun off from a bigger organisation. So you mentioned that Organon started off as an initiative within Merck and it became an independently public listed company in June 2021, which as I'm sure many of our listeners will know, was during the pandemic, so just another complexity to add in there. And as you said, you're around 10,000 employees now. I'd love if you could share a little bit more about the formation of Organon, but also the role that HR played in helping to form the company as well.
Aaron Falcione: I'm admittedly biased in my position, but I feel like HR played an outsized role in helping to create the company that we see today. So you're right, we started this journey, we announced within Merck the intent to form a new company. It had not even been publicly named yet as Organon. We did that in February of 2020, if you can imagine. It was a mere weeks, a few weeks later, the whole world changed. So we launched this company in the midst of a global pandemic, the most disruptive experience any of us have had professionally, and yet we still stood up a brand new company. And from the very start, from the moment I actually started having discussions about joining Organon as the Head of HR, the discussion revolved around culture.
We have the benefit here at Organon of having a very enlightened and progressively minded CEO, and he had the wherewithal from the very start to know that culture -- basically the discussion was over dinner one night when we were talking about this idea of what would become Organon, and he came to the conclusion very early on that if we have the most pristine and exact strategy, and it's exactly what is going to still a need in the marketplace, but we get the culture wrong, we will fail. And it was as binary as that. And that if we really get the culture right, that our chances of success as an organisation go up exponentially. And so we started from that moment, building Organon to be a culture-first organisation.
We needed to establish a strong set of values that reflected not only our aspirations as a different kind of company, but reflected our beliefs and personal preferences as leaders in the organisation. And so that journey started with just, you know, just to demystify it a bit, I personally spent time interviewing every one of our executive team members, I spent time with our board, we talked a lot about the kind of behaviours that we had experienced in our careers and what resonated with us and was true to us and what are the things that we wanted to do differently.
From there, as we were pulling ourselves together as a team, the very first workshop or meeting, in-person meeting, that we had as an intact leadership team was a two-day workshop on the employee value proposition and culture. That was the very first thing we did. We spent two whole days debating and prioritising the kinds of values that we wanted to be held accountable to and those that we wanted to hold our teams accountable to. And that's what's ultimately become the values of Organon. That workshop and those interviews planted the seeds of what then would ultimately become some of our values that we talk a lot about and I think have become differentiators for us as an organisation.
So a couple of examples that resonate with me; one of our values is, "be real". This speaks to the idea of showing up, being your true and authentic self, being transparent. "We all belong", is another value, it speaks to the importance of diversity, equity, inclusion, and a feeling of belonging at this organisation. And also, one of the ones I love is, "bring your fire" is a value. We really do want people to feel a sense of connection and passion for the mission that we're on as an organisation.
Interestingly enough as well, it was one thing to capture the words and provide a little bit of a description of what we meant by those words, but we even double-clicked on that, and we spent time, actually most of the time we spent was defining the behavioural standards of this organisation, so what does it mean to be real? We went through and gave examples of what that will mean, what it will look like in everyday life, and I think going that level deeper has helped the rest of the organisation understand how that should show up every day and how to see it when it does show up.
David Green: That's really interesting, Aaron, and as you said, values is one thing, but then you did think about the behaviours that, as you said, will demonstrate those values is really important. And then I guess another element of that is some of those behaviours, I mean the first one you mentioned about being real and so people can be their true and authentic self, as you know, you have to create the right culture for that, and for instance, psychological safety so people can show up and be themselves. So if you focus on that particular element, that psychological safety aspect of the culture, of the values of the positive employee experience that you were looking to create and employee value proposition you were trying to create, what strategies did you introduce to kind of catalyse this into the culture?
Aaron Falcione: Psychological safety is a foundational concept. We anchored a lot of the kind of employee experience we wanted to create around that idea of psychological safety and starting with just defining it for everyone, defining what it means for everyone. It's this idea that we create an environment where interpersonal risk-taking is conducive to interpersonal risk-taking, and making sure that there was a safe space for that. There were a couple of other foundational concepts that I think stitched together to create what I believe is the employee experience.
So, the other concepts that were really significant for us in our thinking, building on psychological safety, we wanted to adopt a growth mindset; we wanted to make a creative environment where people felt that they could get better, that their skills and capabilities were not innate; we wanted to have a strength-based culture, where we focused 70%, 80% of our energy around leveraging strengths and focusing on strengths versus deficiencies; we wanted to tap into people's source of intrinsic motivation. So my own philosophy on this, but I believe we are all endowed with a really healthy amount of intrinsic motivation. The things that start to get in the way and extinguish that intrinsic motivation are demeaning evaluations, feeling judged, feeling threatened, aberrant behaviour, those things all start to erode the sense of intrinsic motivation.
Lastly, there was positive psychology, the underpinnings of positive psychology, where we said we all have any number of experiences in a given day at work, I'd love for the overwhelming majority of those experiences to be deemed as positive and not negative. It's not the absence of any negative experiences, people have disagreements that feels uncomfortable, but generally speaking we coached our managers that when you're engaged in those experiences, try and make them create that 6:1 ratio where for every one negative experience someone has, they're having six positive ones. And those concepts strung together, I believe creates an incredibly positive, enriching, and engaging employee experience. And I believe that's essentially what we're on this journey to do.
So as we looked at the design and creation of different programmes in the company, it was a simple strategy, we just asked ourselves, "Does it create psychological safety or not? Does it create a positive experience or not? Does it tap into intrinsic motivation or not?" And whenever the answer was negative, we kind of went back to the drawing board and said, "Well, we need to tweak this a little bit and tinker a little bit more so that we can maximise those concepts within the organisation". And we're far from perfect, I mean we're not getting it all right. A lot of our experimentation has clearly led to higher degrees of those aspects than what many companies, any company I've ever been a part of, has experienced.
David Green: Firstly, what's the feedback been like from employees, both those that maybe transitioned over from Merck, but also those that you've brought into the organisation since June 2021, how's that landed with them; and two, are you seeing the values transition through to some of your business results and growth as well?
Aaron Falcione: Yeah, and I think those two concepts are very interdependent. So, the feedback from our employees has been overwhelmingly positive, beyond what I could have expected. We do obviously employee listening and some surveying. So for two years in a row, our survey scores, our overall employee engagement has been in the mid- to upper-80%, our response rate is in the same category, so just the response rate alone is an indicator of engagement. But we have 92% of our employees say that they had a positive and constructive relationship with their managers, that their managers respect and value their opinion. Those scores are foundational things that I think allow us as an organisation to really build on.
I had the opportunity last week to be in Brazil with some of our founders in Brazil, and spent time just throughout the week with individuals and groups, and I heard that there were themes that emerged. And so we're two years into this journey and people are saying things like, "I've never worked as hard and I've never been happier in my professional life". And I use that as an example, but I hear different versions of that throughout the organisation. People are working really hard, I think that's consistant across many industries, many companies around the world. The fact that people are feeling so rewarded and feeling so good about their work is, I think, a good signal that we're on the right track. And I believe that, if you were to try and quantify it into results, it's discretionary effort. People are feeling good about what they're doing, they're feeling respected and encouraged, and we have a really important mission that we're on.
All of that means that we're able to do a little bit more with a little bit less as an organisation, and our people are still thriving as a result. And, like I said at the beginning, it's incredibly rewarding to hear that kind of feedback and sentiment coming out, even though we're now almost a couple of years old, it's not a halo effect or a honeymoon kind of dynamic;I think it's a very real and sustainable characteristic of the company.
David Green: And actually, back to what you were saying when you had that initial conversation with the CEO, it's about if we don't get the culture right, we'll fail. And obviously, as we'll continue talking, it's getting that culture right, measuring that you're getting the culture right, making changes where necessary, and as you said, you get the rewards from that in terms of people stay, people enjoy, people put discretionary effort in.
Aaron Falcione: Yeah. The other thing I'd say, David, in that, beyond just the discretionary effect, this idea of we all belong and be real, this allows us to have -- I feel like we're avoiding that typical threat response that often happens in an organisation, where people feel vulnerable, therefore they're feeling a little bit afraid to respectfully challenge thinking, to come up with new ideas, to think differently. I feel like we, again there's no panacea, there's no perfect environment, but I feel like I've observed a very real shift in the willingness and confidence of our average founders in this company to challenge, to speak up, and to offer maybe a new way of thinking about it. And that's led to more innovation, a more vibrant kind of sense of community as an organisation.
We are on this journey to keep getting better and better and improve the overall effectiveness and efficiency of the organisation, and you can see a tremendous grassroots level of effort. We had a programme last year that we launched called Better at Organon. And the idea was, how can we get better at what we do, and that continuous improvement journey. Without any incentivisation, anything beyond just creating a platform online for people to post ideas for getting better, we have organically over 1,000 ideas articulated, experimented with and rolled out, from big to small ideas, organically, just naturally, that were people saying, "I think we can get better at this". And it was simple ideas like reducing some waste in some of our production facilities, or improving a process, streamlining a process for approvals of things that just took more time than we needed. And I think that's a good example of the kind of energy and enthusiasm and innovation that we've unlocked with these cultural underpinnings.
David Green: And of course, the people actually doing the work are usually, well they are usually the best people to come up with suggestions to improve, so if you can actually harness that, get people to contribute, which you obviously did, and then if people then see that those ideas are being acted upon and rolled out, then that's a really positive driver of culture, isn't it?
Aaron Falcione: Absolutely.
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All these strategies and values and everything else, how are you aligning those with the organisation's overall mission, which I'm guessing is related to women's health?
Aaron Falcione: So, I mentioned at the beginning, our vision as an organisation is that we want to create a better and healthier everyday for everyone around the world; it really guides our actions, it guides our actions we take as a company, both internally and externally, and we've looked for opportunities. Again, with the clarity of that vision and purpose, it really makes it natural to then evaluate some of the choices we make, the policies we have against that. If a vision is maybe too esoteric and too high level, it makes it a little harder to serve as a North Star. And in our case, I feel like we've got the benefit of having a very clear purpose. So I'll give you a couple of examples.
This year, for the second consecutive year in a row, we wanted to really highlight and shine a light on the inequities in women's health. And in many respects, part of what gave birth to Organon was this idea that we saw these dramatic and long-overdue issues to be addressed, huge unmet needs in women's health, and from real therapies and solutions to just health literacy and education and dialogue around the issues that uniquely affect women. And so we took International Women's Day, 8 March, and we decided in order to help really shine a light, we were going to give every one of our founders the day to care for themselves, a day off, and really called on other organisations to join us in that. So we did it for two years in a row, and it's an extraordinary experience.
The entire company is focusing on their health or the health of the women in their lives, and it's created, I speak personally, reaching out to the women in my life, my mum, my sisters-in-law, my wife, to really draw attention to this. It's translated into real action, and it was a simple idea that we looked at and said, "This is a great example of how we can live our values and really live our sense of purpose".
Other areas, we're focused on addressing some societal issues as well. So, in society there's a today problem and a tomorrow problem. Today problem is in both developing and developed markets, the rate of unintended pregnancy still can be upwards of 50% of all pregnancies are deemed unintended. So we have portfolio contraception that could help deal with those challenges today, make sure that women have education and access to effective contraception.
The tomorrow problem is a declining birth rate around the world, where depending on what country you're in, the birth rate is not sufficient to maintain the current status of the population and then all of the sequelae that follow that from economics of the viability and sustainability to the cultural dynamics that change when the population starts to dwindle. So, we have a fertility portfolio that we are trying to apply to make sure that when women choose when and how to have a family, that they have the tools available to do that and do that in a planful way.
So, we look at our programmes internally and say, well, are those fertility benefits available to all of our founders at an effective rate? And we saw that there were some pockets where that wasn't always the case, and we adapted. We made changes to our healthcare policies to ensure that we could support families, all of our founders, men and women, in getting fertility treatments at a rate that we felt was sufficient to really help them in their family planning journeys. Family planning doesn't always work, and we know that these could be emotional journeys, and so we also implemented a global care leave policy to make sure that men and women had the time for self-care, for the care of a loved one as they were going through those fertility treatments.
We extended that also to include, if you're managing menstrual pain, you're going through menopause, things that have not really been talked about a lot, especially menopause, can have a debilitating effect on women. And so we wanted to make sure that to destigmatise that and make sure that women felt comfortable if they needed to take some intermittent leave to deal with those menopausal symptoms, that they could do that.
The last thing I'd say, here in the US, we had a bereavement leave policy in the event of the loss of a loved one. But that leave policy was silent when it came to a miscarriage or stillbirth, and it was insufficient as well. So, not only did the language of the policy not cover the loss of a pregnancy, there was an expectation that someone would come back to work four or five days after an event like that. So we thought that just, again, we looked at that policy and we said, "Well, that's not aligned with our values and our culture and our purpose; let's change it". And the joy of being in an organisation that's still a startup in that mentality is, within a day, we were able to look at that, make a proposed change, take it to the executive team, and they signed off on it immediately. And that change was implemented literally within a day.
That just doesn't happen at larger organisations. It doesn't happen at organisations 10,000 people large, typically. And so we're trying to hold on to that sense of startup at scale and that real founders' mentality.
David Green: And I think as a leader obviously in women's health, you can help educate other organisations a little bit that they also perhaps should take similar policies because, as you said you've got a duty of care to your employees, both male and female, then these are the sorts of measures and approaches that you need to put into place. And I know that you and your colleagues have been publicising what you've been doing, which I think is really important for other organisations to learn from, because a lot of it is about other executives and other companies learning about this, isn't it?
Aaron Falcione: That's exactly right. I mean that really is our primary motivation for sharing. There is the pride of having been pioneering in some of these areas, but really our true north is our mission and our purpose and trying to make a difference. We really do believe, I personally can say, I believe Organon is going to change the world, I believe we're going to make a difference, even if it's just simply changing the narrative and making sure that we draw an appropriate amount of attention to the unmet needs that women face in this world when it comes to their health, and that's the legacy that we're trying to build and that really guides us every day. It's incredibly motivating, as you can imagine.
David Green: Yeah, I can imagine. And a quick point of reference for our listeners, when you talk about founders, you're actually talking about your employees, aren't you?
Aaron Falcione: Oh, yes, I'm sorry. Yes, we've been steadily building up, standing up the organisation. We've hired, and since the launch of the company, we've hired over 2,000 people. But we really intentionally use the term founder because we felt it captured the mindset that we wanted to see within the organisation. The founder's mindset really is one that skews bureaucracy, there's a connection to customer and sense of purpose, there's an intimacy that founders have with their organisation, and we wanted to really promote that kind of mindset.
The question comes up often, "Well, are you going to continue to use that since we're now a more mature, intact company?" and we've said yes, because the mindset doesn't go away, at least not in my mind. I want that mindset to continue years and years from now, that people feel a sense of connection and ownership for the organisation, and that we are constantly reinventing ourselves and we want that founder's mindset to permeate the organisation.
David Green: Yeah, which leads nicely to the next question, Aaron. Clearly, Organon is a very culture-driven organisation from every part of our conversation so far, and you mentioned around the employee listening piece that you're doing. I'd love to understand, how often do you use employee listening to help your decision-making and for what, what decisions, what examples have you used it for?
Aaron Falcione: Yeah, so when we started the company, that day, 2 June 2021, we launched a commitment to listening to all women. We had a mechanism where women could take the mic and share with us their experiences with their own healthcare journeys, what was working, what was really not, and what are some of the unmet needs. That really helped us address and understand the therapeutic gaps in women's health around the world. And we've done the same kind of strategy with our founders. We started out with a really strong listening strategy.
It's not that unique. We have an annual census survey, our founders' experience survey, where we capture sentiment and map that sentiment to both the external benchmarks, but as well as our own values, to see how people are experiencing the culture. And we ask for opportunities where we can enhance the overall level of engagement, reinforce what's working, and what's helping to advance our company, the vision and mission of the company, but also where there are gaps that need to be addressed. And it's had a profound effect on our priorities as an organisation, what we focus on, and we are going to do this regularly, where we have periodic pulsing of the organisation. We'll have a stratified sample of founders around the world, where we can get a sense of generally how things are going.
But we will continue that annual census type survey, and we wanted to create a cadence by which the voices of our founders really shaped the priorities that we have as an organisation and the efforts that we invested. A couple of examples were everything from our return-to-office approach to performance and rewards to career development. Career development at Organon, as a new company, has become a very big focus for us this year, and that is a direct result of the last survey, that we saw was an area that a lot of founders had questions about. It scored relatively high to benchmark, to external benchmarks, but internally one of our lowest scoring items compared to all the other really positive feedback we were getting. And so it was really clear, our employees were speaking to us and we said, "Okay, we need to put together a comprehensive solution that helps address some of those issues". And we launched this year the first of many years of a reimagined way of thinking about careers and career development here at Organon.
David Green: There's some good examples there and that listening approach with annual cadence augmented by ,as you said, pulses, stratified sampling, I think definitely something we're seeing. And in terms of, you use the example of return to work, did you rely solely on employee feedback or were there other data points at play there?
Aaron Falcione: No, not solely on employee feedback. Maybe I'll just share with you a little bit about how we think about it and the kind of deliberation that we continue to have on this topic. We obviously know we've just gone through a very disruptive period in the history of work. One thing that's been somewhat strangely comforting is that no one has figured out hybrid work yet in my estimation. So we're all experimenting, everyone's trying to find what works for them and their organisation.
The things that we really considered is the importance of human connection is very real, and I have a strong belief that we are better when we spend time together. We're not going to go back to a day where everyone had to be in their workplace five days a week. I don't believe that it's right for our company to have an entirely virtual employee experience. So that's one factor that we acknowledge, that basic human connection is meaningful, rewarding, and energising.
Other factors that I think are really important to us, one, I guess I'd say, is solidarity. When I talk about this, I think it's important to recognise that when we talk about a return to office, we're really talking about office-based knowledge workers who have the privilege of choice around coming into the office or not. Almost half of our founders work in a production facility, and they have been heroes throughout this entire experience. They have shown up at their place of work every day, especially in the early days when we didn't know what we were really dealing with, we didn't know the level of threat, we didn't have answers or information, and yet they showed up every day. So we feel solidarity to them as well, and we're all one company. So this discussion around return to office feels quite privileged in my estimation.
There's another factor, which is not as significant, but it is something that we talk about as an executive team quite a bit, and it's a sense of communal obligation; community obligation, I guess, is the way I think of it. We are a new company, we signed office leases in the communities two years ago as we were standing up this organisation, we made commitments to our communities. I'm in my headquarters here in Jersey City. We met with the mayor of Jersey City, it was a lot of fanfare, we have over 700 jobs that are located and based here in Jersey City. If we stop showing up, there are impacts in this community that we can't ignore. There's a coffee shop in the lobby of our building, there's a dry cleaners, there are maintenance staff that are here, and they're here on the premise that there's going to be a sufficient population of employees that show up.
These are individually maybe not enough to be the sole determinant of our return-to-office strategy. But when you think of them collectively, it takes us down a certain path of trying to encourage a bit more frequent return to our offices, our collaboration spaces as we call them, and it's been a helpful guide as we've been trying to navigate the murky waters of all this. Again, and we talk about it, you know, we've had a fairly open dialogue with our founders, we don't have it all right, we know we're experimenting, we're going to continue to listen, we're going to continue to gather feedback, and so far I feel like the experiment is largely working.
We've set what we call an anchor day, which is Wednesday. Here, I'm using our headquarters, our US-based offices, as an example, and we've just encouraged our founders, if they're coming in to the office a day that week, make it Wednesday. It increases the cross-functional collaboration opportunities. We'll allow for calendars to adjust to be less focused on virtual meetings that day and more in-person meetings, that will take a little time, and we feel like new patterns are already emerging here. And it's only been about three months since we've been doing this. And new patterns are already emerging. We see energy in the office, people look forward to Wednesdays, and I think over time my estimation is that that'll increase a bit, that we'll start to maybe, without having to force it, we'll start to see more frequent traffic in the office, it'll become more routine and those new patterns will start to emerge.
David Green: Yeah, it's really interesting. I think you've highlighted two key things there, experimentation, as you said, no one's got the answer to this yet, this is new and we're going to have to try things, listen, as you said, measure and adapt; and I think the other thing you talked about there was intentionality, so if Wednesday is the day when people come into the office, as you said, you don't want to be sat in an office having seven hours of Zoom or Teams calls, so it is an opportunity to collaborate, grow your network within the organisation, innovate together, and do work that maybe is better done when you're together. So really interesting, love to hear how that plays out. As you said, it's new, so experimentation is so important.
Aaron Falcione: And I would also just acknowledge, for everyone that's listening, we messed up at first, we completely got it wrong at first. We sent a message out saying we wanted everyone in the office probably roughly three days a week, two fixed days, and then one day of your choosing. The feedback from our founders was overwhelmingly negative. It was actually at a time when we were still dealing with the threat of COVID, it was ebbing and flowing in terms of infection rate, and we listened to that, and again maybe a signal of our culture; we had a very open and transparent discussion that said, "We got it wrong. We hear you, we got it wrong. We're going to retrench a little bit. Let us think about it a little bit more, we'll come back with an alternative".
That kind of transparency and dialogue and actually humility, I guess, at the end for the senior leaders and up to and including our CEO to say, "Yeah, maybe it was a bit over exuberant. I do want people in the office but I also recognise the impact of that and we're going to course-correct here". I thought it was a really important moment for us.
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I'm going to move to a couple of other areas first. So, performance management, can you share some of the changes that you've made to your performance management processes? And then I'm going to combine the next question, and then the second part of that is, how has that impacted performance?
Aaron Falcione: Great question. It's a passion of mine, it has been for most of my career in HR. It's always been my sense that there's probably no more significant process that defines the culture of an organisation, the way you manage performance. We started with this really simple question I asked my team was, "How do we most effectively manage the performance of this organisation and all of the individuals in it?" And so from there, we set out to really reimagine the way we do that, the performance and rewards approach. We moved from an annual review process to an always-on-performance model. It's grounded in continuous conversations and feedback, again leveraging the strength of our culture and the strength of our relationships between founder and manager, we realised that we had a unique opportunity to really reimagine and maybe I think even pioneer some different approaches.
We did away with our annual performance ratings, getting back to, again, this notion of how do we encourage and promote more intrinsic motivation? Well, if you're labelling and sorting and categorising people, it can extinguish intrinsic motivation, so we said that we're not going to do that anymore. We eliminated exercises that really are focused, we're focused on the sorting process, the force distribution. Many listening may be familiar or have some version of a nine-box process where you look at, you sort people based on their performance and their potential. We did away with all of that and it was under the simple premise that we're going to focus more energy on conversations that count and it's going to recognise that performance is a constant.
Performance is not an annual dynamic in an organisation. People perform every day and so what we've replaced was a model that tried to sink itself into the natural flow of everyday work. We all have conversations with our managers around the demands of our work on any given day or given week. Well, part of that can be real-time feedback on what's working, what's not, are the priorities aligned, and how people are doing and where they can be improving. And so we've really tried to put those in-the-moment opportunities into the system. And th
Then one of the big challenges with organisations I faced in most of my career, the big challenges with reimagining the way you manage performance was, how are you going to then pay at the end of the year? How are you going to determine the pay, make the pay decisions in an informed and defensible way? And so, one of our values I did mention earlier was a value that we called "rise together"; we rise together as an organisation, we rise or fall together, quite frankly. But when you think about this idea that we value this concept of rising together, we felt like then having an individual-based pay decision ran contrary to that.
So, we really put people that are eligible for an annual incentive, that annual incentive is determined based on the company performance, the company scorecard, not individual. And that promotes the sense of we're all trying to work together. If there's someone not fully performing, the team is motivated to help pull them up and coach for high performance because at the end of the year, everyone is going to be paid based on the company result, and we're all in it together. The feedback has been overwhelmingly positive from managers to founders to our executive team. They all have indicated that this model is working and there's no way that we could ever go back to a more traditional model, which is a good signal to me. We have some work to do to keep refining and getting good at building new muscle on how to work within this model, but I would tell you the results of the company have exceeded expectations.
The expectations of organisations that go through a spin-off like ours is that they typically struggle coming out of the gate and then eventually find their footing. We've had exceptional operational performance. We've exceeded our own targets, we've exceeded expectations, we've met or exceeded consensus expectations as a company, and we're delivering in areas that many people doubted at the beginning. I attribute it all to choosing the right people, the right leaders, that are connected to a sense of passion and purpose, strong values, and the removal of some systems that I think can ultimately erode that sense of intrinsic motivation.
David Green: Yeah, and I guess it's back to that conversation you originally had around putting culture at the centre. If we get culture right, we'll succeed. The evidence would seem suggestive that if we apply it to you, and obviously I know there's lots of other data points that we can look at, but the evidence would suggest that that has helped come to fruition.
Aaron Falcione: I go back to that theme I heard last week from people saying, "I've never worked harder and I've never been happier. If that's not a testament to kind of the discretionary performance and the sense of real motivation that I think a better model can elicit, then I don't know what it is.
David Green: You've accomplished a lot, Aaron, you and the team and all the founders, and actually, okay, although it's a fairly unique situation to spin off a company and be 10,000 people within two years and everything else, actually companies are looking at cultural transformation all the time, so I think there are lessons that can be applied by other companies here as well. I'm sure there's been plenty of learnings along the way, and you talked about a couple of those, certainly in relation to return to office. If you could take the time machine back to the early stages of the Organon formation, what advice would you give yourself; and would you do anything differently?
Aaron Falcione: Well, I'm standing here today feeling, like I mentioned, quite pleased with where we are at this point. Like I said, we still have so much to do and so many things to tackle, but we've got good wind in our sails, we've got good momentum, I feel like we've gotten more right than wrong. I guess if I were to think about giving myself some advice a couple of years ago, I guess the two things that I would say I would spend even more time on if I had to do it over again was continuing to build and deepen and nurture the relationships across the different teams. My peers, their direct reports, the leadership of the company, I think, have provided invaluable insights to me and have been champions, and I would have spent even more time building those relationships.
I think the other thing I would say is, I guess I would be more comfortable with experimenting. We've experimented a lot, and so it sounds weird to say this, but I carried a lot of stress during those experiments. I felt really strong, really feeling anxious about making sure this worked. And in the true spirit of experimentation, you have to test and learn and understand that not everything's going to go right, but that adds to the collective knowledge of the organisation. And maybe if I could give myself some advice, I would say, get more comfortable with that experimenting, continue to try those new approaches and know that in the end it will add, not detract from the overall experience. I was focused on making sure I got it right instead of the nature of experimenting itself. So, that's the one challenge to my thinking that I guess I would give myself.
David Green: Very good. Well, I can't believe we've already reached the last question, Aaron, but we have, and this is a question we're asking everyone on this series, in fact I think we asked in the last series as well, and I think the context of why we're asking this is, you know, HR has really come to the fore in the last few years but there's a lot happening, whether you look at what's happening in technology, if you look what's happening around employee expectations, there's so many things that are changing. So this question is, what do you think HR leaders, such as yourself, need to be thinking about most in the next 12 to 24 months; and what's your biggest concern maybe; and then what would you see as the biggest opportunity?
Aaron Falcione: I think they're going to be one of the same. The biggest concern and opportunity are kind of one and the same to me. There are two things that I and my team are intensely focused on. One is continuing to advance and create a more inclusive, equitable workplace, making sure that people feel a true sense of belonging here. I think it's a differentiator for us as an organisation, I think we have a moral imperative, and I believe organisations find themselves in a very unique spot to influence this topic. There's different social constructs and political constructs that can make things confusing, but what I know here inside the company, we can stand for a more inclusive, equitable, and diverse environment where people feel a sense of belonging, and it's something that we're not all skilled at.
In order to do that, I believe there is a skill and capability required to get into some uncomfortable spaces. If we find there are gender pay equity gaps, acknowledging those, addressing those, talking about those things can be uncomfortable. When we hear in the US and many parts of the world, there are power differences in society and we are operating within those societies. So really encouraging, and the organisation to really explore where you sit in the hierarchy of power, the haves and the have-nots, and exploring what you're going to do about it as a company while we're here. That's a huge concern, because we're not making progress fast enough, and I also think it's a huge opportunity for us because we can differentiate ourselves and make a difference in the lives of our founders. When they're here, they can feel that sense of belonging and safety and they can maybe influence their communities and their networks outside of the company to think differently about these topics.
The second thing, again, concern and opportunity is in the whole space, it's still a little esoteric, but in the whole space of the impact of generative AI on the workforce. We're seeing a revolution at the moment, it's happening right in front of our eyes. The power of the ChatGPT or these other AI platforms I think is significant, I don't think we're all prepared for it, and I think the companies that are able to understand the risk of it and maybe the challenges of it, but also see the opportunities that it can unlock and the power that it can unlock in an organisation, those are the companies that will win in the next decade. And I think we are already feeling a sense of urgency to try and get a handle on how do we cope with this emerging technology? And I think it's a really important dialogue to have over the next 12 to 24 months, and beyond.
David Green: I totally agree, and more and more people I'm speaking to in your position, running HR in bigger organisations around the world, are thinking exactly the same thing. It's, how do we capitalise on this opportunity, but do it the right way? So a really good point to end our discussion, Aaron. Thank you very much for sharing the Organon story with listeners of the Digital HR Leaders podcast. I know it's going to be an episode that people are going to enjoy. How can listeners find out more, get in touch with you, follow you on social media and find out more about Organon?
Aaron Falcione: Yeah, that's great. So I am on LinkedIn, hit me up on LinkedIn, or you can also follow Organon on our LinkedIn page or organon.com. And really, David, thanks for having me, it's been a great discussion.
David Green: Well, thank you, Aaron. It's been really enjoyable and it's heartening to hear what you're building at Organon.
Aaron Falcione: Thank you.
David Green: That's all for this episode of the Digital HR Leaders podcast. I'd like to say thanks again to Aaron for sharing Organon's inspiring story and his invaluable insights on enhancing employee experience through mission-aligned HR strategies. If you enjoyed today's episode, please take a moment to rate us on your podcast platform of choice, as it helps other HR professionals and enthusiasts discover the show. We value your feedback, and your ratings enable us to continue producing and evolving the show.
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