The Doom Cycle of Low Expectations

Most CEOs carry a number in their head for what HR is worth. They set it early, from the HR leaders they inherited, and they've run the company on it ever since. That number is probably wrong — and the gap between it and reality is costing them real money.

This episode isn't for the HR team. It's for the person they report to. Jackson Lynch and Scott Morris bring in Ted Forbes — former CHRO, co-author of Making HR Matter — to name the mechanism and show the exit.

What You'll Learn

• The "doom cycle" of low expectations: why it's self-sealing, rational from every angle, and what the interruption actually looks like.
• Why screening your next HR hire for credentials is screening for the past — and the three interview questions that actually identify the right profile.
• How income statement thinking converts HR from overhead into a measurable investment with a real return attached.
• The $40M Capital One University story: how Ted's team cut training costs and improved job performance scores at the same time.
• What a CEO can do Monday morning to break the pattern — no new budget, no search firm, no external help required.

Key Quotes

"The number you carry in your head for what HR is worth isn't a fact. It's a decision you made with the inputs you had at the time."

"Nobody is entitled to a seat at the table. Not a single function. You earn it by speaking the language of business and adding value."

"Ask for the engagement score and you'll get the engagement score. Ask for the constraint and the people move — that's what arrives instead."

Sources for Statistics Cited

• 51% of CEOs regard HR function as strategic (down year-over-year) — McKinsey HR Monitor 2025
• 58% of PE-backed CEOs replaced within two years — AlixPartners PE Leadership Survey
• Top-quartile PE exits: 20% had CHRO at exit vs. 9% in bottom quartile — The People Space
• SHRM Competency Model: 9 areas, 1 is Business Acumen (11%) — SHRM BASK
• 70% of joint ventures don't meet expectations — HBR / McKinsey, multiple sources
• $40M training consolidation / job performance 79%→86% at Capital One — Source not independently verified (internal data, Ted Forbes)

SEO Summary

Meta Description: CEO and CHRO alignment in PE: Ted Forbes names the doom cycle of low HR expectations and the income statement thinking that breaks it for good.

Keywords: CHRO strategy, CEO HR alignment, human capital ROI, income statement thinking HR, private equity talent leadership, HR cost center vs investment, CHRO Ascent Academy, Making HR Matter Ted Forbes, doom cycle low expectations, talent density executive leadership

Transcript

Jackson [0:00] Hey, if you run a company, you carry a number in your head for what HR is worth. You set that number years ago from HR people you happened to inherit, and you've run the place by that number ever since. It might be the most expensive guess you've ever made.

Scott [0:39] He's a former CHRO with all of the playbooks and scar tissue to prove it. He's a man who has read more income statements than most CFOs and still somehow gets seated next to the intern at the company dinner. And he's also the founder of Propulsion AI. Today we're going to do something a little bit different. This episode is not for an HR audience. It's, candidly, for the person that they report to. And if you're a CEO and your head of HR sent you this, they did that on purpose — it was deliberate. They want to change something with you, and they didn't have a clean way to start. So we're going to start it for them. The subject is a quiet, expensive trap that most CEOs are sitting with in their own people function.

Scott [1:27] And you know, Jackson, I want to name why this is harder than it looks from the outside. Every CEO runs on their own personal experience. The HR people that you worked with taught you what to expect from the function. And most of that lesson pointed in one direction — down, unfortunately. So when Jackson and I say a trap, we don't mean that you made a mistake. We mean you've been running a reasonable call on poor inputs for a long time. That's fixable. And today we've got the right person with us as a guest to help us do it.

Jackson [2:02] That is what is known as a tease. But before we get into it, I want to take a second and say a thank you and a shout-out this week to Shiva and the entire Altera team out in San Jose, where I spent time this week. It was really great — a very sharp room, and they are doing the hard work that comes with being a carve-out. I just want to say thank you for being a part of this community. And to everyone who is tuning in, whether you're joining us from W City in the Philippines or from Anchorage, Alaska, where you can go to the Double Muskie just outside in Portage — my favorite Cajun restaurant in the entire world — we're glad that you showed up today.

Scott [2:43] I love that you have a favorite restaurant in almost every city you've been to. And while we're stopped, Jackson, let's do 30 seconds about the CHRO Ascent Academy. Take 30 seconds, everybody, and think about the last time you walked out of a conversation with your CEO. Did you know, walking out, that a talent argument had moved a real decision? Or did it land as information that the CEO filed away and kind of moved on past? Jackson created something called the CHRO Ascent Academy. One of the recent graduates put it this way: the experience helped them frame HR programs from a business standpoint, from the viewpoint of the executives in the room. And that's the whole game. The CHRO Ascent Academy is where CHROs learn to translate people decisions into the language that business already runs on — revenue, margin, and risk. It's a cohort program, seats are limited, and they tend to fill up fast. So head on over to mytalentsherpa.com and check it out.

Jackson [3:43] Yeah, I appreciate that, Scott. And now let's dive into this thing. Here's the picture. Every CEO — well, almost every CEO — will tell you that people are their most important asset. They say it on earnings calls, they say it at the all hands, and for the best part, they mean it. Then I want you to look at how the same CEOs describe the function that owns those people. McKinsey's HR Monitor for 2025 found that about half of CEOs — 51%, if you want to be specific — regard their HR function as strategic. And that number went down from the year before. So the asset is the most important thing in the building, and the function that creates the conditions through which it's managed, in the CEO's own words, is a coin flip. And that gap is this whole episode.

Scott [4:34] Well, and let's be specific about what that gap costs, Jackson, because in the world that I work in — private equity — it carries a price tag. AlixPartners found that around 58% of CEOs in private equity-backed portfolio companies are replaced inside of the first two years. It's actually 18 months. Sit with that for a second. The CEO is the most scrutinized hire in the entire building, and more than half don't survive their first act. And when you ask why, the answer is almost always execution. They couldn't move the business fast enough and they got replaced because of it. And execution is a workforce question before it's anything else.

Jackson [5:18] It really is. And here's the data point that should stop a CEO cold. When researchers look at private equity exits and sort them by outcome, the top quartile of deals had a CHRO in their seat at exit about 20% of the time. The bottom quartile — about 9%. So that's more than double, for those who are challenged with math. Neither are great numbers, but they do include a number of pre-CHRO-sized companies, from what I can tell. But the takeaway that is strongest is that outcomes are correlated with having a real human capital leader in the room. So the function the CEO rates as a coin flip is sitting right next to the function that separates a strong exit from a poor one. Both things are true at once. And a lot of CEOs have never put them side by side.

Scott [6:11] And I think from the CEO's seat, what it looks like is a person who has been trained to want less. A sponsor says to the CEO, "You need to go get an HR person" — because they've read those same stats you just rattled off. And so the CEO goes and gets a CHRO. And they're hiring really because there's a box on the org chart that they need to fill. They're not hiring for the profile. They're hiring to fill the box because they've never seen the profile really work. They've never seen the function really deliver. So they get what they've always gotten. And experience confirms expectation. The function stays small in their mind, it stays small in their budget, and it stays small in the room.

Jackson [6:53] And look, we're taping this when earlier this week we had an entire company — Bolt, I think it was called — that decided to get rid of their entire HR function. Why? Because they were solving problems that they created just to solve. Like, that's not unusual. And it's one of the things why we went into these podcasts trying to help people think about ways to reimagine the way human capital should really work, because that leads into a doom cycle. And we're going to name it properly with some help here in a few minutes. Because the cost of staying in that cycle is not a soft cost. It's slower execution, weaker exits, and a CEO running a workforce that they can't actually see. And here's the part that I think makes today worth your time. There is a version of HR that operates as a profit lever. And our guest built that. He has a single number attached to one decision that he made — $40 million. And we're going to get into that whole story. That man is named Ted Forbes.

Jackson [7:55] And I'm glad to have him here. Ted and I found each other the way a lot of good things happen these days — on LinkedIn, prior to all the algorithms shrinking everything. He is one of the sharper voices in my comment section and has been, candidly, for a while. Here is why he belongs in this conversation. Ted did not come up through HR. He came up through the Darden School of Business as a strategy person. He learned business first and then fell into HR almost by accident — at Capital One, where a CHRO took a chance on him. He went on to run the people functions at United and Backcountry.com and was one of the first heads of people at Cotopaxi. Did I get that right, Ted?

Ted [8:37] Yes, absolutely, Jackson. You got it right. Cotopaxi was a small startup company in the outdoor industry, named after a volcano in Ecuador, of all things.

Jackson [8:46] No wonder I couldn't pronounce it. He now runs his own firm, and he has written all of his learnings down with a gentleman named David Allsop in a book called Making HR Matter, which is coming out in June. Ted, before Scott and I get into the assumptions, I just want to welcome you to the pod. And I'm curious about your read on the picture that we just laid out.

Ted [9:08] I think it's spot on. There are two things that really resonated with me in your opening comments. One was the notion that most PE portfolio companies don't have a strong HR leader, and that that ultimately — as Scott pointed out — impacts the exit multiple. And the other thing is that the idea of "if you always do what you always did, you'll always get what you always got" is really my way of thinking about how CEOs think about HR. The experience that you have colors the model in your mind about how you move forward. And that's really critical in terms of finding the right HR person.

Scott [9:55] Ted, I love your framing on that, and it lands. And I want to walk the listener through the assumptions that a CEO is holding that keep them stuck. The first one is kind of the quiet one, because it doesn't feel like an assumption — it feels like realism. The CEO has concluded that low expectations of HR aren't a bias, that they're an accurate read. And it's because HR has been transactional every time they've seen it, in every other company they've been in. In their mind, that is a sound judgment.

Jackson [10:26] Look, I think that's the trap of it. A belief built on real experience doesn't feel like a belief — it feels like data. And the CEO is not being lazy here. They have a sample size, they see what the sample says, and they take what it says. The problem is the sample itself. They've only captured the function being used at a fraction of its range.

Scott [10:48] Ted, I know that you — because we've talked — have walked into companies where the CEO had quietly written the function off before you arrived. When you sat down with that CEO for the first time, what did you have to dislodge before you could get anything else to happen?

Ted [11:06] Great question, Scott. There are really two beliefs you have to dislodge. One is that notion that HR is just a bunch of tactical, administrative work. Occasionally, in smaller growing firms, there might be employee issues that come up. And those present themselves to the CEO in a way that they don't want to deal with. So they think: I need somebody in here who can handle employee issues. But it's tactical stuff, it's employee issues. The other belief — and it's grounded in experience, as Jackson pointed out — is the perception that HR people just have a narrow, non-business point of view.

Jackson [11:42] Stay on that one for a second. When a CEO has carried that belief for years, what does it actually cost them in business terms before they even realize there's a problem?

Ted [11:54] What it costs them is a number of things. It'll cost them a lack of realization about how things like culture, corporate reputation, morale, and productivity can actually impact the work that people do on a day-in, day-out basis. And that work — the innovation, the productivity, the pure getting-stuff-done activities — those are what make the company operate. If the company isn't operating at full potential, then it's not realizing it.

Jackson [12:24] So let's move to the second assumption. I think it shows up the moment a CEO decides they want to do more. They reach for more HR. And if the function has been disappointing, the instinct is to hire someone with a better resume, more certifications, a bigger HR title history. More of the same thing performed by someone more credentialed is the solution.

Scott [12:46] And Ted, if I'm correct, your book takes that one apart directly. One of the myths in your first chapter is the belief that certifications and degrees are somehow going to make somebody good at this work. I've always had a strong disaffinity for SPHR or SCP or whatever letters go after your name, because I think they're for people who are good at taking tests. I've never seen those tests really help you be great at the work. From the CEO seat, it's a hard myth to give up because credentials are the one thing they know how to screen for. So, Ted — when the CEO builds their next HR hire around a pedigree, what's the thing they tend to screen out without realizing it?

Ted [13:28] Well, it makes sense when you're looking at a resume or meeting an individual to ask: Where did they go to school? What did they study? What kind of professional certifications do they have? We see that in pretty much any discipline, and it's not a bad proxy. But the issue is that when you look underneath the proxies, sometimes what you're being certified on isn't really what you're looking for in your CHRO. And I'll give you a very clear example. SHRM — which certifies the majority of HR professionals in this country — is a perfectly good organization with large penetration. But when you look at their certification model, out of the nine competency areas, only one of them is called Business Acumen. So 11% of what they're certifying people on is business-facing. The rest is important, but it's not what you need to move the needle.

Ted [14:20] We talk about in the book — we call it the Pogo effect. If you remember the old Pogo comic strip: "We have met the enemy and he is us." That's kind of what we're dealing with. And I think the other part is that CEOs just don't set the bar high enough for their people function. Pedigrees are nice, but just like any function, you've got to get beneath the covers and say: what are the skill sets I really need in a CHRO? Does this person deliver on those?

Jackson [14:46] And it's funny, because I've had an off-handed conversation with someone our listeners would probably recognize. The question was: what's wrong with the broader certification efforts out there? And the answer was that we have done the equivalent of taking a finance organization, looking at accounts payable, and calling it finance. It is a small part of it. We are certifying yesterday's work — much more transactional than what's needed. And to your point, Ted, business acumen is one of the most important things you can bring to the table. That and the ability to influence are, candidly, the only two things I look at in an HRBP. I can teach everything else. If you know how the business works and you can get people to buy into where you want to lead them, you're in great shape. And, Ted — in our pre-conversation, I think you shared the story about walking into a finance leadership meeting when you were about two weeks into the job and starting to ask cash flow questions. What does it say about an HR leader asking finance questions that it registers as remarkable? Because it really shouldn't be.

Ted [16:04] It's a great story. It did happen when I was at Capital One. I took my first job as an HR business partner and got assigned to the CFO as my client. I did sit down in that prep meeting, and when they started working through the financials — getting ready for the quarterly earnings call — I started asking questions about cash flows. And it was as if you could see the mood change in the room. Suddenly they were: "You're an HR person. What are you doing talking about this?" Now, bear in mind that was 20 years ago, so to be fair, a lot of things have changed since then. But I think it's an accurate assessment of how business people view HR: "You don't understand what we're talking about." And unfortunately, that's often true.

Jackson [16:53] The third assumption is the one that no one says out loud — or at least not very often. The CEO holds the head of HR to a different standard than the head of finance or the head of operations. Generally speaking, it can be slower, softer, less accountable to a number, more tied to operationally keeping the trains running. And they would not describe that as a double standard, the way I think the three of us would. They would describe that as being realistic about what HR is.

Scott [17:23] But, Jackson, it's fair to ask where that came from, because it didn't come from nowhere. It's a matter of conditioning, right? A career of HR arriving with policy instead of P&L taught the whole C-suite to expect a different kind of contribution. Finance says no all the time — there's nothing unusual about that. They say no to budgets, to hires, to deals. I've been on the receiving end of a lot of those no's. But nobody calls finance the Department of No because finance says no and here's the business rationale for why we're not going to do that. So, Ted — why do CEOs hold a different bar for the HR leader than for, say, their CFO?

Ted [18:07] I think there are two questions on the table. One is: do CEOs have different expectations of their HR people? And secondly: why can CFOs say no in a way that's effective and CHROs say no in a way that gets dismissed? Let me take the first one. I think it's absurd to hold your HR people to a lower bar. If you're sitting around the table talking about important strategic issues, why would you hold one person to a different standard? What do you want from each of your direct reports? My hunch is they want people who offer wisdom, who offer expertise, who see the big picture and know how to optimize their function to get things done. So why would you hold HR to a different standard? I think it's the old myths. As Scott pointed out — stop doing that. Because first, you're perpetuating a myth that's not helping your business, and second, you're creating a function that is handcuffed by the perception across the entire executive team that, well, that's HR — they sit at the kids' table.

Ted [19:08] The second thing: I joke with my CFO friends that one of the things they learn in CFO school is how to be an ass. It's a fun joke, but sometimes they have to be one — and there's a good fiduciary reason for it. Everybody understands the CFO is ultimately responsible for the company's financials. If it's a public company, they've got to sign the Sarbanes-Oxley certification. It's a lot of responsibility. So everybody goes: that's the CFO, they carry a lot of weight, and I understand why they say no. Here's the thing: when the CHRO says no, they often can't explain the why in business terms. It might be a legal issue, a compliance issue, an exposure issue — all completely legitimate reasons to say no. But if you can't connect the dots between the no and what it means to operating the business, you're going to leave people with a bad taste in their mouth.

Scott [20:21] There's another thing that operates there too — we tend to look at HR as responsible for employee happiness and engagement and satisfaction. So saying no kind of runs against that. When in reality, we are the group that is supposed to make the workforce productive.

Ted [20:39] Absolutely. And saying no on things that create risk for the organization is absolutely the right thing to do. But anytime I walked into an organization and addressed my new HR team, the first thing I said is: I don't want to hear you say no. I want to hear you say: let me understand what you need and work with you to figure it out.

Jackson [21:00] Look, for those who've listened to the pod before, there are two things to recognize. One — we forgot to tell Ted we don't swear on the podcast. Moving forward. But second, I have a running theory on why this works. And, Ted, I'd love to get your take. We grow up in human capital wearing three hats. One is the company defender hat — a compliance lens. The second is the employee advocate, and I mean that the way Dave Ulrich originally meant it — not what it's evolved into, which is essentially a shop steward for employee concerns. And the third is the talent architect: do I have the right people in the right place with the right systems to enable business performance? When you start your career, almost everything you do is through the compliance lens. As you grow up and through the organization, it's really hard to shed that. That has two implications. One — you never really step into "my job is to enable business performance first" until you reach the CHRO chair. But also — you've trained each of your peers over time to work around you, because you have the compliance lens, not the business lens. And back to your point: both finance and HR say no, and only one of them gets the nickname. So what's your read? Do you think I'm onto something there?

Ted [22:40] I think you're totally onto it. And honestly, that's why we wrote the book. The audience is as much business executives as it is HR people. Let's state that up front. But there's a third sub-audience — folks who are young in career, building their trajectory as HR professionals. And we would like to catch them sooner. We want to give them a picture of what HR can be, as opposed to what HR is or might be depending on who they learn from. You've got to break the cycle. You've got to get in early. If it were an operations problem, you'd look at the raw material and say: are we getting the best raw material in? Are we molding it in the right way so the finished product comes out with the expectations we're looking for? That's exactly what we're trying to do — help young people see that it's important to learn all the disciplines of HR. Recruiting, benefits, compensation, compliance, employee relations — all those little disciplines are key. But it's equally important to put them in the context of: why do we do this? And that's why we wrote the book.

Scott [24:09] So that's the diagnosis. Three assumptions, all of them rational from where the CEO sits. Together, they hold the door shut. The real question is why the door stays shut even when the CEO wants to open it. And that's a mechanism, and it has a name.

Jackson [24:27] It does have a name, Scott. And I want to name the mechanism loudly, because the fixes people tend to reach for treat the symptom instead of the underlying loop that's producing it. And, Ted, you and David named this in the book. You called it the doom cycle of low expectations — which incidentally would look great on a t-shirt. When you were inside a company watching that cycle run, talk to me about what was feeding it, turn by turn.

Ted [24:56] We call it the doom cycle because, as you've articulated, low expectations beget low performance. And low performance reinforces low expectations, which in turn begets further low performance. I saw this before I got into HR, when I was doing a lot of work in the space of joint ventures, alliances, and mergers. HR would be brought in to do due diligence on a merger or alliance partner, and the mandate was: go tell me how each company does HR so we can align those processes. And if you walk into due diligence thinking what really matters is the nits and gnats — what do the compensation systems look like, how do the seniority agreements align, what are the benefits plans and how do we harmonize them — then your due diligence is going to be focused on stuff that has minimal impact on the success of the venture. What tends to happen in cross-company arrangements is that, like any new product, 70% of them don't live up to their expectations. And the reasons they don't are largely the people stuff — the culture, the values, the unwritten rules of how things get done inside an organization. If you're not looking at that, then you're going to miss it. The executives weren't asking the right questions. HR didn't know how to ask the right questions, or was afraid to push back. And thus what you get is a root cause that was never examined in due diligence.

Scott [27:10] Ted, I'm excited to share that the platform we've built at Propulsion AI is now running that diligence cycle, and not a bit of it is focused on the transactional elements. It's all focused on capabilities — whether they exist within the organization, are you compensating those people in the right way, who do you have to hold on to, who can you let go of, where are your duplicate roles. It's really exciting. But you talk about the transactional things and the gravity that pulled HR toward them. There's a loop that's happening, and it's clean and self-sealing. Low expectations mean HR gets handed transactional work. HR does the transactional work — and often does it incredibly well — because that's what was asked for. And then the CEO sees the transactional work and their expectation is confirmed. Nothing in the loop is anyone failing. It's just that everybody's doing the wrong jobs. And so that loop just runs until something outside interrupts it.

Jackson [28:17] And let me go back, Scott, to where I was just a minute ago. A large share of our profession grew up entirely through that compliance lens. Did the training get completed? Is the policy current? Is the risk covered? Even as you look through HR's own development, we tend to score it with vanity metrics — compliance and activity counts. By the time somebody actually reaches the top of HR, they have spent two decades being rewarded for playing defense. And the business has spent two decades learning to route around them for anything that's not defense. The root cause is easy to say but really hard to fix: we grow HR leaders on the compliance track, then we act surprised when they can't meet expectations that no one trained them to meet. And then you get to the top chair, and it's all about playing offense. Ted, I'm assuming you agree.

Ted [29:28] I agree a hundred percent. It's a mindset shift that has to happen, and there needs to be a catalytic event to cause that mindset shift.

Jackson [29:38] So that's the machine. Two loops, both stable, both rational, neither with a natural way out — which means the way out has to be built on purpose. Here's the shift I think we ought to focus on. The old model says HR is a cost center — it's a support function, it's overhead, something you manage down like rent. The new model says HR is an investment, something with a return that you can and should actually compute. And, Ted, your book has a word for the new model. You call it Relevant HR. And you define "relevant" as the opposite of irrelevant — which is what a lot of people quietly assume HR is. Before Scott and I build this out: does that shift — from cost center to investment — match the thing that in your experience actually changes outcomes on the ground?

Ted [30:34] I think it's a big part of it, Jackson, yes. It's about expectations and mindset. If you think about HR as a cost center, and the CEO, CFO, and CHRO are all aligned around that notion, then HR is really the necessary evil. The mindset around a necessary evil is: how do I get the biggest bang for the smallest buck? It's a little bit like a minimum viable product. What's the MVP I need from HR to keep the company from running off the rails? The shift comes when those three individuals say: how can we make HR an investment opportunity? Then you start to look at things differently. It drives behavior that's completely different from that MVP cost center mentality.

Scott [31:31] You know, I'll tell you where the concept clicked for me. It wasn't from book learning — it was from observing it in private equity. Because in private equity, the whole game is about the return and how fast you produce it. And so the functions are — sometimes explicitly, sometimes more implicitly — being asked: where are you generating a return? Sales answers it. Ops answers it. I've had at least one really good example watching a people leader answer it in the same language with a number, and you could watch the CEO's posture change in real time. The function didn't earn more respect by asking for it — it earned more respect by showing up with the math. And Ted, the engine of your book is something you call income statement thinking. Can you walk us through that?

Ted [32:27] Yeah, for sure. We call it income statement thinking because, honestly, it's the simplest but most impactful way to think about running a business. We all know what an income statement is: sales minus expenses equals profits. Now you can break it down into margins, EBITDA, all those things. But that basic formulation — sales minus expenses equals profits — is a fantastic lens for thinking about how you run the business. And it drives some key questions: Are we growing sales? Are we managing expenses carefully? Are we making a profit? What most HR people pay attention to — and this is the cost center mindset — is just the expense side. How do I help drive expenses down to make the bottom line grow? Our suggestion is that people need to think bigger. You can impact the revenue side, you can impact the expense side, and through both, you can impact the bottom line. We like to say: if you can't draw a tight connection between what you do and the income statement, then you need to step back and look carefully at what you're doing.

Jackson [33:33] And at least in my experience, that discipline is harder than it sounds. Because income statement thinking is not just about doing something and then putting a dollar sign on it after the fact. It's actually starting from the income statement and working backwards. And to your point — if you can't connect what we're doing to revenue or margin or risk, then the honest move is to question why we're doing it. That's a really hard standard. And in my view, it would probably retire a lot of HR activity. But it would have the added benefit of making the things that do survive matter more.

Jackson [34:10] So, Ted, you have a number attached to this — $40 million, one decision, at Capital One. Could you tell the Capital One University story for us? And could you talk about the part that most people would skip — which is that learning got measurably better at the same time that the cost came down?

Ted [34:34] I'd love to share it. It started, Jackson, as a cost play. Capital One was feeling margin pressure, and the CEO said to each of the operating leaders: we want you to find ways to get our margins back to where they need to be. So the HR team looked at a lot of different opportunities. One thing we saw as we looked across the business is that each functional division at Capital One had its own training department — whether it was Auto Finance, credit card, or Canada — they all had their own little teams that operated. And we were spending about $125 million a year on training, which is a good chunk of change. We felt like there was a 30 to 40% opportunity to realize efficiency there. And so we dug into it and found three places where we could save money.

Ted [35:30] We walked into this thinking it was a cost-saving opportunity. As we got deeper, we learned a lot more — and that's where the real interesting value proposition is. The opportunities were, first, around headcount; second, around infrastructure cost — which was a big number. But as we got deeper into it, we started seeing that there was a way to come up with a more customized, impactful, technology-enabled learning product. And equally, there was an opportunity to create a corporate university that gave people who worked in those training functions a sense of belonging to their own tribe — working within this university entity that would create a career path for them. So when you look at those three things — headcount costs, infrastructure costs, and the career path opportunity for training talent — what was intriguing was that each division leader ranked those priorities differently. Some cared more about costs, some cared more about technology, some cared more about their people.

Ted [36:30] In the end, we took advantage of the headcount savings — and it was tough, but Capital One is a company that's been accustomed to doing RIFs and does them quite well. We saved about $5 million off the bottom line in headcount costs. Straight away. Where the big lever was, was in the infrastructure. When you look at each of those little training departments scattered across operating divisions, there were a number of software platforms, course authoring platforms, classroom spaces, and a massive amount of third-party training. We found that by combining all of that, we could make it more efficient and deliver a better product.

Ted [37:00] What we did: consolidated classroom space, created one single learning management system, one authoring platform. We replaced a lot of third-party training with in-house expertise — interestingly, finance was one of the first to jump on board with that. And we shifted the mix from about 90% face-to-face training to roughly a 50-50 e-learning model. That was where the $40 million number came from: $5 million in headcount costs, $35 million in consolidating infrastructure, reallocating corporate real estate, and eliminating third-party consultants. But what we found by shifting to a more efficient mix and a more current way of thinking about learning — and getting operating executives involved in it — is that our impact on job performance scores went from 79% to 86%. We saw a real lift.

Ted [38:00] What was really cool is that by branding Capital One University, we went into the learning marketplace and started winning awards. We won the ATD Best Learning Program — the first year we went live, we were number 10, and it went up after that. Training Magazine gave us an award for best new hire program. That was a completely web-enabled onboarding program — people didn't have to come in and spend time in the classroom for pre-work. And at the end of the day, people found careers in learning and development. The satisfaction and impact of learning went up, the costs went down, and by branding this as a corporate asset, it became a magnet for hiring. Our CEO, I'll never forget this, at one of our all-hands meetings talked about Capital One University as one of the assets he was most proud of. In the end: we saved money, we had a better and more efficient product, we had a point of pride for the company, and we built a very strong culture of learning and teaching that permeated the entire vibe of the executive team. We walked in thinking we could save money, but as we got into it, it became clear it was a real investment with a huge ROI.

Scott [40:00] You know what I hear in that, Ted? And this is now the second time I've gotten to hear you tell that particular story. As I listen now the second time, there are constraints that are relaxing in the background. And that's something Jackson and I talk about on the show a lot. I want to walk our listeners through the chain of logic, because I think most HR work skips the income statement thinking we just heard. We start out with: well, we just want people to be better trained and satisfied — which is not a bad goal, but it stops one step short. The income statement version of that, if I've got your concept right, keeps that walking. People need to be more productive because the company is chasing points of margin, and the margin is blocked by some specific constraints. And the constraints are only going to relax when the workforce is producing a different output. And that output only happens when people know or believe something that they don't today. So training is the last link in that chain, not the first. But built in that order, the number at the top is real. If you skip the last link, you've bought a workshop and some hope. But you guys went about it thinking: how do you not just save costs, but how do you better enable productivity? And that's the key.

Jackson [41:22] Scott, I love that summary. If you go back, we talked about how most of learning and development is set up as a byproduct of managers not doing their job. And I think the story Ted told — and your summary of it — is the example of where it really works. But before we move off this and talk about what to do, there is a fourth myth in Ted's first chapter. It's called entitlement. It's that HR has owned a place in the room because the work is important. And I know a lot of HR people are going to be uncomfortable hearing this, because they've been taught to really want that seat at the table.

Ted [42:18] You know, Jackson, I first heard "we deserve a seat at the table" about 25 years ago. And frankly, it kind of nauseates me. Nobody is entitled to a seat at the table. Not a single function — not HR, not finance, not marketing. You earn that seat by adding value. And I think HR's problem in that conversation is that HR speaks the wrong language. HR speaks HR, and everybody else speaks numbers. It's a little bit like the stereotypical American tourist overseas who, when not understood, just talks louder — but they're speaking the wrong language. You earn your seat at the table by speaking the language of business and adding value. And frankly, if you don't have that seat, I would start by asking why and looking in the mirror.

Jackson [43:04] Yeah, and we've talked a lot about not wanting a seat at the table — you want a voice in the debate. Because you can sit and that's not the end state. What you want to do is shape things and change them. Which is why what you and David wrote about is so impactful. Because the model, simply put, is: HR is relevant when it's tied to economic outcomes, and irrelevant when it's not. The dividing line isn't about effort or good intention. It's about math. And the CEO's job here is pretty straightforward: you need to expect the math, you need to expect the arithmetic, and you need to build the conditions where it can exist. Which of course brings us to what a CEO can actually do on Monday.

Jackson [43:50] So if you are that CEO, here's how you move on this starting next week. Ted, we're going to give you the first one. What's the single thing you would tell a CEO to do on Monday morning to start breaking the cycle?

Ted [44:06] What I would do, Jackson, is pull the CHRO in — invite the CHRO into my office — sit down with them, and say: I need to see better bottom-line results on our company's business model from HR. So please go look at everything you do as though it were an investment, and tell me how you're creating economic impact that drives our business model. And then I would hold them accountable to doing that.

Scott [44:32] I want to underline that, because that step costs nothing and it can't be delegated. The CHRO actually has to go and do that one. And the CEO can take that step tomorrow morning if they want. No budget cycle, no search firm. And that's a really good one to start on, Ted, because it turns the next two plays from instructions into things you actually want to do.

Jackson [44:56] Okay, here's mine. And I think it's about who you hire. The next time you hire a head of HR, build the interview around the business, not around HR. If you have a search firm — great. Ask them to validate whether the person has the functional chops. But that should not be your decision node. You shouldn't be talking to them if they don't know the functional stuff. Notice that when you're building questions for the interview around the business, none of the questions I'm going to suggest are HR questions. Here's what I'd use. One: does this person understand how the whole enterprise makes money? Two: do they understand finance well enough to hold their own with your CFO? Because finance is the language your company already runs on. And three: can they sit in a C-suite debate and move it — not just attend it? If you screen for those three things, you're sometimes going to hire someone whose HR resume might not look as wonderful and polished. That's okay. That's the point. You will get a business leader at the enterprise level. You don't need a functional leader. Those are not the same things.

Scott [46:21] I'll tell you where that play matters the most, Jackson. It's when the board, a sponsor, or an operating partner in PE tells you: you have got to go hire an HR person. Because that's the highest-risk hire in your sequence — it's the one where you are most likely to hire to fill the box. Those three questions take muscle memory, but it's worth doing the right way. Slow down, screen for those three things Jackson just named, and you change the trajectory of the company over the next five years if you get the hire right. Here's mine — and it's how you run the relationship after you make that hire. Look at your next one-on-one with your head of HR. If it opens with an engagement score or a status update on a list of HR initiatives, then you're running at a low altitude with a senior person and you've got to redesign that meeting. Five-minute operational updates — because you do need to know how the trains are running. But then spend the time on one question: what's the business constraint you're focused on right now, and what's the people move that's going to relax that constraint? Ask that every time, and you're going to retrain that relationship inside of a quarter.

Jackson [47:49] I think that's right. And it's why when I work with my clients, I tell them to write down their updates. Don't use precious one-on-one airtime for an update. When you start focusing on constraint-based human capital, you'll figure out very quickly — and it'll signal to your head of HR — the altitude you expect. You don't need fancy training or a logo or a lecture. People are going to bring you what you ask for. Ask for the engagement score, and you're going to get the engagement score. Ask for the constraints and the people move, and within a few cycles, that's what's going to arrive instead. And equally important — that is where the function moves into income statement thinking from a functional leader.

Jackson [48:40] So, everybody — I know this is your favorite part of the podcast. It is your Talent Sherpa summary. And Scott doesn't know this, but I heard him talking to his agentic CHRO at Propulsion AI, and I heard him say: "My head of HR is the smoke detector of my executive team. I want it silent. I want it up in the ceiling, out of sight. And the only time I think about it is when something is already on fire." Isn't that what you said?

Scott [49:08] That is the worst thing you've made up that I've said, I think, in any episode we've done. All right.

Scott [49:15] Here's the summary. Takeaway one: the doom cycle, as Ted calls it, is real — and it's not destiny. Low expectations produce low performance, which confirms the low expectations. Takeaway two: when you screen your next HR leader for HR pedigree, you're screening for the past. Screen instead for business breadth, real financial fluency, and the ability to hold a C-suite seat. Takeaway three: the relationship gets run in the one-on-one. What you ask for is what you get. If you're opening with engagement scores and status reports, that's the altitude you're going to stay at. Open with a constraint and the people move that's going to relax it, and inside of a quarter you're going to have a different leader in front of you. Takeaway four: HR is either an investment or it's overhead, and the difference is arithmetic. Apply Ted's income statement thinking as the test. If the work can't be tied to revenue, margin, or cost reduction, that's the reason not to be gentle with it — it's the reason to question it. Those are my four. That's the summary. Ted, last word to you.

Ted [50:20] It's been a joy talking to both of you gentlemen. I've enjoyed it. I have a mission to get this message out there, and you've helped us do that. If you found what I had to say interesting, appealing, maybe even provocative and disturbing — go to Amazon or wherever you buy books and pick up Making HR Matter: What CEOs Want and How to Deliver It, and share it with your teams. Thank you.

Jackson [50:48] Yeah, and I got a chance to take a look at the preview that Ted was gracious enough to share with Scott and me. It should be required reading. And here's the one thing I want everyone to carry out of this episode. If you're the HR leader who made it all the way to the end — you already know what to do. Send it to your CEO and then book the conversation. We're making it very easy for you to lean into this. And if you're the CEO on the receiving end, just understand what that person is trying to do and what they're asking for. They're not asking for a bigger budget. They're asking to be measured differently — against the income statement instead of the activity log. And that's a request I think you should want to say yes to. The number you carry in your head for what HR is worth isn't a fact about HR. It's a decision you once made with the inputs that were available at the time. And you can make a different decision today. One I think you probably should make, given all the math in private equity these days. That's a business decision, and it is yours.

Jackson [51:55] And that's it for today. I want to say thank you so much for tuning into the Talent Sherpa Podcast. This is where senior leaders come to rethink how human capital really works. So much fun to do with everybody.

Scott [52:07] If you liked the episode, do us a favor right now and hit the like button, or even better — click subscribe. You can leave us a review on Apple Podcasts, Spotify, or even YouTube. We're on all of those. It benefits the community and helps us spread the words and thoughts from our great guests to other senior leaders. Hit like, hit subscribe right now.

Jackson [52:32] And look, I want to talk a little bit about Scott's company. Propulsion AI is workforce intelligence for private equity. Their AI teammates surface workforce risk before the deal closes, and help leadership teams drive execution after the deal closes. They translate strategy into individual accountability, coach managers to define roles by outcomes, and give every employee a clear line of sight to what actually matters. So if you're trying to figure out where to start with AI, I would start with Propulsion AI. You can learn more at what I think might be the most cleverly named company website ever: getpropulsion.ai.

Scott [53:18] And if you are a new CHRO, if you're preparing to step into that role, or if you're an aspiring CHRO, Jackson's built all of the tools that are going to help you operate at the altitude that role demands. Personal coaching, the CHRO Ascent Academy, even his best-selling Substack. Everything you need for that journey, you can find at mytalentsherpa.com.

Jackson [53:42] Ted, before we close, I just want to say thank you so much for being here. This was a great conversation, and I again want to point people to your book — Making HR Matter: What CEOs Want and How to Deliver It, written with Ted Forbes and David Allsop. It's out in June. And if the argument we made today landed for you, that book is where the whole blueprint lives. The myths, the mindset, the four essentials of Relevant HR. And Ted, for everyone who wants to learn more about you or get in touch — how do they best do that?

Ted [54:16] Thanks, Jackson. The easiest way is to hit me up on LinkedIn — Ted Forbes. Very simple. You'll see a picture of me, and under the tagline it says co-author of Making HR Matter. So that's the right Ted Forbes.

Jackson [54:31] And we'll have all of that in the show notes for everybody. Thanks again, Ted, and thanks to everyone who is listening — and some of you who are watching. Until next time: keep raising the bar, keep raising what you expect from the people function, and keep on climbing.