Chano Fernandez, the co-CEO of Workday, is a rarity. It is rare, that is to say, to find a European chief executive of an IT company. The industry is dominated by the US, and California at that, and its founders and senior leadership teams tend to be American.
Workday itself is a Californian company, headquartered in Pleasanton, but Fernandez is Spanish, a graduate of the University of Salamanca, and based between London and Madrid.
He has 25 years’ experience in the industry, and has been with Workday for almost eight years – since August 2020 as its co-CEO, alongside co-founder Aneel Busri. He had a formative stint at McKinsey in the mid-1990s and has had a career in enterprise software that includes stints at SAP and Infor.
He is a physicist by background, while Workday co-founders David Duffield and Busri are electrical engineers. They are known as a thoughtful senior leadership group, interested in ideas. They have also adopted an unusual co-CEO model, first with the founders and now with Fernandez and Busri.
Duffield is famous as the founder, in 1987, of PeopleSoft, which was acquired by Oracle in 2005. Workday is well known as a company that prefers to retain staff, as against one that leans more towards a “tour of duty” model, turning over job hoppers – which is more of a Silicon Valley norm. It gave all employees two weeks’ wages at the start of the pandemic as a bonus, to help them deal with any initial financial difficulties due to the public health crisis.
Fernandez describes Workday’s culture as “significantly customer focused” and “very welcoming”. “[It is] a lot about the ‘we’ and the team and collaboration. Making sure people want to do the right things for the company, not the right things for themselves,” he says. “Keeping that in mind, we have a very simple saying, which is we don’t see companies that have happy customers and unhappy employees.”
He says it is commonplace today for companies to say employees are number one, “but if you go back 10 years, people wanted to highlight how customer focused they were, they were always talking ‘customers, customers, customers’ – but customer satisfaction is an outcome of employee satisfaction”.
“I don’t think I understood the impact of culture on values till I came to Workday. If employees are happy, they want to do the right things, they want to do the best for the company, they want to perform, they want to be productive, they want to stay out of politics, they want to really collaborate within their teams”
Chano Fernandez, Workday
When the Covid-19 pandemic started, he says Workday decided to “double down on employee support – not just in relation to health and safety concerns, but also financial concerns in terms of what was happening in the future”, starting by making a bonus payment to all employees, equivalent to 15 days’ salary.
“We’ve supported them with their mental health, we support them through flexibility, [enabling] care-giving support for those who need to take care of either parents or children. I think we’ve done the best we could, guided by our values,” says Fernandez.
“I don’t think I understood the impact of culture on values till I came to Workday [in 2014]. If employees are happy, they want to do the right things, they want to do the best for the company, they want to perform, they want to be productive, they want to stay out of politics, they want to really collaborate within their teams. All the employees are shareholders, and they feel ‘this is my company’,” he says.
All full-time employees of Workday are shareholders as they are given shares that vest over time. They are also awarded additional shares as performance bonuses.
It’s not always been a quasi-socialist utopia, however. “Like anyone else, we went through our difficult times.” Five years ago, he says, “the culture was deteriorating”. While, in the early years of the company, the founders were able to interview every recruit, once they were adding in the order of 1,500 to 2,000 people a year, the scale of the growth was attenuating the culture, “which is something that you always need to be preserving”. Today, Workday has around 12,500 employees.
Hence, in 2016, the company designed an annual programme where first-time managers (first time to Workday, that is to say) gather to talk about culture, not commerce. They have been putting 600 to 1,000 people through the programme each year.
“It sounds a bit fluffy, talking about these things for two to three days. But it’s been great, with lots of real-world examples. We go through cases and ask, ‘What would you do?’ It helps our managers make decisions about people’s performance and behaviour, making sure they understand how we think about our values and the expectations of managers at Workday.”
Transatlantic dreaming
Does Fernandez think he brings an extra dimension to Workday, from a European background? It is well known that Californian companies are different even to companies from the east coast of the US. And certainly different to UK and European companies. What are his reflections on the differences between business cultures on the two sides of the Atlantic?
“My experience is that when you bring expats from the US into Europe, they will tell you, ‘Yes, I understand. You guys have different languages and different cultures. I understand’. But once they have been here a year or so, and they have had an opportunity to interact with British or Spanish or Finnish or whatever customers and colleagues, they come to you and say, ‘I did not understand, Chano. Now, I’m starting to understand, and I have a long way to go’.”
Should the culture of the Bay Area – powered by venture capital, energised by successive generations of computer science graduates, and characterised by “failure as a virtue” – be replicated in London, Madrid, Paris or Berlin?
“I think this [approach of] startup fast, and if you fail, there are learnings, and try again, is great. I would love to see my own country, Spain, taking that on,” says Fernandez.
“But I also believe in keeping our own authenticity. The backgrounds, the values and the heritage are great across Europe. The challenge is to scale. The US is a very large, homogeneous market compared with Europe. But we are seeing many more European companies innovating technologically, for example, with process mining from Germany. So, there’s much more innovation taking place in Europe, and certainly, there is much more access to money. The challenge, again, is to scale those companies before they get acquired.”
The legacy of the Covid-19 pandemic
Asked what he expects to see as the legacy of Covid, Fernandez says he is “very positive that we are emerging”, although “we are conscious that the virus is still there and that even in the best-case scenarios we will have to live with it”.
From a technology perspective, he testifies that many companies discovered they were behind where they needed to be, in relation to digital transformation, even to the extent of not being able to close their financial books remotely at the end of each quarter or at the financial year end. Or not being able to identify “emergency” staff as required, as in healthcare where organisations struggled to find retired doctors or nurses to help out at the height of the pandemic.
“The dialogue between the CEO and the CHRO during the past year has been intensive and dynamic. Mental health, well-being and staying close have been more relevant. And significant with respect to diversity and inclusion, and ESG. All these things are top of mind right now for the CEO” Chano Fernandez, Workday
“Companies had serious problems with not having much visibility into their workforces – how engaged employees were, their morale and productivity,” he says.
Another area he identifies as requiring more attention, as disclosed by the pandemic, is planning. Workday could see that, he says, because of the “vast amounts of data about scenario planning that companies were doing, visible to the supplier as anonymously aggregated”.
Fernandez expects to see an acceleration of financial and HR projects that have been put on a back burner, “especially the bigger projects around financials”.
As for HR, he believes it to be an area that has become more strategic in recent years. “In the past, the CHRO [chief human resources officer] role was sometimes not that strategic, reporting to the CEO directly. That doesn’t happen any longer,” he says. “If you think about the past 15 months, CEOs were worried about what was going on with their employees: Are they okay? How will we bring them back to work? Are we doing the right things? How are we communicating internally? What else we should be doing? What are other companies doing?
“The dialogue between the CEO and the CHRO during the past year has been intensive and dynamic. Mental health, well-being and staying close have been more relevant. And significant with respect to diversity and inclusion, and ESG [environmental, social, and corporate governance]. All these things are top of mind right now for the CEO, and many CEOs have just not been living through these new trends, which are front page today.”
A challenge for his own company, which is proud of its diversity and inclusion programmes, he expects to be in relation to recruiting the right talent, and the right amount of it. “With the market we’re living in, ensuring that we keep attracting, retaining and developing the best talent is vital, because the market is very hot out there. If you look at the technology market in the US, there’s maybe three offers for every candidate,” says Fernandez.
Another challenge is security. “We almost give our security guys a blank cheque for whatever is required to invest in to make sure that we keep our customers secure,” he says.
Fernandez describes the co-CEO model at Workday as a division of labour between himself and Aneel Busri. “I’m more the growth part of the company, and Aneel represents more the innovation part. This model works where there is friendship, trust and low ego – if possible, no ego – because otherwise, it is very hard.”
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