The New CHRO: Having More Impact Than Ever Before

October 12, 2016

The New CHRO: Having More Impact Than Ever Before

There’s a bit of a revolution going on in the world of CHROs. Gone are the days when people in this role are seen as the keepers of the administrative people functions. Today’s effective CHROs are clearly part of the executive teams that develop and execute business strategy.

Increasingly, the CHROs that we work with own the talent solution side of the business, aligning talent workstreams to drive the business toward the organization’s objectives. Companies where the CHRO focuses on this strategic set of responsibilities are positioned to gain the upper hand, because these firms are likely to better execute their strategies. 

The outdated view by some of HR as “people police” who demand proper paper processes reminds me of the job of staff officer from my service in the U.S. Army. “Staff officer” was a term most officers dreaded, because it meant you were doing administrative work, instead of being out there, leading the troops.

For CHROs, being seen as the equivalent of a “staff officer” is a reputation they cannot afford—not if they want to be viewed as a strategic leader within the company. Many are following the path of chief financial officers (CFOs) who, more than a decade ago, became recognized by CEOs as strategic partners in helping to drive the business. CHROs are evolving in the same way, starting with the creation of a human capital agenda that drives talent workstreams that lead the execution of the business strategy in all units, across the organization. We’ve seen a trend of CHROs operating as if they, too, are business unit presidents, accountable to the CEO. Theirs is the enterprise’s people business –they are the CEO of that business.

And CEOs need to understand the value that a CHRO can bring to an organization. Korn Ferry research shows that, while most best-in-class executives reveal a similar silhouette, it is clear that CHROs are cut from the same cloth as CEOs and COOs. It is not a surprise that COOs and CEOs have similar profiles, given that they play similar roles. What is fascinating is that best-in-class CHROs are so much more similar to CEOs than are CFOs, CIOs, or CMOs. Even examining nuanced distinctions, we find that the CHRO’s profile is statistically closer to that of the CEO and COO than are the other key functional leaders

Paying attention to the talent part of the business is critical to success. Total human capital costs can account for as much as 70 percent of operating expenses, including for Fortune 500 companies. To get the most from this investment, organizations need to align their talent strategies and their business objectives. Historically, HR has been very proud of its programs. The focus has been the programs and their component parts and not how they actually drove the successful execution of the business strategy. But today, it’s not about the programs. It’s about workstreams that align talent to the mission. This alignment puts CHROs in a very strategic position and in partnership with the CEO, CFO, chief marketing officers (CMOs), and other C-level leaders.

“An effective C-suite leader must operate like a CEO—thinking broadly about the levers to pull to create value,” said John Berisford, former CHRO of McGraw-Hill Financial and now president of Standard & Poor’s. “For a CHRO, it’s all about alignment of talent to the growth and performance agenda.”

CHROs who embrace a larger role help drive their company’s strategy through talent acquisition and leadership development. They also manage a host of other requirements, such as: human resources technology platforms, compensation, performance management, culture, diversity and inclusion, succession planning, learning and development, and employee relations. In addition, strong CHROs understand market dynamics and customer satisfaction, and have the skills to influence others to achieve a desired impact.

Admittedly, for those who have built careers largely on technical acumen, the shift to a larger, more strategic role may be beyond their capabilities and their comfort zone as a technician. But more than ever, there is a need for CHROs who have the mindset and leadership acumen to move beyond being “staff officers” and instead assume strategic roles to help develop and lead “the troops.”

“The CHRO needs first to be a business person with the same goals and understanding of the business as the CEO and CFO,” said Kevin Silva, CHRO of Voya Financial, adding: “When the CHRO stands shoulder-to-shoulder [with other C-level leaders] the full potential of the senior team and the business can more readily be realized.”

Of great importance in the expanded role of the CHRO is acting as a key ally to the CEO. As a trusted advisor, the CHROs can tell the CEO what he or she need to know: Is the CEO having the intended impact as a leader? Is the right executive talent in place? Is the culture productive and emerging—or is it in danger of becoming toxic and demoralizing? Without leveraging such deep insights on talent, leadership, and culture, a CEO may find that even exceptional technical solutions are not being implemented—or are being implemented out of sync with rapidly changing global markets.

CHROs who move well beyond merely administering programs create impact and a return on the money invested in their company’s talent systems. It takes courage and a willingness to be proactive; they must anticipate problems before they arise and provide solutions.

As more CHROs step up to the challenges and expectations of broader, more strategic responsibilities, the more the role will evolve into ownership of the talent solutions for executing the organization’s strategies.

 

The Authors: 

Alan Guarino is Vice Chairman in the CEO and Board Services practice for Korn Ferry. He brings a unique perspective to Korn Ferry as a former chief executive officer and experienced consultant, working with corporate boards and executive teams to drive business and talent management strategies.