Why a CHRO Needs to Think Like a CIO

January 17, 2018

Why a CHRO Needs to Think Like a CIO

What’s more important to the future of business, people or technology? As HR leaders, we would say people are most critical to organizational success. A recent global study of CEO perceptions by Korn Ferry found a startling lack of top-leader focus on the value of the people in their organizations, while they instead are putting a higher value on technology and tangible assets.

 

Through in-depth interviews with 800 business leaders in multi-million and multi-billion dollar global organizations, we found:

  • Sixty-three percent say that in 5 years, technology will be the firm’s greatest source of competitive advantage.
  • Sixty-seven percent say that technology will create greater value in the future than people will.
  • Forty-four percent say the prevalence of robotics, automation and artificial intelligence (AI) will make people “largely irrelevant” in the future of work.

 

What this tells us is that leaders may be facing what experts call a tangibility bias. Facing uncertainty, they are putting priority in their thinking, planning and execution on the tangible – what they can see, touch and measure, such as technology investments. Of course, this line of thinking misses the key point – the technology is only as good as the people who make the technology relevant to the business, and adapt as the business evolves.

 

To be truly digitally sustainable, as quickly as possible, the people strategy must evolve so that the organization has the new critical competencies necessary to succeed.

 

That’s where HR leaders come in. If the CHRO can be nimble and think like a CIO and a CHRO, true success will come. The main role of the CIO is to shepherd the breakneck pace of change in the technology realm and HR plays a critical role in helping the CIO understand how people will be the underpinnings of ushering organizations to the next level.

 

According to Phil Fasano, former CIO of AIG and Kaiser Permanante, "These perspectives are complementary, with a natural opportunity for partnership on the digital agenda between the CHRO and the CIO." Beyond owning the people strategy, CHROs must not be simply order takers, but help implement new trends and business strategies that will ultimately determine the organizational design and the people strategy.

 

Since the CHRO is responsible for ensuring that the company has the right people in the right places at the right time with the right competencies, they must continually be out front looking at the competitive landscape and collaborating with their colleagues who run businesses and critical functions like IT.

 

In terms of human capital analytics support, Krishna Nathan, CIO at S&P Global, offers advice: "With the advent of AI and Big Data, a CHRO in today’s world should insist on collecting and analyzing vast amounts of data. How can you analytically predict attrition? Identify those employees most at risk? The CHRO needs to ensure that he or she collects the appropriate data so that the CIO’s teams can derive meaningful predictions from it."

 

What are some key HR differences between legacy company technology organizations and their digital competitors who continually evolve with the business climate? From an organizational design perspective, the digital competitors are more likely to have operations and application development working in unison. This creates a closely tied workflow that enables the rapid change.

 

From a workforce competencies perspective, the differences are significant and meaningful. While there is an old saying that you "go to war with the army you have," that should not be a long-term approach. To be truly digitally sustainable, as quickly as possible, the people strategy must evolve so that the organization has the new critical competencies necessary to succeed.

 

Companies today are facing thought-provoking build-vs-buy decisions around this new breed of talent. They hunger for a “shot in the arm” from people with new skills and, often, new mentalities – but then often struggle to integrate two disparate workforces. “Reverse onboarding” may be required to help the existing organization’s culture change to better include and enable new (and badly needed) talent. In this regard, to include reskilling of existing employees in talent strategy can be powerful, especially when the workers who are chosen to be reskilled have been thoughtfully selected for having a robust ability to learn.

 

Taking the big-picture view, there is in fact a competency set that is common to successful digital companies and is measurable. Our research lays out five measurable competencies for tech companies to become an ever-evolving digital company, which correlate strongly to growth in gross profit margins.

 

1. Discipline and focus. Tech organizations must be clear on what digital means to their specific organization, and be prepared to execute effectively and single-mindedly toward that vision. Prioritization of the right initiatives is critical, as is repeatability and scalability.

2. Connectivity. For a tech organization, the key to connectivity is setting up vibrant ecosystems to let both internal and external collaboration flourish. Joint learning and co-creation is the order of the day.

3. Openness and transparency. For the sort of collaboration that enables connectivity to flourish, open and transparent communications are a must. Tech organizations that demonstrate this capability empower their people; all voices are heard in a fully inclusive environment where decision-making occurs on a public stage.

4. Empowerment and alignment. Digitally sustainable organizations empower the parts of the organization that sit close to three key sources of value: customers, talent, and data. For a tech organization, then, putting as much authority as possible in the hands of those who touch data is critical. Such organizations then align the entire tech organization around the shared digital journey to further drive the ability for the frontline to make decisions in the moment without fear of missteps.

5. Agility. Agile technology organizations plan and execute in parallel, make decisions quickly, and don’t shy away from risks. Our research shows such organizations are populated with highly learning-agile executives – who are 18 times more likely to be high-potential than their peers.

 

Why are these competencies important, and how do they translate to concrete business activities?  Let’s take the example of agility. Korn Ferry research demonstrates that agile organizations have 25 percent higher profit margins. We’ve identified three components that drive the kind of agility needed for a digital world.

 

First, the aforementioned learning agility among executives; second, rapid decision speed; and third, lean management. Think about an organization that truly displays these three traits. It can explore new areas easily and pivot quickly to anticipate disruption.

 

Accordingly, as the CHRO, you should drive a heat-map exercise to determine the abundance or lack of these competencies within your organization, more broadly as well as in the IT organization itself. After all, what good is a strategy if you don't have the capability to execute?  Like it or not, organizational capabilities are derived from the aggregate competencies that reside in the workforce. If the competencies are not there, your organization does not have the capabilities it needs. It is as simple and as complex as that.

 

So, as a CHRO, we encourage you to think like a CIO and, yes, meddle if necessary. After all, it isn't meddling; it's really your job.

 

The Authors: 

Alan Guarino, a former chief executive and experienced consultant, is vice chairman for Korn Ferry's CEO and Board Services practice. He is graduate of the United States Military Academy at West Point, and earned his MBA while on active duty in the United States Army. 

Melissa Swift is the global leader for digital solutions at Korn Ferry. She is charged with driving the development, alignment and marketing of innovative solutions for digital transformation offering across the firm. 

Gabriella Kilby is a senior client partner at Korn Ferry and a member of the firm's Succession Management Practice. She has has two decades of experience helping companies and senior leaders to develop and leverage their human capital and improve organizational performance.