The new generation CHROs are no longer perceived to be "behind the scene" administrative function people only. There is already a sea shift taking place in how their role is perceived, with increasing number of CHROs working closely with the CEOs and making their way to C-suite and boardroom. The percentage still remains far from noticeable, but the trend is definitely set to change in the coming years.
It is thus imperative that the CHROs equip themselves with skills and experience to tackle the new expectations and realign themselves from administrative roles to being strategic and operational thinkers.
In a detailed study published in the Harvard Business Review, the traits of CHROs matched up closely with those of CEOs. Researchers analyzed assessments of large group of leaders in six C-suite functions - CEO, CFO, COO, CIO, CHRO, and CMO - in which each executive was ranked on 14 aspects of leadership on a scale from one to seven. And the CHROs traits came closest to that of CEO. That sure sounds surprising considering the conflict between People and Profits.
Research from the likes of Dave Ulrich also reflects that out of all the executive roles, they share most common traits with CEOs. Same as what HBR researchers concluded. "This finding is very counterintuitive - nobody would have predicted it."
A CHRO is the C-level position of a company that resembles the CEO in 3 important aspects: Leadership Style, Thinking Style and Emotional Competency.
People and profits conflict was always a perceived one, expense against revenue. Businesses don't create value, it's people do. Success of an organization and hence, its profitability is mostly governed by its people. Whether delivering a product or a service, it's the people who are the key differentiators. It's not an impossible task for a competitor to replicate your products or services, but it's the unique people matrix that can never be copied.
Next generation leaders can not merely focus on the bottom line and drive organizational success on technology and profits. Stakeholders will remain in as important a position as shareholders. Modern day CHRO must realize the importance of being collaborative, understanding business strategies along with people needs. Progressive CHROs act like an economic & strategic advisor and no longer remain limited by the administrative functions. They increasingly provide operational and strategic input into their organizations. If one were to scan through profiles posted for CHRO requirement, some of the strategy and operations related terms that stand out are:
- Develop strategic plan for human capital
- Alignment of HR strategy with organizational goals
- Enhanced analytics ability to forecast future manpower requirements
- Develop KPIs to constantly enhance organizational performance
- Importance and deliverability of fiscal performance targets
- Envisage competition and institute operational changes well ahead of time
CHROs need to combine these strategic and operational demands. An experience no other department can demonstrate. This also sounds closest to what a CEO is expected to deliver. The caveat here seems to be that a CHRO would find it rather difficult to make to the CEO position, if he has spent his entire career in HR. The best candidates for this position would be candidates who have had broad managerial experience (and P&L responsibility) that includes a developmental stint running the HR department from a strategic point of view. Emphasis seems to be that any CHRO who aspires to become a CEO must demonstrate capabilities in a host of skills required of top leaders.
Successful CHROs will be challenge-motivated and solution-inspired leaders, whose skill sets will remain relevant in an increasingly technology-driven world. Future top talent will be relevant because of their uniquely human qualities: their ability to think on their feet, collaborate, empathize, and demonstrate leadership.
"The challenge for CHROs is to…acquire sufficient technical and financial skills, in early education and in career steps along the way, if succession to CEO is a desired outcome,"
A CHRO vying for the top position must demonstrate these:
- Focus on business results along with utilizing the people capital
- Ability to lead, push, forecast, rather than play just a supportive role
- Embrace risk rather than reduce it
- Become an enabler rather than a barrier
CEOs with CHRO role in their resume have not become a trend yet, but it is definitely the new age requirement.
GM CEO Mary Barra who was company's VP of Global HR, aptly demonstrated that she not only had financial acumen to make tough decisions like pulling out of select markets, but also the strategic prowess demonstrated by her to bring in new technology advances. Incidentally both GM and Xerox have had female CEOs who came up the ranks through HR. It is perceived that women may be the biggest benefactor for the top CEO position in this case since HR globally has high % of women head.