Against the backdrop of organizations struggling to deal with ongoing virus-initiated turbulence, could one of the effects of COVID-19 be to throw the role of the CHRO into sharp relief? In the way that the role of the CFO was placed centre-stage during the financial meltdown years of 2008-2009, could it be that the time has come for CHROs to take a more obvious lead in supporting and sustaining employees during this demanding and testing period? As a potentially critical resource for CEOs – are CHROs “hidden in plain sight”?
Hidden in plain sight
Why might CHROs be “hidden in plain sight”? For years – and certainly well before COVID-19 - there has been a huge debate (still ongoing) - and many pages written by experts around the world - about the need to strengthen the capability of CHROs. Alongside this is a related - and always unfailingly lively - discussion about the CHRO as a fully paid-up member of the Executive team. Should CHROs have a seat at the strategic top table? And on top of this come questions around the CHRO contribution to the life and times of the Board.
But not as much has been written, specifically, about the quality or nature of the CHRO’s relationship with the CEO, and still less about their relationship with the Chair.
In our previous article in People Matters: The Chair-CEO Relationship - Time to Dial Things Up? - we shared how critical the Chair-CEO relationship is and how it can have a significant impact - both positively and negatively - on the success of the organization. And so in this article, we will explore the role of the CHRO as it relates to the CEO and how it might develop in the years to come, post-COVID-19. We will discuss how the current period of turbulence could potentially offer up a silver lining for CHROs: it might just give them an opportunity to accelerate their development and enable them to strengthen the role and the credibility and importance of the role – if they are prepared to step up. And of course, if their CEOs are prepared to support them.
Questions for us include: To what degree has the CEO got the back of the CHRO? Is there a time when the CEO steps aside and allows the CHRO to lead? Does the CEO actively give prominence to the importance of the role of the CHRO? How much more could CEOs do to spotlight the amazing work done by the best of the CHROs? And what more could be done to attract top talent into the profession – to make it truly special?
The Rise (or not) of the CHRO
Let us reflect for a moment on the CHRO role itself. As we have already noted, the debate about what level the role should occupy in the organization - has raged on unabated. Questions include: where should this role be placed organisationally, and in recent years, as CEOs and Boards find themselves faced with many challenging and growing - “people-related issues” - the questions: “Should CHROs have a voice at the Board?” come up again and again. We believe that such problems (people-oriented issues, ironically) are not helped - and in some cases, can be exacerbated - by a lack of background expertise to handle these issues appropriately (at both Executive Team and Board levels). If this is the case, from where then is this expertise supposed to come? It seems to us that the starting point has to be the fundamental capability of the CHRO to do the job and play the role.
The CHRO Global Leadership Board (CGLB), with support from a research team at CEB, now Gartner, produced a white paper in 2018 which outlined what they believe defines a world-class CHRO and in so doing, created a model which we reproduce below. By their own admission, this work is aspirational. They hoped it would bring clarity around what the role “should be” or “could be” as CEOs and Boards navigate disruptive markets and labor force trends, while also ensuring business growth. They also hoped it would guide the development of future CHROs.
What is interesting to note about this model is just how all-encompassing it is. The model articulates the five roles CGLB believes form part of the CHRO role and these all rest on the need for broader base business skills as well as management of their function. While being a useful model to flesh out various aspects of the CHRO role or “potential role”, one has to ask, just how many CHROs in the world would live up to this model’s definition of a CHRO?
In attempting to answer that very question: Just how many CHROs in the world would live up to this model’s definition of a CHRO? - it may be useful to provide a ready-reckoner of the defining moments in the work-life of the CHRO. If the CHRO isn’t able to handle the majority of these events and issues, the question then becomes: how can we enable them to do so? And what help could the CEO be providing?
Defining Moments for CHROs
There are a range of defining moments that are critical for any CHRO incumbent (as defined by the CGLB’s white paper):
- Managing a CEO Transition
- Managing Executives Through a Sensitive/Crisis Situation
- Leading Independent Board Interactions (Engaging board members in meetings and individual interactions on sensitive issues that require navigating tensions between the CEO and Board (i.e. CEO performance conversations)
- Driving Executive Decision Making Around a Key Trend Affecting the Enterprise
- Delivering Capabilities for a Business Transformation or New Business Acquisition
- Designing a Strategy to Enable an Organisation to Implement the Right Structure for Future Business Needs
- Leading a Bold Experiment
- Implementing a Large-Scale Change to Compensation or Benefits
- Crafting a New Mission/ Vision/Values
- Leading a Cultural Transformation
- Managing Impact of Digitalization on Culture
- Engaging Executives in Critical Dialogue on Leadership Needs
- Courageously Advocating a Contrarian Position With the CEO
Taking a closer look at this smorgasbord of tasks and initiatives, we find that there can be more to many of these defining moments than meets the eye. In Don Ciampa’s HBR article “After the Handshake, Succession doesn’t end when a new CEO is hired” (Dec. 2016), he suggests that “the outgoing CEO, CHRO, and the Board should all have roles in helping the newcomer navigate company culture and politics.” This is over and above the role they all have in the hiring process.
“The new CEO will find it easy to obtain strategic, operational, and financial data while getting up to speed, but will need someone to explain other executives’ personal backstories and interrelationships and why and how some of the company’s more idiosyncratic practices evolved.
Ideally, a CHRO can also offer candid feedback on how the new leader’s early words and actions are perceived in the organization.”
Ciampa goes on to say:
“When a large retail company recruited an outsider to succeed the CEO, the company’s CHRO called him the next day and explained that although they’d spent time together during the search process, he wanted a meeting to discuss an onboarding plan and the company’s political structure. The CHRO traveled to the new CEO’s distant city, and they spent hours talking about the challenges of transition. The new leader found it invaluable.”
As you cast your eye across those defining moments for a CHRO, it is not hard to realize that one would need to work closely with the CEO (and other CXOs) as well as the Board, including the Chair. This is one reason why many call for the CHRO to be on the Board - a call that has been out for decades now. And yet there has been little movement in this area. What has changed during these decades though, are the growing complexities around people issues that organizations face. So why has the call yet to be taken up?
Being on the Board, rather than just presenting to the Board every so often, would be helpful for many reasons. While being able to make compelling, timely, and useful presentations to the Board is one important capability for a CHRO, being present as the Board considers, if not struggles with, “people-related issues” would seem sensible in many ways. However, this is all easier said than done. Why should this be?
Let’s take a look at how things play out in organizations.
How things play out in organizations
Imagine, you have just started your new job as a CHRO for one of the most progressive “start-ups” in the world - one whose name is now becoming part of our day to day language like hoovering and xeroxing did in their day. Two weeks after your commencement day, a former employee publishes a blog about their working experience in this same company. It’s February 2017, and yes, the company is Uber. As you all know, extreme turmoil was unleashed within the company and in many ways, they are not totally through it all.
Immediately, Liane Hornsey, the new CHRO, had to tackle a huge number of difficult and complex issues on many fronts all at once. There were multiple investigations to oversee. She served on the 14-person interim leadership team that ran the company after the former CEO was ousted. And then there was the organizational culture to tackle!
The story was different for SVP and CHRO, Carol Surface, at medical device company Medtronic whose operational headquarters are in Minneapolis. She started at the company in 2013, a few years after the start of then Chairman and Chief Executive Officer, Omar Ishrak. The initial focus was around succession planning for key roles but quickly changed to manage the acquisition of Covidien, which basically doubled the size of Medtronic. Both Carol and Omar have said that an acquisition of that size is the ultimate mate test of the CEO-CHRO relationship and that the strength of their relationship was critical for success. In Omar’s own words:
While we didn’t abandon talent and succession planning, we made an immediate pivot to assess our organizational design, to ensure it fulfilled and aligned to our overall business strategy and supported the upcoming integration. At the same time, Carol’s focus shifted to that of an enterprise change leader, driver of culture and purpose, and HR functional expert during a lengthy period of acquisition planning and integration.
Over subsequent years of working together, they have traveled through different seasons, as their focus adapted to the business needs of the company. Carol Surface plays an active role, along with her executive peers, in driving business results, which is something looked for and expected by the CEO. Positioned as the board’s leader of human capital, this CHRO also had to support the transition of Omar Ishrak to Executive Chairman while bringing in a new CEO.
Carol Surface and Omar Ishrak were involved in the development of the CGLB’s Model of a World-Class CHRO. It was important to them as they believed the aspiration and clarity around the CHRO role needed a lot more attention than it was used to; it is much easier to articulate the role of the CFO or COO, for instance.
The trust Omar and Carol had between them allowed them to expect a great deal from each other, which in turn resulted in them giving a lot and really delivering for the business.
So in reality…. where are the CHROs (in the organization)? How can they connect with the Board?
As we look at the organizations that surround us, more often than not, we find the equivalent to the CHRO organisationally in two places. They either report to the CEO or they are structurally under the COO or equivalent, given HR is frequently deemed a “service”. This means that they have a job to do if they are to reach or connect with the Board. It is going to require effort.
For their part, Boards are normally filled with former CEOs and the predominant background of directors is usually finance or law. Depending on the nature of the organization, there may be some domain experts on the Board. So traditionally, directors tend not to have deep experience or a background in the “people side” of the business. A less-than-ideal situation can be made worse on the Executive side (where one might look for “people-oriented inputs”) by some CEOs who, lacking a strong financial component to their own professional skillset, will often bring in a strong CFO, but seldom be self-aware enough to recognize that they might lack a strong “people” aspect to their repertoire as well. This means a CEO is highly unlikely to bring in a strong CHRO to compensate for his or her lack of skill on the human side. It isn’t something that will come automatically into a CEO’s calculus for strengthening the company’s chances of success. Few CEOs will ever admit that they might need help in that area i.e. working with human beings - with the result that for some CEOS, even considering CHROs as a resource to do just that - doesn’t get any headspace time at all. And this state of play, or attitude, is further strengthened by the lingering impression held by some that CHROs are first and foremost the custodians of rules and regulations and that if they happen to be compassionate and empathic - well then, that’s a bonus. All these elements conspire to make it really challenging for CHROs to be able to change attitudes and alter the status quo.
So how might these challenges be addressed? Could redefining the nature of their human relationship with the CEO be one way of improving matters? Could this be one way of ensuring that CHROs don’t remain “hidden in plain sight”, as far as CEOs are concerned? Given that CHROs on Boards are thin on the ground (see quotation below) - perhaps it does fall to the CEO to champion the CHRO.
“According to DHR’s own research, only twenty-eight active CHROs are currently serving on the boards of Fortune 1000 companies.” (Magsig & McGrath (2019), “Why Now Is the Time to Have a CHRO on Your Board”, DHR white paper)
So for the CEO to champion the CHRO, the relationship needs to be strong and trusting. The CEO also needs a strong bond with the Chair. Anecdotally, we hear of situations where CHROs, tasked with taking responsibility around organizational culture and values, find it difficult, if not impossible, to lift the conversation to the Board level - precisely because awkward or flinty dynamics exist around the Chair/CEO relationship. The bridge just isn’t there.
So, what capabilities and mindsets are needed today – and tomorrow?
Potential CHROs come to the position in many different ways. Some rise through the HR function. Some come from outside the HR function. We have read figures that indicate that in the top MNCs in the world, around 25-30% CHROs enter that role from outside the HR function. There is also much discussion around the value of HR leaders, as well as business leaders, spending time holding positions in and outside HR. While it is also desirable that business leaders have a good grip on HR issues, it is important that potential CHROs find ways to get deeper experience in the business generally. The existence of the HRBP (HR Business Partner) has certainly helped in this regard although we think there is still scope for the CHRO to deepen his knowledge of the business or the activities of the organization.
Reflections for CHROs and ways to build capabilities. What’s next for the CHRO? And how can the CEO help?
If you are a CHRO reading this, here are some ways in which we believe you - as an individual - can actively strengthen your capabilities:
- Ask yourself: How widely do you read?
- Read about business. Read about trends. Read about topics that – in your mind - may not even be directly relevant to your work.
- Be curious. Find “peers” and friends who also can talk about what you have read and what they have read. Debate. Explore new thinking.
- Task yourself to seek out evidence-based arguments (by studying evidence-based HR research and practice).
- Strive for intellectual humility: give space to others to express their thoughts and encourage them to share.
- While developing your capacity for empathy is a great thing to do, focus more on developing your capacity for compassion. It’s an active attribute and requires you to actually do something to alleviate someone’s distress or difficulties. Empathy is a critical skill - which can be developed – but for a world-class CHRO, we believe that developing compassionate leadership skills is even more important.
And specifically around CHRO-Board interaction, we feel that the research work of Professor Patrick Wright from Darla Moore School of Business, University of South Carolina is useful here. He has been researching the changing nature of the CHRO role for over a decade - at a time when he was noticing an increase in exposure of the CHROs (from top companies) to Boards. Given the increasing complexity and public scrutiny around issues like CEO pay, succession, and the impact of culture, Boards are increasingly seeking the views of CHROs, inviting them into the discussion more and more. For Professor Wright, however, there are some specific CHRO characteristics that seem critically important, in the eyes of the Board - and those are:
- Honesty and
If you are a CEO reading this, you can take an active role in supporting the development of your CHRO, through coaching and feedback - and actively help with the elevation of the CHRO role itself, through advocacy and “sharing the limelight”:
- Encourage the CHRO to think about the career journey ahead and actively help the CHRO to seek out different experiences – and even roles.
- Suggest a move out of HR for a time.
- Help the CHRO to find an opportunity to serve on a Board, perhaps starting with a charity you both support. This will help the CHRO to watch and learn and engage.
- Challenge the CHRO to learn how to hold a point of view and how to present it in the face of opposition, while also listening carefully to those with counter views.
- Assist the CHRO to find people in various networks, including your own, that can stretch the CHRO’s thinking and provide a challenge. Such people in the network(s) most probably are operating at a higher level than the CHRO and there will be lots to learn from them. Should the CHRO manage to establish mutual respect, they may even sponsor him or her into a new role one day.
- Challenge your CHRO to set aside any tendency to be judgmental. CHROs often have to be the custodians of organizational rules, processes, and procedures. Balancing conflicting moral issues is never going to be easy - but a top CHRO needs to try to get this right as often as they can. As a CEO you can help them to do this.
- Last but not least: trust. The CHRO has to develop trust across the organization and that means developing a trusting environment and gaining the trust of others. In our experience, a Board that does not trust the CHRO of the organization will (metaphorically) simply cast them aside. As the CEO you can help with this too.
- Never forget: A CEO who does not trust and/or rate her CHRO - will miss out hugely: your own leadership will be greatly compromised by this dysfunctional relationship and the organization overall will suffer.
- Don’t let your CHRO be a critical resource hidden in plain sight. Invite the CHRO to join you in all sorts of discussions with people inside and outside the organization – if appropriate of course. You won’t regret it.
Contrary to popular belief, COVID-19 was not a Black Swan event*. It was something that we – governments, countries, people – knew could happen: a global pandemic with the potential to kill many. Such events have happened before and will happen again.
The key thing is to be ready.
So, albeit on a different scale, perhaps the greatest contribution a CHRO can make to an organization is to be able to support the CEO and the Board in getting ready for the unexpected - and then working closely together to meet - and overcome - those challenges wrought by an “unexpected turn of events”.
The CHRO is unlikely to be able to solve all problems by himself – which is why he and the CEO would do well to be “joined at the hip”: if he has built trust and respect in the organization, we believe he will have done the best thing possible to lay the foundations for personal and organizational success and fulfillment.
*A Black Swan event is an unpredictable, catastrophic event.