Empowering CHROs: A note to the CEOs

Dynamic nature of today’s business environment challenges the corporate leaders to evolve rapidly and in accordance with the volatile markets, regulatory compliances, technology trends, cut-throat competition, and diverse workforce. Leaders at the CXO positions, particularly the CEOs, are responsible for driving the enterprises in the right direction with their skills, experience, and decision-making abilities. However, they also heavily rely on the insights from their business partners, co-leaders, and the management. CEOs usually face an array of challenges in the ever-changing market scenario. They expect Chief Human Resource Officers working in parallel with them to add direct value in strategizing the business. But are CHROs equipped and ready to meet these standards? Let us investigate!

Call it the need of the hour; the CEOs expect the HR leaders to be their Strategic Business partners and lead in driving the company with them. But, the issue is that CHROs seem to be far from becoming actual business partners. This limit of the Talent Leaders puts the ball in their court, and managing the expectations of CEOs in terms of direct business value contribution becomes tough for them. It is imperative that the talent leaders change their line of thinking and align themselves towards business operations roles and corporate strategy formulation. However, one question arises from this leadership transformation paradigm. Are we expecting the right and justified thing from company CHROs? The answer is yes! Dave Ulrich in 1992 put forward a Strategic HRM model to inculcate leadership in the HR managers. He believed that the cruciality of any professional role in an organization depends upon the magnitude of value it delivers for its growth. And so, he created four major roles for HR managers to become highly competent professionals in corporate strategic planning. A crucial part of his model highlighted the need for HRMs to assume their roles as ‘Strategic Business Partners.’ We can then safely conclude that CEOs’ expectations from CHROs are justified. And so, we must shed light on what they exactly expect!

When you are responsible for the flight of a company, you expect your ‘Co-pilots’ to perform their roles with precision, autonomy, coordination, tactility, and goal-oriented mindset. CEOs hold a similar expectation from their CHROs. They know very well that it is not the business that creates the value, but the people. Here is what Chief Executive Officers expect from their Talent Commanders.

Expecting the CHROs to be passionate 'Business Junkies' might sound like a deviation from their role. But it is not!

CHROs with business acumen: Expecting the CHROs to be passionate ‘Business Junkies’ might sound like a deviation from their role. But it is not! Present day CEOs expect the Talent Leaders in their enterprise to add business knowledge and give them insights into business processes, talent management, strategic decisions, and more. Despite CHROs being lost in their ‘traditional duties,’ business acumen is becoming a baseline expectation of the Chief Executive leaders.  

HR background or not! Research conducted by the Talent Strategy Group revealed that HR background among effective CHROs made a little difference in their overall performance. For example, in the survey, when asked about whether the company’s CHRO was able to build effective talent, 29 percent affirmed (CHRO without HR background), and 26 percent affirmed (CHRO with HR background). CEOs value knowledge of the business line much more than the relevance of the HR background itself. However, they expect the knowledge of industry/domain too.

Broad functional competence: CEOs want dynamic Talent & HR leaders with a broad functional competence, as opposed to traditional HR. They ideally look for a CHRO with recruitment expertise, operational efficiency, compensation skills, and passion for building a talented workforce. If CHROs possess these qualities and abilities, they can be transferred to Strategic Business advisory and direct business decisions. Such dynamic CHROs can also lead the top performing teams effectively. 

Above-mentioned are the abilities and traits CEOs look for in CHROs in their enterprise. However, they are not getting exactly what they want. 

There is an urgent need for the HR leaders to realize that they need to be well versed in direct-business strategies, collaborative and flexible when it comes to navigating a company. Though there are some limits that keep the Chief HRs from becoming a strategic business partner to a CEO. 

CHROs limited to administrative functions: HR leaders are commonly seen as administrative machinery rather than ‘Strategic contributors’ to a company. By just running the administrative-gears, they limit themselves from adding a direct-value to run the company which is much required. Since a company’s business portfolio and talent agenda is a direct function of high-performance teams, CHROs must be responsible for nurturing them with their leadership and share responsibility with other CXO leaders. 

Narrow Functionality: Chief Human Resource managers often carry a limited to no strategic business decision-making experience. They often mark themselves distinctively with HR-specific functions (Recruiting, retaining, and administration) which is no longer sufficient!

High-satisfaction vs. High-performance: HR leaders, often emphasize nurturing talent and teams on the basis of ‘High-satisfaction’ levels rather than molding them towards ‘High-performance.’ CHROs have a ‘talent retention’ mindset and often focus on employee work environment, compliance, compensation, etc. These are important but do not add value to the business processes of an enterprise. 

Limited Financial & technical skills: Having at least one is crucial for anyone who wants to lead beside a CEO. CHROs usually lack these, and this limits their scope of Strategic acumen. Possessing these skills is crucial to gain insights, lead teams, make decisions, rather than just lying in the supportive profile as the HRMs. This limit makes the CHRO role dormant when calculating business contributions. 

Recognizing the fact that Human Resource leaders can be of strategic significance seems a little alien to many CEOs even today

Recognizing the fact that Human Resource leaders can be of strategic significance seems a little alien to many CEOs. In this case, CEOs need to understand the massive difference their HR leaders can make! It must be noted that evolving CHROs will not only serve as the crucial admin tools but also act as the CEOs of an HR solutions company. This comes as an interesting proposition since talent acquisition and building high-performance teams will become the lone franchise of Chief Human Resource Officers.

To gain an edge in the market, CEOs and CHROs must evolve to work together in collaboration with each other. While it is the people that grow the business, CHROs must realize that they need to become problem-solvers, performance-oriented, and own the talent pool as their own franchise. Being directly accountable for the overall business agenda of the company will help them cross the checklist of expectations by the CEOs. And for CEOs, they must evolve as leaders who have an affinity for CHROs in guiding their business strategically. Once both the CXO leaders align themselves with company goals, embrace risk-taking, and act as an enabler for each other, the enterprise can mitigate many unseen and forecasted risks while growing.