It has almost become a cliché that we live in a volatile, uncertain, complex and ambiguous (VUCA) world. It certainly seems as though it has been like that for a very long time now. What seems to be different is that many view this as something to be coped with, almost as though it is a symptom of an incurable illness.
But, ask any CEO what they fear and they are likely to tell you that the last thing they want is stagnation… and that is the opposite of VUCA. Yes, most CEOs will tell you that stagnation makes it much harder to find a differentiator, USP, or a competitive advantage. Disruption, change, and uncertainty creates a fertile environment in which innovation can flourish.
So, the questions often asked are, “What does the CEO demand of CHRO?” and, “What does the CHRO demand of the CEO?” in this type of world.
Let’s take the CEO first. Their primary obligation is, and always will be, to their stakeholders. Without investment, there is no organization. But, the CEO also knows that they have to meet the stakeholder demands through the people, whether in manufacturing, services, not for profit, etc. And, people prefer certainty.
So, the successful CEO seizes on external uncertainty whilst demanding internal certainty. I’ll use the analogy of captaining a longship to explain.
The CEO, the captain of the ship, wants a strong, fast ship, surging through turbulent waters, racing ahead of floundering competition. Naturally, the CEO needs a strong, skilled, stable crew, ambitious and capable of winning every race by pulling together, no matter what conditions they face. And, the CEO wants to know that irrespective of the destination, course, weather, and port of arrival, they can easily take on board any additional crew needed for the next leg. That is the challenge for the CHRO.
What does this mean in the real world of organizations today? What precisely do CEOs look for in the CHRO? To stretch the analogy further, their four demands are equivalent to:
- “Tell me how to seize on the availability of crew members en route. How should we adapt our destination and course to take maximum advantage of the crew available to us?”
- "Leave plotting the course to me and the mates, but tell me how I can get the best out of the crew I have already got? How can we maximize their performance?”
- “I don’t know what the next destination the stakeholders will set for us will be, so how can we get the crew to develop to peak capability so that they can cope with any course we find we need to plot?”
- “Assure me that given the little we know about the future, you can ensure that we have and can retain the crew we need, for a sum that the stakeholders will bear.”
CHROs need to be actively involved in the development of an organization’s strategy, and not just support it
In a VUCA world, that is not a set of minor demands; those are very substantial.
We have struggled for decades with optimizing performance, and the recent scarcity of resources has forced organizations to cut back on training and development. Rough waters and limited supplies have left many “crews” tired, disengaged with many longing for terra firma — a change of ship or even profession!
So, what do CHROs demand from CEOs? Frankly, few CHROs make demands of CEOs. But they should. I contend that courage and personal effectiveness are two skills needed in most HR leaders!
At first sight, it might appear that the answer to the question, “What do CHROs demand from the CEOs?” is money – “Give me more resources and I’ll pay King’s ransom to get you better crews, I can then also pay them more if they sail faster!” But, we know that this is only a small part of the challenge. Money does not solve many people issues and often causes others. Performance related pay can be one of the most disruptive and damaging processes.
I would contend that the following are four key things that CHROs need and should demand from their CEOs:
- Active involvement in the development of the organization’s strategy, not merely the expectation that they will support it. Knowing ‘why’ you are expected to do things makes the tasks so much easier to complete effectively. CHROs should report directly to the CEO, period.
- Trust. Most CHROs truly are professionals who want to do a quality job. They understand how to engineer behaviors, how to manage change, how to recruit best-fit staff, and are immensely frustrated by the frequency with which they are asked to simplify (or trivialize) processes to the point where they are no longer effective. The arguments often include:
-Managers are too busy…doing what? Shouldn’t they be managing and leading, or that now seen as a bolt-on to a real job?
-It’s too complicated … and the technical work that they are doing isn’t complicated? That is merely an excuse.
- Support for putting the right crew members in the right roles, clearly differentiating between:
-Those who should be promoted into people-management positions (e.g., Quartermaster or Mate in our analogy) based on evidence of their capability to manage and lead people effectively, and
-Those who should be promoted into higher level specialist roles (e.g., Boatswain, Gunner) i.e., based on, or as a reward for, achievements in their specialist roles.
- Support for either redeploying or exiting (with dignity) those who are clearly not able to perform sufficiently well in their current positions, and/or who do not have the potential to fill the roles they will be needed to fill in the future. To continue our analogy, to set them down on a beautiful tropical island, not make them walk the plank!
These two sets of demands seem obvious and easy, yet are realized so rarely. Hopefully, the sea will calm down enough for the CEO’s (the Captains) to realize that they can make much more effective use of HR. And, perhaps HR can muster the courage to go up on the bridge more often and challenge the Captain about the destination and route.