State of the CHRO 2015 – Service Providers' Perspectives
CHRO is expected to be the strongest business allywho will align the customer and employer value propositions to address all the stakeholders
The research conducted by People Matters on the role of CHRO revealed its critical position in organizations. The CHROs need to have the ability to understand global requirements by catering to different cultural needs and building relationships.
Let us look at what the Service Providers and Headhunters have to say.
CHRO needs to push down responsibilities
Navnit Singh, Chairman and Regional Managing Director at Korn/Ferry
Not being a mere HR generalist will be important in the coming years. The CHRO role has become an aspirational one. HR domain experts are OK when it comes to leading COE’s but CHRO’s need to be business managers now. Today, people who are looking to prove themselves or create value in business are being looked at to fill CHRO roles. For this, business experience and exposure is very important. Today, quite a few HR heads are hired internally and the ratio of internal to external HR Head hiring is increasing. A lot of companies are now open to taking HR heads from the operations side as they understand the nuances of businesses
Knowing the business nuances, being aware of the P&L of the firm, and knowledge of future business models are important factors for aspiring CHROs. Earlier, the managers were looking at whether the individuals were HR competent, but today what matters is can a CHRO actually become a CEO tomorrow? HR is a rapidly evolving field. Many large-scale companies now are outsourcing recruitment and non-core HR activities to third parties. So, when it comes to evolution, it is important to look into how many companies actually provide for learning and training programs. HR structures are slowly shrinking in size internally and developing partnerships with companies that are embedded in some form. Even when it comes to compensation, now there is maybe just one person overlooking the entire compensation process. Maybe, tomorrow one person will be embedded as HR head. So where HR is today and where it will be is going to be 360 degrees different.
HR needs to evolve with the current trends. CHROs need to start trusting subordinates and push down responsibilities. The average working age belongs to the young generation, so it is important for HR heads to stay relevant. Even young aspiring HR professionals need to mature and not shy away from responsibilities, and should be willing to take up non-HR roles and functions. Not being a mere HR generalist will be important in the coming years.
HR structure should move to a Four-Box model
Julie Gebauer, Managing Director Talent and Rewards at Towers Watson
The role of the CHRO is to help organizations and people become more effective. What’s changing is the level of impact it has on the business. Over the past years, the HR function has evolved from managing the workforce to managing Human Capital to ensuring that the organizations have the right people at the right place and to now delivering the strategy of the organization. The role has moved from just compliance and control to include strategic partnering in business. HR needs to develop futuristic thinking in terms of the talent that organizations need as they globalize at a fast pace.
The HR leadership structure, which is a Three-Box model, is effective in organizations where there are Centres of Excellence for key processes or where there are Shared Services and HR Business Partners. This structure has helped efficiency and effectiveness and is generally positive for organizations. There is also a Four-Box model, which makes sure that HR gets delivered efficiently. In this model, we have management over and above the other three stakeholders and there are processes and governance around that structure; this is an important next generation development. Today companies are establishing the right processes and governance, setting up change management system and installing the right technology to support this whole transformation. One of the biggest challenges that companies face while transitioning to this structure is creating it and defining the new role. Companies assume that those from the prior roles can take up new roles without requisite training or experience.
There are many competencies that the CHRO should develop; business acumen is table stakes. Digital acumen is also increasing in importance; social media especially has emerged to be critical today. Ability to understand global requirements by catering to different cultural needs and building communication skills have always been important.
It’s important to throw more challenges at HR leaders so that they can grow into incorporating these competencies.
More strategic candidates are shifting to CHRO roles
Deepak Gupta, Chairman, DHR International in India
The mandate for HR leadership positions has increased in the last 10 years. Increasingly, we are seeing more focus on CHROs who have experience in restructuring, or large-scale transformations, layoffs or downsizing–HR practitioners. CEOs want their CHROs to play a strategic role and take business requirements into their hands and plug in HR elements that will be required for the business to succeed.
However, there is a huge demand-supply gap. Most companies are still looking at HR professionals from Tier-I B-schools with experience in the HR field (and in specific, people with experience in large-scale change management); it is challenging to find such HR candidates who meet this demand. The world has witnessed at least two downturns in the last 15 years and many HR professionals have that kind of exposure now. But how much of a role did the candidate play in this transformational phase of business is also important.
Today, more strategic candidates are shifting into CHRO roles. Aspiring CHROs need exposure to transformational work, downsizing projects, etc. They should focus on cross-functional roles; this will boost the candidate’s profile. A stint or two in another function in their current organization will help build strategic acumen and business orientation.
CEOs have too high expectations from CHROs
Pankaj Bansal, Co-founder and CEO of PeopleStrong
There are three parts to the HR function – The first is the CHRO who gets the work done and oversees compliance, the second comprises of talent heads, talent acquisition team and talent management team. The third is becoming the transformers or drivers of business. The third generation of CHROs are expected to be more agile and business centric in their approach (which I already see happening). We also look to see greater representation of CHROs on the board, which is also taking place. Finally, they will be more data-driven and tech-savvy.
CHROs today require strategic focus, ample courage and a strong character. While strategic focus was a competency required even in the past, its need today is amplified more than ever. Not just that, the CHRO should have the capability to look at the big picture and have the audacity to make decisions and give other management teams the confidence to move forward with their decisions.
Today, CHROs have to grapple with the low quality of team members; quality of HR in India is not as high as one would hope. Secondly, the market is changing at a much faster rate than the evolution of HR thinking. HR is not equipped to meet the ambiguity that they face in this fast changing market. Thirdly, they are constantly trying to align with the board without the kind of rights that they need.
If you look at other functions, especially the finance role, the outcome of the function can be concretely defined. But to define outcome is a big challenge in HR.
Ideally, HR should have three components–Centers of Excellence, Shared Services on the operating part of HR and Business Partners of HR who enable business. When these three components are missing, the result does not get translated into the desired employee experience. Currently, HR departments do not have these components due to which the HR structure is not very effective.
CEOs today have too high an expectation from the CHROs and usually do not find the person match-ing their expectations. But they hire irrespective of that and this results in unfulfilled expectations.
So either the CHRO’s agenda is not aligned with the competencies his role requires or the CHRO becomes subservient to CEO’s agenda. The CEOs want someone in the middle of being subservient and being completely misaligned. CEOs expect CHROs to be wholly data-driven, establish a very objective HR structure and align HR strategy with business goals.
Not getting the right candidate for CHRO role
Shiv Agrawal, Managing Director at ABC Consultants
Most HR leaders focus solely on the HR function. However, CEOs want their CHROs to be business oriented and not just have the HR experience. While CEOs are looking for CHROs who have some kind of core business experience like sales or operations, only 10 per cent of professionals with specialization in HR have had non-HR experience.
The other major challenge that companies face is finding professionals who have stayed in the company for a long time, proving his capability to work across the peaks and troughs of business cycles.
How one operates during good times is very different from how one operates during the bad times. When a person sticks around in a given role for a long time to witness and cater to the business cycle, a lot can be said about his ability to manage change. However, this is also something that we struggle with while looking for candidates to fulfill the CHRO role.
Another factor we find missing while recruiting an HR leader is her internal and external network. What kind of network a CHRO brings with him/her? Does it have great value? For example if an e-commerce company is looking to hire a CHRO, factors such as the number of CTOs she has within her network, what kind of engagement she has in the tech community, etc. will matter to a great extent.
Since many CEOs are not able to find the right candidate who will bring the real value expected from the CHRO role, the companies could now be looking to hire relatively junior or inexperienced people to fill the CHRO role. This is also driven by the fact that the salary of the CHRO has increased manifold in the last five years.
While CHROs are getting paid at par with the rest of the C-Suite function, the value of that role is not perceived to be the same as the rest of the management team.
The role of the HR leader has really become hot, so candidates need business orientation. They also need to work on agility, flexibility and the ability to get into business beyond the HR side of the project. Having a business stint will be the proof that you have the ability to practice what you preach.
CHRO is the navigational compass of the company
Moorthy Uppaluri, CEO at Randstad India
Every company has a vision as well as a mission to fulfill; these are defined values that guide an organization’s strategy. HR leaders should be able to align processes with principles with confidence and maturity. According to me, CHRO is the conscience keeper and the navigational compass of any given company.
CHROs have to be well balanced in terms of being an employee advocate as much as an employer advocate. For this, CHRO needs to remain connected with the people of the organization. Further, CHRO should be tech-savvy and be aligned with business as these have emerged as critical competencies.
As the CHRO role has evolved from the conventional role of personnel managers to strategic partnering. CHROs today are becoming better at business augmentation. I spend a disproportionately high percentage of my time with my CHRO. In my professional upbringing at GE, Jack Welch would say that every CEO should spend 40 per cent of his time on the people agenda. If you are in an investment mode or a transformation phase, then may be 50 per cent or more time could go to HR. The time spent need not necessarily go only to the CHRO, but also other HR initiatives. Even when it comes to leading HR initiatives, we are integrally involved with establishing a high performance organization.
CHROs should drive organizational growth
Niraj Kaushik, Vice President - Applications Business at Oracle
The CHRO function depends on the structure of the organization. An old school organization will see CHRO as a support function. In newer economy organizations, especially service oriented companies, the CHRO’s role is progressive and plays a strategic role aligned with business.
The big step out in the HR function is business acumen; without that the role is very generalist. CEOs today want CHROs to take up not merely a process-oriented role, but to contribute to growth of the organization from a business perspective. Traditionally speaking, HR has always been seen as a backend function and nothing is being done in today’s context to give them the flexibility to engage in business; problem comes from both sides. While CHROs are still looking through the rearview mirror, business leaders are not providing them with the equipment to look forward and get involved in business growth. How many CHROs today are actively involved in the business? Very few.
If the role of the CHRO does not change, it will be detrimental to the future of the organization. The need of the hour is for CHROs to take the front seat in driving organizational growth. The fact that CHROs do not own funding and depend on other leadership teams to achieve their goals stands as a big problem today. This make is hard for them to truly get a sense of business.
Further, CHROs face challenge with technology, digital acumen and retention of employees. If the role of the CHRO does not evolve to encapsulate all of these requirements, organizations will continue to face challenge in the market from a people perspective.
Good HR leaders are difficult to find
Atul Vohra, Managing Partner of Transearch India
If business is a three-legged stool consisting of ideas and opportunities, financial capital and human capital, the biggest differentiator that organizations always suffer is the human capital aspect. HR and people have come to play a central role in the success of any organization today.
If HR is able to harness human capital in a business and attract and retain the right talent, there is no doubt that the organization will succeed. For this, having a good work culture is a very important. As organizations become leaner and flatter, the ability of the people to work closely together becomes critical. Getting that cultural space is important for organizational success and many leaders recognize that.
While traditionally companies have hired people with some training or experience in HR, they are now looking for someone with the ability to drive business. Some of the upcoming CHRO competencies are business acumen, ability and agility to move very quickly and to operate in today’s fast-changing business environment, ability to build a strong workforce and an enabling and collaborative work.
I think one of the toughest mandates that organizations face today is finding HR leaders for organizations. This is mainly because very few people have been trained with 360-degree perspective on HR and business.
A lot many people are open to moving into the HR function as it has evolved to a more strategic role and rewarded like other roles. This, in fact, will help in plugging gaps in the demand-supply. Culture will remain the most critical piece in the function of HR. While attraction and retention of talent is and will remain the core function of HR, a lot of the operational aspects of the function can be outsourced.
CHROs have to train themselves to become leaders, which will happen only with time and experience. A level of EQ is a must for those aspiring to take up HR jobs because you’re working in the field of feelings and culture. While a lot of this is inborn, a lot is also trainable. They need to really know how to align the HR function to support and drive business.
HR seeing addition, deletion of sub functions
A.G. Rao, Group Managing Director at ManpowerGroup India
Never before has the dependency on the human element been more pronounced in the success of an organization. From being a pure transactional role, CHRO’s role has come to the center of the organizational strategy. The function is critical in the current business context and CEOs expect the CHROs to be adept in general management skills with broad business perspectives. Talent acquisition, engagement, performance management, talent retention and management can be the most effective levers of any organizational strategy.
The CHRO of today’s business world need to be business-savvy, analytical in decision-making and futuristic. The key charge for the CHRO function is to turn talent management into an instrument of business transformation. However, at the ground level there is a lot more that CHROs need to work upon.
In the current context, they face challenges from different aspects such as getting a true read on talent reality within the organization and challenge of succession planning. 44 per cent of the CHROs in the Consero Group Survey report that they have not identified a successor to replace them. CHROs are unable to attract talent with the right values to fuel the growth of companies. Further, they are faced with change management issues during organizational change.
Some of the significant trends in HR will be seen as mobile hiring, social media and data analytics take center stage. Apart from these, constant reinvention will emerge as a critical imperative for HR effectiveness in any organization.
HR delivery to business is fragmented
Sandeep Chaudhury, CEO, Aon Hewitt India
It is a recognized fact that the competitive advantage of firms is no longer pivoted on the tangible aspects. It has shifted to softer aspects (employees, values, culture etc.) resulting in innovative and agile organizations with greater chance of sustained success. This means that today the HR leader has to take on the responsibility of relevant business outcomes.
Today, progressive and mature organizations look at CHROs to lead transformation as a part of the executive team and steers the organizational ship in the intended direction. Therefore, CHRO is expected to be the strongest business ally who will align the customer and employer value propositions to address all the stakeholders. Given this backdrop, the HR leader’s scorecard in our business is changing radically in some aspects and yet some core competencies remain intact.
Some of the competencies that define the HR function are:
The limitation with today’s HR structure/organization is that none of these CEOs or functional leaders converge and hence the HR delivery to business is fragmented.
Today, there is little time and money that gets invested in studying the employee behavior, preferences and the choices s/he makes. Hence, we end up managing with a few set of generic rules. The techniques that marketing uses to know their customer—using the digital platform to track the e-carbon footprint etc—can come very handy if applied to our employee base.
CHROs in India and Asia Pacific are seeing a very steep curve of change, most of them are championing transformations, but the start of such journeys is from the most basic elements.
Get the full coverage of the State of the CHRO 2015 through the links below:
Summary: State of the CHRO 2015
Where Do CHROs stand today? - Infographic
CEOs Perspectives on the State of the CHRO