Is HR developing future CHROs effectively?

How do I become a Chief Human Resources Officer (CHRO)?” is a question that I often hear during HR conferences or executive development sessions with HR practitioners. Unfortunately, the answer to this question is often unclear for people in the human resource profession. While some organizations have put in place deliberate plans for grooming future HR leaders, too often, HR professionals are busy focusing on the talent in the organization with no time to take care of their own! The growing common response to a path to CHRO amongst HR managers is “You can’t get there from here.” 

Globally, the evidence supports this notion. More than 60 percent of the CHROs in the S&P 500 group of companies were hired directly from external sources. This is not a one-time phenomenon as this trend is growing (up from 50 percent external hires in 2011). Only 30 percent of CHRO’s are promoted from within the HR function. If we contrast this to the path to the CFO, more than 50 percent are promoted from within. While we would not expect 100 percent success in developing a succession plan for the CHRO, we can hopefully do better than only 30 percent... by any measure, HR is receiving a failing grade! 

Unfortunately, a career in the HR operations in areas such as compensation, recruitment, development, and performance management does not prepare people for the requirements of the top job. In addition to leading the HR function, the top responsibilities that the CHRO is tasked with include architecting the overall talent strategy, advising executive team members, coaching the CEO, providing insight to the board members, and representing the firm. One might argue that being a good HR business partner is a solid development ground for the CHRO role; however, most HRBP roles are simply an extension of administering current HR practices, not developing new solutions or coaching executives. Just as being a good accountant does not naturally lead to being the CFO, being a good HR manager does not naturally lead to being the CHRO.

There is another troubling issue with hiring external talent to fill the CHRO role. To truly make human capital a competitive advantage for the firm, HR leaders must have a deep understanding of the business, industry, and strategy. When we bring in talent from outside, we may get a fresh perspective, but we may risk the perpetuation of common HR practices and policies across organizations – making HR a rather generic function. In other words, for HR to create strategic value, there must be firm-specific human capital strategies to create and sustain competitive advantage.

In some cases, and in some countries, companies have promoted from within to fill the CHRO position, yet the incumbent is ill-prepared for the role. While many of these new CHROs can talk confidently about the role and present a good story, they often do not know what to do. While the job can be learned, a non-fully qualified CHRO can put the reputation of the HR function at risk. These CHROs may not be prepared to address some of the strategic considerations surrounding human capital.

It seems that we have a perpetual cycle of not developing internal candidates as future CHROs and therefore bringing in external talent without firm-specific knowledge to create strategic human capital for competitive advantage.

Perhaps, it is ironic that the profession with deep expertise in the development of talent cannot seem to develop their own leadership talent. I suspect that most HR professionals would find this troubling. So, what can we do?

First, we need to recognize that there is a problem. This may sound obvious, but it is surprising how many CHROs are not thinking about their own succession. The good news is that more than 50 percent of CHROs indicate that their successor will likely come from inside the firm. Planning for CHRO succession is the first step.

Second, we must create developmental opportunities. Several organizations have started to recognize this challenge and have changed the roles in the HR function to provide richer experiences for HR leaders below the CHRO. Since several of the CHRO duties involve confidential information, many are reluctant or not allowed to share information with others. However, there are many ways that the CHRO can involve subordinates in activities related to board matters, executive discussions, and strategic talent management. 

Third, we must rethink the capabilities we need in the HR function. Too often, we have nicely defined roles based on the competencies inherent in the function. Yet, we also need strong leadership capabilities and executive management skills. By taking a longer-term view of the function and by considering how we flow management talent into HR from other parts of the business, we can develop more leadership capability coupled with HR knowledge.

When we bring in talent from outside, we may get a fresh perspective, but we may risk the perpetuation of common HR practices and policies across organizations ñ making HR a rather generic function

As the stewards of the human capital in the organization, HR leaders play a key role to ensure that the right talent is available and ready to meet the business needs. Yet, we have failed to develop our own leadership bench strength to create future CHROs. It is time to change this pattern and build our future HR Leadership talent. 

The next time someone asks, “How do I become a CHRO?” - I hope we have a clear answer and start to receive a passing grade for developing our future leaders in the profession. 

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