A good CHRO needs to think ahead of the CEO
Many CHROs waste their time in focusing on tangibles and eager to demonstrate to their CEOs how much money they saved in sourcing talent of various forms
The CHRO has come to occupy a significant role over a period of time. In quite a few evolved companies, the CHRO is the eyes and ears of the CEO, Chairman and the Board and a business facilitator and partner. In still evolving organizations, CHRO is at best a people support manager still looking after traditional functions like Industrial relations, Administration (personnel records, MIS, recruitment, compensation, Transport, estate management) and perhaps some Human Resources Development (Learning & Development, Performance Management, career paths assessment centres etc.). It is interesting to see how this role and the function have evolved over time and the scope this role has to be the future of all business activity.
Anything that was in short supply became a strategic variable and that has been the same through several decades. In the 60s and the 70s, the business strategies focused largely on technology and manufacturing. The strategic focus was to mass produce products of quality using the most modern technology at a price. This was indicated by a large number of MBAs going for production and operations jobs then. In the 80s, the focus shifted to marketing and many started gaining access to technology. By the 90s, finance became a focal point as money was required to buy technology and market with enormous expenditure of advertisements. In the last decade and half, talent has been in short supply and has now come under global focus. With this, CHRO becomes more prominent and critical than any other CXO.
In the 60s, we had labour welfare officers and in the 70s establishment officers and personnel managers. In the 80s, with HRD becoming prominent, the HR function got lifted to a higher level with VP-HR and even Director HR being appointed. By the late 90s, CHRO has begun to assume a critical role and has got further lifted to the Board level. Today, good CHROs have demonstrated that they could be key business partners.
Several CHROs have demonstrated their capability to head business by virtue of their competencies. Several of them in 80s and 90s have demonstrated that HR is a good route to be a CEO or MD or Chairman. For example, Arvind Agarwal (now RPG Group) was heading not only HR in Modi Xerox, but also performing roles in marketing, quality, strategy and systems etc. before he became CEO of Escorts JCB and finally settling down as President HR & OD in RPG. Anil Khandelwal was in training and then in personnel and had shown remarkable achievements as the Head of Meerut and Kolkata zones at Bank of Baroda and subsequently became CMD. M.R.R. Nair, who was Director Personnel, became MD at Bokaro Steel and then CMD of SAIL. Santrupt Misra at Aditya Birla Group handled HR systems and technology and today he heads the Carbon Black Business. Manoj Kohli, Sambamurthy and many other examples can be found that demonstrate that good CHROs can be good CEOs. If good CEOs have to be successful, then they have to be good at people management or at least supported by good CHROs. Thus, the CHRO position today has become a business position and does not any more remain a support service.
My view of the future
I strongly believe that in the future what the CHRO can make of himself or herself will entirely depend on how he/she conducts self and learns continuously. Learning and self-management are critical to success besides business and people competencies. The scope for CHROs is enormous. I suggest below seven things that the new CHRO should do to lift up the role, the function and the organization.
CHROs should think ahead of their CEOs. If people are the focal point of all business (customers, suppliers, employees, management, union leaders, government officials and policy makers etc.), then CHROs need to manage all those functions that deal with people. In my view, a good CHRO is the eyes and ears, brain and heart of the CEO. He needs to, therefore, think ahead of the CEO. Today’s CEO is very concerned with a few strategic variables like technology, markets, mergers, acquisitions, investors etc. and most of the concern is on monthly and quarterly financial performance of the company. He has become a short-term result producer and is no longer the long-term intellectual capital builder. Intellectual capital is built by thinking ahead and of many variables that impact business,talent is the most important.
A CHRO could think ahead of the CEO in areas that the latter may not have the time for and compensate for his lack of time on such important activities. Intellectual capital consists of all intangible assets of a company and constitutes in many cases as much as 80-90 per cent of the market capital. For example, about 10 years ago in IT companies, the tangible assets accounted for hardly 5 per cent of the market value (Infosys, Wipro, TCS etc.) and intangible assets about 95 per cent. While the CEO, CFO, Chief of Marketing, Production, Quality and all CXOs focus on tangibles, there is very little the CHRO can do here.
Focus on intangibles. A CHRO, therefore, has the scope to focus on intangibles, which make the company in the long run. He should be knowledgeable about business, products, markets, customers, competition, innovations, culture, etc. The CHRO should have understanding of employees, customers, vendors and other stakeholders, looking for business opportunities, building teams etc. All these help in getting, managing, retaining and developing talent, which ultimately adds to the intellectual capital.
People are the chief sources of intellectual capital or intangible assets of a corporation and a CHRO becomes a facilitator of building this important part. Many CHROs waste their time in focusing on tangibles and eager to demonstrate to their CEOs how much money they saved in sourcing talent of various forms including employees, consultants, various service providers (transport, canteen, etc).
A CHRO should influence the thinking of the CEOs, business heads and top management; he should do this through continuous communication, facilitation of upward learning at all levels so that knowledge of customers passes bottom up by those who interact with customers, building personal credibility, managing routines and thinking ahead; removing traditional image of HR; information sourcing; strategizing and initiating and managing best talent management practices.
The CHRO should be capable of restructuring his role. Most CEOs don’t know the potential of CHROs. They use them than as chief recruitment officers and chief negotiators with employees, but not as chief business developers and chief talent managers. He should restructure his role by resolving various dilemmas. There are times he should focus on industrial relations or focus on stability or best HRM practices like compensation structure, rewards, recognition, great places to work etc. and there are times he should focus on development and growth of the people and the corporation. He has to constantly balance between peace, stability and growth or IR, HRM and HRD. He should restructure in terms of building teams, conducting HR audit and promoting self-renewal and learning.
Developing Leaders and Leadership. Developing leaders and leadership all through the corporation has become the most important challenge the CHRO and the corporations have. There can’t be a more appropriate person than the CHRO. He has to figure out how to get the top management to use tools like 360 degree feedback for leadership development and benefit from it? How to get them to participate and use ADCs and understand limitations? He should focus on designing and implementing leadership development interventions.
Continuous learning and learning from juniors (Gen Y). Gone are the days when performance coaching was a one-sided affair. Nowadays, juniors have equal contributions to make to the growth and development of their seniors, while at the same time learning from their seniors and seeking their direction and wisdom. Four generations live under the same roof and differentiated HR policies are required for different generations. They should promote interacting with Gen Y and learning from them. There is knowledge explosion all over. Line managers need to constantly stay in touch with various developments around them.
The CHRO should make the corporation innovative by creating a culture of innovation and designing incentive and reward systems. He should also developing intellectual capital through culture and values with long-term outcomes in mind. There is a need to balance short- and long-term goals and results and build structural, relationship and human capital.