Business Management

Published: Dec 29, 2021
Updated: Dec 29, 2021

CHRO — co-driving corporate engine

The importance of the Chief Human Resources Officer in today’s ultracompetitive, fast-changing business environment cannot be stressed enough. As Navin Malhotra sees it, today’s CHRO role requires a wide range of strengths beyond the expected people management and coaching skills. The ability to use data and analytics to drive strategy and organizational design is a key, along with a structured way of thinking. People-assessment skills are critical. Deep understanding of organizational dynamics is important, as is the ability to identify the impact of external and internal trends to the business, The CHRO must be comfortable challenging the status quo so that he or she can serve as a true advisor and partner to the CEO and the board.

In the realm of Human Resources, the Chief Human Resources Officer (CHRO), by virtue of his/her strategic view of inter-related issues across the enterprise and a deep knowledge and understanding of all aspects of talent, can add substantial value to the organization. The CHRO is a CHkey guiding hand when major transformations are taking place in an organisation. This said, there continues to be a widespread view that the ‘standard’ CHRO is simply not strong enough to be considered a strategic contributor and, in addition, there remains a perception among many CEOs and boards that Human Resources, in general, is not as strong a function as other C-suite roles.

There are five key ways that CHROs can deliver an impact on the business.

1. Establish a foundation of talent data.
2. Focus on strategic business issues, not tactical administration.
3. Position your company to handle growth and manage change.
4. Build for the future.
5. Have strategic guidance ready for your executive partners.
Establish a Foundation of Talent Data

Some of the insights that talent data can offer include:

Who are your top performers? If you know who they are, can you hire/develop other employees to be like them?

• Who are your high-potential employees? Can you help them develop the needed knowledge and skills?

• Every organization has key positions and people who drive significant value. Do you know which these are? If a few people leave, is your business in jeopardy?

• Are your employees productive? Are your managers taking steps to reward top performers and improve av erage and low-performing employees?

Focus on Strategic Business Issues, Not Tactical Administration

have heard a number of times that HR is not strategic, they spend too much time on tactical issues. The reality is more complex. Tactical HR functions are essential core services, such as recruiting, on-boarding, and basic skills development.

Let me ask a question: What is the primary role of your CFO? Chances are you would answer — managing the financial actions of the company, financial planning, financial risk management, record-keeping, financial reporting and similar responsibilities. What if you asked the same question about the CHRO? Other than consensus on the role of leader of the HR function, the responses likely would vary widely — the role would extend beyond functional leader.

Today’s CHRO role requires a wide range of strengths beyond the expected people management and coaching skills. The ability to use data and analytics to drive strategy and organizational design is a key along with a structured way of thinking. People-assessment skills are critical. Deep understanding of organizational dynamics is important, as is the ability to identify the impact of external and internal trends to the business, and the CHRO must be comfortable challenging the status quo so that he or she can serve as a true advisor and partner to the CEO and the board.

Serving as the HR functional business leader is the foundation of the CHRO’s role. CHROs also are expected to quickly acquire business acumen specific to the companythey are serving, as well as to work with executive peers to shape and influence business strategy. These areas of expertise are considered non-negotiable, they are essential for success in this and any C-Suite position.

One of the role’s most interesting and important evolutions is culture, which requires to be closely aligned for the leaders and employees to be passionate about the mission of the organization. The CHRO’s role in connecting the dots for employees at all levels cannot be underestimated.

Position Your Company to Handle Growth and Manage Change. One main lesson of the 2008 downturn remains top of the mind for many business leaders. Change happens suddenly, and one needs to be prepared. To be an effective partner, a CHRO needs to be able to facilitate growth, yet prepare for sudden change.

To fulfill this strategic role, the CHRO must possess a broad range of business knowledge and leadership skills which are:

• Vigilance in scanning the external environment to anticipate business and talent threats and opportunit ies.

• Strategic thinking skills to work with the board, CEO and executive team to set direction.

• Cross-functional business understanding with a P&L orientation.

• The courage and decisiveness to prioritize, to succeed or to fail fast and move forward.

• The conceptual skills to shape the organization to meet tomorrow’s demographic challenges.

• Financial acumen to broadly balance resources and understand the financial implications and tradeoffs of investments in every aspect of the business, including talent.

• Technological savvy to drive efficiencies and to en gage the workforce through innovations in technol ogy solutions.

• A risk management perspective with regard to talent.

• The ability to convey the importance of talent at all levels as a fiduciary issue to the board and the leadership team.

• Legal literacy to help ensure a culture of compliance and integrity at every level of the organization and across borders.

• Operational ability to ensure that the transactional as pects of HR are well executed in a world of fast-movi ng and changing expectations of the employee popu lation.

As part alchemist, responsible for talent and cultural transformation in the service of strategic objectives, the self-aware, empathic CHRO must also be able to:

• Unfailingly model the desirable attributes of the cul ture and passionately advocate them.

• Balance role of advisor to CEO with role of advisor to the board on CEO succession and compensation and also advise on new board member acquisition and on boarding.

• Develop a ‘mindful’ culture to embrace change and drive high performance in a multi-generational em ployee population.

• Refocus leadership development around change it self in order to produce agile leaders.

• Ensure comparable training and support for the workforce.

• Transform HR processes by leveraging both the new art and the new science available today, including the neuroscience of top performance as well as technol ogy and data analytics.

• Cultivate a compelling employer brand from the in side out and the outside in with a strong marketing orientation.

• Innovate in talent management, engagement and ret ention strategy, driving opportunity for all.

• Reshape the organizational design and rewards struc ture to reflect the dynamics of the business environ ment and the new world of work with more a mobile and less permanent workforce.

On the face of it, the wide-ranging aspects of the role appear to require multiple personalities. But the common thread running through all aspects of this role is change – anticipating it, managing it, and continually positioning the organization and its people to stay ahead of it. The CHRO should be, in effect, the organization’s chief change officer. The critical general management capabilities now required of CHROs – broad business acumen, strategic and analytical insight, financial savvy, risk management, and the ability to leverage IT and analytics – ultimately come together to shape an organization that’s flexible and fluid while ensuring the right talent strategy for the constantly changing environment.

Build for the future

Much like a Chief Risk Officer, the CHRO should engage in long-range scenario planning – considering the impact of various talent risks and the likelihood of their occurring. This expanded strategic scope of the CHRO role has increasingly meant more interaction with the board. In the past, board presentations around talent strategy from CHROs dealt primarily with CEO succession and executive compensation. Today, however, far-seeing boards recognize the talent risks and opportunities that lie ahead. They want to be assured that opportunities are being leveraged and risks are being systematically and objectively managed, especially succession needs and risks throughout the top levels of their companies. They also want to know how talent is being factored into key business decisions and any potential impact on shareholder value. In fact, boards at several major companies maintain distinct human resource or talent risk committees to ensure keen oversight of these issues. In my mind, the role of the CHRO must evolve to become a “future of work expert.” Here are a few key focus areas:

• An Agile Organizational Structure and Understanding Behavioral Shifts:

CHROs should design agile workforce models that en able companies to proactively anticipate talent needs, adjust in real time and leverage a variety of employ ment arrangements to achieve their goals. The most critical way CHROs can take the lead is by adjusting recruiting and hiring strategies and facilitating new work environments to support what will be an ever-chang ing mix of temporary, contract, consultant and freelance contributors. They must become experts at maximizing remote workforces and championing the use of tech nology to engage agile workers for collaboration and training. Finally, they’ll need to align with other C-suite leaders on the role of agile employees and how these employees will be managed. Today’s workforce is fo cused on work-life fluidity not work-life balance. CHROs will need to work collaboratively, and gain executive and managerial buy-in, in order to get support for prac tices such as flex-time or job-sharing to enhance workforce flexibility.

• Putting Culture at Centre

Company culture has taken centre-stage in recent years, becoming a make-or-break factor in any organization. I have experienced in most of the organizations that this factor is ignored or only given lip ser vice, and in turn I have seen good and old orga nizations dying. In addition to leading day-to-dayHR operations, CHROs must serve as custodians of culture, designing specific programs and strategies to ensure a healthy and engaged workplace. To stay com petitive, CHROs need to help organizations communi cate not only the “how” of work, but also the “why.”

• Lead continual cultural renewal and organizational re shaping

Both CHROs and CEOs should seek to create cultures that are not just designed for high performance but in trinsically drive it. But culture, like strategy, doesn’t stand still. Even the strongest cultures must be vigilantly main tained and continually renewed if they are to remain viable.

• Ensuring the Right Future Leadership Competencies Are In Place

There is a change in how work gets done and is organized. CHROs need to ensure the right kind of leadership is in place to support future needs. She/he is expected to develop robust people plans aligned to the business strategy, whereas in fact, I have seen in most of the organizations that these areas are never prioritized. Have strategic guidance ready for your executive partners To make the CHRO a true partner, the board/ CEO should create a triumvirate at the top of the organization to include CEO, CFO and the CHRO. Forming such a team is the single best way to link financial numbers with the people who produce them. It also signals to the organization that you are lifting HR into the inner sanctum and that the CHRO’s contribution will be analogous to both CEO and CFO. It is this group that can make the connection between the organization and business results, and the CHRO can provide guidance in the following manner:

• Recommending ways to use human capital to unlock so as to create value.

• Developing reliable and repeatable performance.

• Leveraging logic-driven analytics: Define talent metrics and score cards to measure the impact of talent man agement investments on business performance.

• Focusing the business on the right things: Aggressive goals are appropriate for aspects of a job that drive value for an organization. HR should make sure that employees are striving for excellence where it matters — even if it means accepting merely adequate perfor mance in less-essential parts of the job.

• Effective HR leaders are able to fill a number of roles well — strategic adviser, confidant, coach, and talent architect.

The CEO, CFO and CHRO should get together once a week to discuss any early warning signals they are picking up internally or externally about the condition of the social engine. Each of them will see things through a different lens, and pooling their thoughts will yield a more accurate picture. The three don’t have to be together physically — they can arrange a conference call or video chat — but meeting frequently is important.

The CEO has to set the tone for these reviews, ensuring that the discussion is balanced and that intellectual honesty and integrity are absolute. It’s a given that both the CFO and the CHRO must be politically neutral to build trust, and they must never sacrifice their integrity to be the CEO’s henchmen. They must be willing to speak up and tell it like it is.

Conclusion

The group should spend a couple of hours every month looking four and eight quarters ahead with these questions in mind. What people issues would prevent us from meeting our goals? Is there a problem with an individual? With collaboration? Is a senior team member unable to see how the competition is moving? Is somebody likely to leave us? Companies do operational reviews, which are backwardlooking, at least quarterly. The objective here is to be predictive and diagnostic, looking forward not just at the numbers but also at the people side, because most failures and missed opportunities are people-related. There may be organizational issues, energy drains, or conflicts among silos, particularly in the top two layers. Conflicts are inherent in matrix organizations. Probing such matters is not micromanagement or a witch hunt. It’s a means of finding the real causes of both good and poor performance and taking corrective action promptly or preemptively. Success as a modern CHRO comes not from performing one role well but from being able to successfully integrate these roles simultaneously. Also, a CHRO cannot hope to succeed without the backing of a CEO who makes talent a priority. It’s no surprise that 63 percent of CHROs said that talent is one of their CEO’s top priorities for HR. It’s a symbiotic relationship. Talent-minded CEOs understand the need for strategic HR leaders, and strategic HR leaders understand how to deliver value to their CEOs. Both a CEO and an HR leader must work together to make talent a competitive advantage for their companies. However, success is determined by more than hard work and collaboration. Line managers and employees must get involved. Tools, infrastructure and best practices are needed to engage everyone in the organization and to capture the data needed to inform decision making.

Discussion of people should come before discussion of strategy. What are employees’ capabilities, what help might they need, and are they the very best? Any CEO who is sold on the idea that people are the ultimate source of sustainable competitive differentiation will improve the business and expand the CEO’s personal capability. Stating the new expectations for the CHRO and the human resources function is a good place to begin. Creating ways to blend business and people acumen should follow.

— Dr Navin Malhotra