The evolution of CHROs
Much more rigour is being placed on HR to think in business terms and use analytics to make decisions and the case for action
Feb 27, 2018
CHROs today are at the board table to talk about executive compensation, incentive compensation, and workplace policies particularly exacerbated by the #MeToo environment. Shutterstock
By Suanne Nielsen
That the role of the CHRO has become more demanding and complex is not a secret. The way to keep ahead of trends is to think like a business leader first and use data and analytics to make business decisions, not just HR ones.
When I started my career, I looked upon the CHRO role as a critical one because I gleaned from people who were in such roles that they had different relationships to navigate on the senior team than, perhaps, those who supported the business in other ways.
I understood early on that there was an important relationship between the CEO and the CHRO. Important decisions were being made by the CHROs to drive the business forward - decisions about everything from developing compensation philosophy and designing incentives to rewarding the right outcomes, and developing talent strategies and workforce plans to achieve business goals.
As I rose up the ranks, I realized CHROs are exposed to a broader swath of HR activities than what is commonly assumed. I had to have oversight of a wide range of HR functions. A lot of HR folks focus on leadership and development but give no consideration to pension and benefits programs. A lot of HR practitioners come up as HR generalists and demonstrate a weak understanding of sophisticated organization design.
It’s simplistic to say that it’s the breadth of the CHRO’s role that makes it important. What makes it most important is a firm understanding that decisions CHROs make with the senior team are going to impact the business, and people’s lives. CHROs need to have a clear idea of the problem at hand, along with the risks involved.
What has really changed is that much more rigour is being placed on HR to think in business terms and use analytics to make decisions and the case for action. In the “old days,” a person could talk intuitively about morale being down or the need for leadership development. Now, those intuitions need to be qualified. How do you know that we need leadership development? How do you know that morale is down?
We could give feedback to a senior executive saying, “You have a poor leader under you,” but what exactly is a poor leader? How can we quantify that statement? What are the number of complaints, sick days, and turnover on that team? Most importantly, it’s about defining what it’s costing the business by not addressing the poor leadership.
The evolution of the CHRO is that the role has gone from intuition to fact-based decision-making. The only way to conduct fact-based decision-making is to present facts to bolster a case and quantify the solutions before leaders see it.
Occasionally, leaders will present their solutions. It’s not uncommon for leaders to lay a company-wide edict that they want to reorganize certain areas of their business and hence, hire/fire personnel. In such cases, CHROs now need to ask the right coaching questions – what is the problem the leader is trying to solve?
Being a leadership coach is now being brought into the fold of a CHRO’s role. It helps to ensure leaders are making good, solid decisions. CHROs advocate by correctly identifying problems, laying out evidence-based goals, employing troubleshooting metrics properly, and afterwards measuring the success of such reorganizations.
While many of today’s CEOs have elevated the talent agenda, they are often, out of necessity, more focused on the survival of the business or the disruptors that are hitting the business. The CHRO needs to be able to forecast and identify the people issues that the business is going to face. They need to ask if the business has the capacity to take on a new initiative. If not, then explore whether talent can be bought or outsourced.
CHROs today are at the board table to talk about executive compensation, incentive compensation, and workplace policies particularly exacerbated by the #MeToo environment. Everyone is concerned, and should be, about whether they have policies in place to ensure a workplace of respect. Boards are concerned about leadership succession, HR is there to support the CEO with succession plans, but it’s not just enough to have a succession plan. It’s important to look at what we have in the leadership development lineup to reinforce that succession plan.
The HR role must remain constantly flexible and responsive to where the business is. If you understand the business, and how to leverage the organization’s investment in people to greatest success, you increase the impact you make, and it may lead you into other areas, perhaps even leading the business.
I would like to see more CHROs move across the organization and move into CEO roles. As organizations increasingly move towards a knowledge-based domain and people are three-quarters of the operating expense, more CEOs are recognizing that having business-savvy CHROs is the way to leverage the people they’re investing in.
For more of my thoughts on how CHROs play a significant role in navigating CEO transitions, see my previous blog on “Navigating CEO transitions.”
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Suanne Nielsen is president of the Strategic Capability Network and global chief administration officer at Foresters Financial in Toronto. The views and opinions expressed in this article are those of Suanne and do not necessarily reflect the official position(s) or opinion(s) of SCNetwork members or Foresters.
For more information about the SCNetwork, visit www.scnetwork.ca.