When we go back to the history of the HR area, we cannot forget that a few decades ago, the corporate HR department was considered by the company management itself as an administrative function, a cost center whose purpose was focused on in basic administrative tasks in relation, for example, to the entry and exit of personnel, absenteeism, as well as the management of compensation plans and benefits. But in the last 25 years there has been a 180-degree turn in the roles and responsibilities of the HR area. Let’s see, for example, what the prestigious Harvard Business Review echoed in 2014, in which it quoted Ellie Filler who already at that time said that “in the last 15 years there has been a dramatic change”. Filler is a Senior Client Partner in the Zurich/London offices of Korn Ferry and is also the Managing Partner of CHRO (Chief Human Resources Officer) for EMEA. Her specialty is placing Chief Human Resources Officers (CHROs) in global companies.
For years, many of the human resources managers she hired reported to the chief operating officer or chief financial officer and complained that they lacked real clout at the top.
But as early as 2014, she confirmed that HR directors report directly to the CEO, also serving as key advisers to the CEO and making frequent presentations to boards.
That’s why Ellie Filler said that when companies look for new CHROs, many already focus on high-level leadership skills and strategy implementation skills. Because by then this role was gaining importance as never before. Because the substantive change was that HR management had moved away from an administrative or support role to become a driver of change and the person who enables business strategy.
To investigate CHRO’s role within the C-suite, Filler worked with Dave Ulrich, a professor at the University of Michigan and a leading consultant on organization and talent issues. Looking at various data sets, they found startling evidence of the growing responsibility and potential of CHROs.
Understand the importance of HR managers
First, to understand the importance of the CHRO relative to other C-suite positions (executive positions) including CEO, COO, CFO, CMO, and CIO, Filler and Ulrich looked at salaries. To identify the best employees, they found the top income decile in each role. They then averaged the annual base compensation of each group. Nothing surprised these researchers, as CEOs and COOs ranked as the highest-paid executives. But CHROs were next on the list and by then it was clear that they were very well paid.
Evaluations on 3 categories of leadership
The research also led them to study the evaluations of many executives for more than a decade examining scores on 14 aspects of leadership, for which they grouped them into three categories:
– Leadership style, or how executives behave and want to be perceived in group settings.
– Thinking style, or how they approach situations in private.
– Emotional competencies, or how they deal with such things as ambiguity, pressure, and risk-taking.
Once the categorizations were made, the researchers evaluated the prevalence of these traits among the different types of executives and compared the results.
And the surprise was immediate
His conclusion: With the exception of the COO (whose role and responsibilities often overlap with those of the CEO), the executive whose characteristics were most similar to those of the CEO was the CHRO. “This finding is very counterintuitive, no one would have predicted it,” Ulrich concluded once they had the study’s conclusions.
Mapping of leadership styles
The researchers analyzed 360-degree assessments of thousands of leaders across six C-suite functions (CEO, CFO, COO, CIO, CHRO, and CMO) in which each executive was ranked on 14 aspects of leadership on a scale of one to seven. . The result was surprising: the traits of the CHROs closely matched those of the CEOs.
The discovery led Filler and Ulrich to a provocative prescription: More companies should consider CHROs when looking to fill the CEO role. In the modern economy, they say, attracting the right talent, creating the right organizational structure and building the right culture are essential to driving strategy, and experience as a CHRO makes a leader more likely to succeed at those tasks.
Advice and warning
The advice came with some caveats. First, Filler and Ulrich studied only the best, thus pointing out that a small subset of CHROs have potential for CEO positions. What they concluded back then is that they didn’t see a path to the top job among people who have spent their careers in human resources; instead, they were promoting the perspectives of executives who had had extensive managerial experience (and P&L responsibility) that included a developmental period heading the human resources department. And this was normal for them to consider it that way because they were convinced that any HR director who aspired to become CEO should already then demonstrate capabilities in a series of skills required for top leaders. It is evident that these requirements are still valid in 2022.
Therefore, in their white paper that they wrote about their research, they said that “the challenge for CHROs is… to acquire sufficient technical and financial skills, in early education and in the career steps along the way, if the succession to CEO It is the desired result.”
In fact, some companies, including Zurich Insurance, Nestlé, Philip Morris and Deutsche Bank, already had a habit of putting high-potential executives through a developmental rotation into a high-level human resources position.
Filler and Ulrich highlight an example of outstanding CEOs who had periods of development in human resources early in their careers. This is the case of Mary Barra, CEO of General Motors, who served as vice president of HR. It’s no coincidence that she’s a woman since, according to the researchers’ data, 42% of high-performing CHROs are women, more than double the share of the next-highest CMO position (16%). One implication: If more companies envision CHROs as potential CEOs, the number of female CEOs could increase dramatically.
In their white paper, Ulrich and Filler also report on what CEOs and CHROs have to say about the changing nature of the senior HR role. Several CEOs view the CHRO as a C-suite consigliere. “Sustainable success is almost impossible without an outstanding CHRO,” says Thomas Ebeling, CEO of German media company ProSiebenSat.1 Media AG and former CEO of Novartis. And he adds that “the CHRO should be a key combat partner for a CEO on issues like talent development, team composition, and culture management.”
Some aspects to highlight from HR directors
1º) HR directors are trained to become CEOs
By working closely with their CEOs on various work issues, good HR professionals help a CEO succeed by facilitating the resolution of a variety of problems, which is another reason the boss human resources may be a good candidate for CEO.
2º) How can an HR director help a CEO?
The human resources department can influence the CEO in terms of how to build an effective leadership team based on her experience in managing talent. Human resources staff help the CEO design a succession plan that enables the company to develop a cohesive long-term plan.
3º) What makes a good CEO candidate?
The skills needed to be a CEO include sociability, teamwork, learning new things, creativity, time management skills, erudition, and strong communication skills. To find the most talented employees in the years to come, candidates for these executive positions will need these skills and find them in the other people who make up their team.
4º) What makes a great director of human resources?
Hiring managers work with people every day, which means they must be passionate and enthusiastic about helping others achieve their goals. A good human resources professional puts the needs and interests of the people he supports first in everything he does.
5º) Should HR be on the board of directors?
Having an HR leader at every strategy meeting not only helps the executive team communicate effectively with each other, it gives employees information they may find valuable. Communicating to an organization what its leaders are working on creates transparency and increases loyalty among employees.
6º) What does a CEO of the HR area want?
Talent management is the most important thing. Most CEOs surveyed in different studies said they want their CHROs to spend more time finding, retaining, and upskilling the best employees. The pandemic proved that people are the key to success in business. Finding them and hiring them is not enough.
Four Reasons HR Needs a Seat at the Board Table
When was the last time a company’s executive team consulted their human resources director about organizational strategy? It seems that the experts are clear: if it wasn’t today, too much time has passed.
While some companies include a seat at their board table for the HR director, others have yet to get to this point. So what is the reason for the delay? Often it’s out of fear, or simply because executive teams have never done it that way.
An industry professional like Sarah O’Neill, who is Director of HR at Digital Trends, overseeing talent initiatives, benefits, compliance, training, and strategic human capital, said that during her time at Pinnacle Workforce Logistics, a handheld solutions company of third-party warehousing construction, the HR department not only had a seat on the board of directors, but was an integral part of day-to-day operations. They took their biggest operational problem (undercounting during the busiest time of the year) and associated it with what the operations and finance team knew (the volume of work required for a given week along with individual productivity data). ). With HR data on turnover rate and average layoff rate, HR, finance, and operations departments were able to work together to solve the biggest concern of companies: labor management.
Solving an operational problem with HR acumen is not rocket science. That was not the big win for the company. The most positive result was the camaraderie, loyalty and trust that was generated as a result. The HR department felt heard, valued, and most importantly, they had a stake in the game.
Sarah O’Neill outlines the four key areas executive teams need an HR professional to keep in mind at all times.
Compliance errors can lead to costly mistakes, and it’s no secret that labor laws are changing faster than businesses can keep up. From what you can and can’t ask during an interview to arranging employees based on categories, it’s totally unreasonable to ask a CEO or vice president to do their job while keeping up with every change in the organization. law. By having an HR representative on your executive team, you’ll stay up to date on what the organization needs to do to stay compliant and stay safe.
HR professionals are by nature wired to help all aspects of the business align toward a goal of team cohesion. By involving them in the goal development process and keeping them abreast of what each department within the organization is doing, they can create cross-functional teams to better align overall company goals with each work group at play. Once they know what’s important to the leaders of various departments, they can help support those goals through training, cultural interactions, and development goals.
Constructive conflict is a common theme among strong executive teams. When leaders feel empowered and heard by their peers, they tend to speak up more. With all the opinions of the thought leaders in one room, who gathers the thoughts and brings the idea to a final resolution? When passion is high, who helps defuse the situation?
Leaders in any organization are not in a position to choose sides, start a war, or complicate things. They are there to foster harmony and progress and bring the team together using educational techniques. Having an HR leader at every strategy meeting not only helps the executive team communicate effectively with each other, it gives employees information they may find valuable. Communicating to an organization what its leaders are working on creates transparency and increases loyalty among employees.
When a company wants continuous growth, human resources play an important role. HR professionals seek out new employees, hire them, train them, and ultimately build the team that will take your organization to the next level. They are also the ones who manage the negative reactions when valued employees leave: they conduct exit interviews, identify the root cause of the resignation, and develop solutions to the real problem at hand.
An HR leader will also spearhead creative solutions to the obstacles that growth itself can bring regarding:
– Necessary structural changes that need to be implemented.
– Budding acquisition possibilities.
– Succession planning regarding the most important executive positions.
– Training and development.
All these actions should have to be addressed, while performing them you should try to maintain a positive experience for employees through the culture of the company.
By having them at the board table as you develop long-term strategies, they can align how the employee experience is shaped to cultivate an environment in which growth will flourish.
With a dedicated leader focused on these four elements, executive teams can continue their strategic thinking process while gaining an alternative perspective, knowing they have a partner (HR) playing a key role behind the scenes. So that nothing is forgotten.
If the organization is ahead of the compliance curve and communicates and aligns correctly, growth will be inevitable.
Why HR Leaders Never Become CEOs, But Should
Historically, Chief Human Resources Officers (CHROs) among the leaders of any organization, were the least likely to become the next CEO. It also happened that few CEOs acquired experience in the HR area of companies. For this reason, we must stop using the same patterns and hire differently, that is, we must look around the table that meets at the board of directors and think about who has the ballot to be the next CEO of the company.
Will it be the financial leader? The sales and marketing person? The general counsel or the director of operations?
The leader least likely to become the company’s next CEO is the one person a company could possibly need to take the reins: the CHRO.
Due to business trends such as the falling market value of tangible assets, the place occupied by a company’s purpose, culture and people have become primary assets. All of which puts HR leaders right in the middle of the action.
However, unlike their peers, CHROs and hiring managers are rarely prepared for business leadership. And they often don’t get business experience like other executives, where they move into various departments, but instead stay positioned to support the leaders around them.
At the opposite end of the spectrum, despite the critical need for great people leaders in the C-suite, few leaders get experiential learning in HR. Few CEOs gain experience in the people management part of the organization.
This is concerning because when leaders spend their careers without spending time on human resources, they may not establish expertise on why they should, or how, to value people (employees and customers) as part of the business.
A principle for good leadership is that leaders should not consider the privilege of exercising their function as a reward, but rather as a responsibility that requires talent and training. And that training must include experience with the most important part of any organization: its people.
Leaders usually (and not always because of them) don’t invest in things they don’t value. This can result in:
– Poor strategy execution due to less engaged workforces.
– Poor management due to outdated management practices.
– Troubling company culture and employee behavior due to top-down disrespect.
– Loss of clients overnight due to careless decisions that disturb confidence.
Instead, CEOs who focus on the people and purpose of their company can avoid these pitfalls and build a brand identity that stands out.
They can create the companies that win the war for talented workers and new customers, and make a profit in turn.
Here’s why HR leaders may be positioned to take on the CEO role more today than ever:
1º) They can increase the returns on human capital during a merger and acquisition.
The problem for CEOs always comes with mergers and acquisitions that are on the rise and human capital becomes even more complicated during this process. Leaders need their people to continue at full speed, and even accelerate, so that mergers and acquisitions are not successful.
A majority of acquisitions that fail
Often during mergers and acquisitions, the numbers look good, but after a short time, workplace cultures begin to clash, company purpose is diluted, and employees experience change fatigue. and all this begins to affect the customer experience.
This inability to manage and motivate employees is one of the reasons why, as the Harvard Business Review consistently reports, 70% to 90% of all acquisitions fail to reap the intended benefits.
This is a huge area of opportunity for leaders because only 21% of people (in any organization) believe that their performance is managed in a way that motivates them to do outstanding work.
It’s no surprise that most companies struggle in this area when you consider that 82% of managers don’t have the right talent to lead people with true excellence.
Managers with the right talent for the job increase employee engagement and performance simply by being natural. But they can achieve even more when they get the right training and tools to do it. They can create a culture of responsibility and development by changing from boss to coach and leading great conversations with their teams.
2º) They can conquer agility by creating a culture of psychological safety
Most companies have not successfully redesigned their key players and organizational structure to support the pace that is needed today.
Thus, the corporate world has become a landscape of too few people using too many features without the necessary resources, leading to mediocre performance in everything, rather than superior performance in some things.
This need for speed that drives today’s market can only be achieved with faster decision making. The days when one or two people within an organization made all the decisions for a company are over.
The advantage of good emotional environments
Emotional environments that create psychological safety have been shown to foster greater agility. However, most CEOs have been educated in financial or marketing techniques and are often not adept at the emotional and behavioral techniques that are essential if they want their companies to move faster.
The ability to organize a company and the people needed to build these teams faster can only be done by those most familiar with an organization’s talent and the principles of behavioral economics, often the CHRO.
3º) They can help your business build trust internally and externally
Employee trust in leadership is low, with only one in three employees in Gallup’s global database strongly agreeing that they trust their organization’s leadership.
When employees don’t trust leadership, they also don’t plan to stay with your organization as long as people who say they do, and have little interest in making a new strategy work or creating new initiatives for customers. They don’t give leaders the benefit of the doubt.
Learn how to optimize employee performance in your organization
The opportunity for HR leaders is more than clear and we can see it from two different angles:
– Leaders cannot build trust with all employees on their own.
– They need a network within their organization.
– They can build trust by creating a common culture and investing in the people who have the most influence over most employees: their managers.
-Even if a CEO did not commit the crime, he was responsible for the company culture that allowed the actions to occur.
-A CEO may have little control over a person’s actions, but if he doesn’t try, he won’t prevent future actions at all.
– Having a leader who doesn’t need to be reminded that something like the #MeToo movement is real, it’s important and needs to be addressed, it’s a baseline for current leadership – HR leaders get it.
As a result, HR managers are perfectly positioned to build trust by building a strong foundation of values and behaviors, not just processes and profits.
Hire CEOs differently
Most CEOs have been cut from the same cloth. But what if they came from a different cloth?
A cloth that gave them experience in people and not only in processes, project management and financial experience.
The people leading today’s organizations need to be more than just financial geniuses or sales and marketing gurus. They must be people who understand how to run a business with their people and because of their people, rather than at the expense of the people.
A simple solution is to provide business expertise to CHROs and provide CHRO expertise to business leaders. So it’s the path to having leaders with significant experience in leading and developing people who are set up to become future CEOs. Therefore, this training must include experience with the most important part of any organization: its people.