An Up-Close Look at the Transformational Role of the CHRO

July 11, 2018 – The HR role has transitioned tremendously over the past 20 years, as the function has gained in stature and prominence. But evolution in such a role does not necessarily come about by major changes and careful planning for the future. Even minor shifts can trigger a chain of events that have significant long-term impact on a particular function, says Thomas Mielke, managing director of the AETHOS Consulting Group.

Mr. Mielke points to what is known today as the “Butterfly Effect,” a term coined in the mid-1970s by Edward Norton, an American mathematician and a pioneer of “chaos theory.” Mr. Norton studied the behavior of dynamical systems that are sensitive to fluctuations in both their internal and external conditions.

“And, what are today’s businesses and organizations around the world if not just that?” said Mr. Mielke. “They are dynamical entities adapting to the flux of markets and economies, as well as the shifting priorities or interests of customers and stakeholders. They also depend on their management teams and leaders to take the right actions to ensure success in the future. Small calibrations today can thus lead to big impacts tomorrow.”

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A Butterfly Moment?

To make his point, Mr. Mielke cited the CHRO position. Not long ago, after a breakfast meeting with a senior executive from the U.K. restaurant industry, Mr. Mielke noticed that a small number of food & beverage businesses were hiring marketers for their most senior human resource roles. Although this had yet to become an overwhelming trend in hospitality, he wondered whether this approach made sense from a competency perspective. If so, would others follow suit? Could this be a “butterfly moment,” he asked himself, which would define roles to come as well as HR and talent management best practices for the greater hospitality industry?

To address these questions, he conducted a gap analysis to look at the core competencies of senior hospitality executives holding leadership functions in marketing and compared them to the success profiles of human resources executives. Using 20/20 Skills, AETHOS’ proprietary psychometric assessment, he obtained an overview and benchmarks for an individual’s 10 core competencies that predict job performance specifically in service-driven cultures:

• Execution skills – measuring self-effectiveness, loyalty to company, process orientation and service orientation.
• People skills – measuring team building, sense of humor, leadership and sensitivity to diversity.
• Cognitive skills – measuring creativity and problem solving.

The aggregate 20|20 Skills profiles for HR versus marketing showed both function leaders were well matched on leadership, creativity, self-efficacy, sensitivity to diversity, humor and service orientation, said Mr. Mielke. Both the HR and marketing executives profiled as “achievers” compared to the hospitality industry’s general success profile.

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“Seemingly, then, there are many transferable skills between the two roles,” said Mr. Mielke.

Some Differences

Yet the results had certain nuances. “Firstly, marketers are scoring higher on process orientation and problem-solving and therefore depict stronger analytical acumen as well as a more metric-driven mentality,” he said. “In comparison, HR is slightly less rigid in its thinking and includes more often gut-reactions into its decision-making process.”

“Secondly, marketers are scoring lower on company loyalty and thus more entrepreneurial and opportunistic,” said Mr. Mielke. “Their attitude is to fail as quickly as possible, learn from mistakes and move on and innovate. HR, on the other hand, is more concerned about long-term loyalty and engagement.”

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At face value, some of these results may be surprising, said Mr. Mielke. One might have assumed that marketers, for example, should be less process-driven and depict a stronger creative streak while HR executives are the ones concerned about policies and procedures. “The fact of the matter is, however, that in today’s world marketing leaders are more aligned to quantitative problem solving and strategy (e.g. digital marketing, demand generation) and less about creative endeavors per se,” he said. “Also, with the split of the traditional HR function, now being much more fragmented into administration and payroll, recruitment and training as well as retention and engagement, human resources executives have become more nimble and adaptable.”

The Effect on Organizations

Having compared the success profiles of marketers with HR professionals, one might suspect that given the overlap of core competencies companies that are recruiting marketers into HR roles are on to something. “At least it makes conceptual sense, because both marketers and human resources professionals are arguably ‘experience engineers’, meaning executives who are concerned about driving and sustaining loyalty and engagement,” said Mr. Mielke. “The difference is that the marketing leader does so externally and the HR professional with a focus on the internal stakeholders.”

Assuming that the recruitment of commercial marketers for CHRO positions is one of those “butterfly moments,” Mr. Mielke said he thought about the possible consequences for the organizations themselves. As the psychometrics suggested, one possible implication of this approach might be that HR departments will become more data-driven or even formulaic, he said. The new type of leadership might become increasingly or exclusively motivated by outcome metrics and business cases, possibly at the expense of relationships or people-first culture-building.

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“Organizations might therefore run the risk of ‘commoditizing’ the HR function, unless there is a conscious effort to maintain and foster a service-driven mentality,” said Mr. Mielke. “Given the analytical background of marketers, and their tendency to think in business metrics, one might also expect such new CHRO profiles asking for bigger budgets to be spend on testing, analysis and other initiatives to optimize people metrics for business outcomes.”

Applying the Results

Therefore, commercial CHROs will add the most value to organizations that strive to make better business sense of employee engagement, guest satisfaction, loyalty programs and the like. “A word of caution goes to those companies whose HR-departments are solely expected to (re-)define and/or hone brand loyalty and employee retention, and whose HR executives are supposed to look after the status quo and not ‘rattle the cage’,” said Mr. Mielke.

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“Yet, in light of the general market conditions and the hospitality industry’s competitiveness, company leaders would be unwise to pursue such talent management and HR strategies which are centered around the unwavering believe in predictability and business certainty,” he added. “The truth is that today’s business world is one of rapid, and chaotic, change. Commercial CHROs should be best suited to weather the proverbial storms.”

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Mr. Mielke, who is based in London, is a founding member of AETHOS Consulting Group. He has a track record of placing senior executives at leading hospitality companies across the EMEA region. He works with travel wholesalers, real estate developments firms, investment companies and sovereign wealth funds as well as leading restaurant brands to identify key talent. He has also joined with clients in establishing compensation schemes as well as organizational structures and workflows.

AETHOS Consulting Group is a global hospitality advisory firm serving the hotel, restaurant, casino, cruise line, club and travel technology sectors. The firm’s core competencies include executive search, compensation consulting, organizational development and psychometric assessments. Through strategic joint-ventures, AETHOS also assists clients in gaining access to expert advice and specialist services in the area of logistics, supply chain management and insurance solutions. Designed as a single partnership, AETHOS operates from locations in North America, Europe and Asia Pacific.

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Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media