Chief Human Resource Officers in Private Equity Funded Companies

April 7, 2025 – In today’s fast-paced and highly competitive business environment—where markets and customer needs are constantly evolving—the CHRO plays a critical role in driving the growth and profitability of private equity-backed companies. The top HR officer is at the vortex, with the CEO, in defining and cultivating the culture and driving the talent agenda so critical to meet value creation objectives, according to a new report from DHR Global’s Keith Giarman, Ed Flowers, Christopher Knipp, and John Staines. “HR leadership and associated practices and policies have a direct bearing on the velocity and adaptability of a company’s approach to the market,” the study said. “The CHRO’s role — to develop leaders, attract and grow talent, and create a culture of engaged employees in a dynamic environment – can make or break a company’s ability to meet aggressive performance targets.”

Importantly, the required pace of change in a PE-funded company often comes with a leveraged balance sheet and always with a discrete timeline to achieve value creation, the DHR report explained. “This change in ownership requires a sense of urgency, focus, and discipline in all functional areas, including HR,” it said. “Preferred candidates for this demanding role must be willing to exercise the cultural transformation rapidly with an eye on developing a highly motivated, accountable workforce so high-impact initiatives can yield desired economic improvements. Whereas some may thrive in a faster-paced environment, others may be less effective given the breadth of actions required that affect the entire human resource fabric of the company.”

In order to successfully fulfill their wide-ranging and increasingly important duties, CHROs must embody many of the same characteristics of all great leaders. While different situations may require different styles to ensure culture fit, DHR sees the following characteristics as common in those who drive the greatest impact.

• Collaborative partner working with CEO and management.
• Urgent with results-orientation.
• Authentic and self-confident in approach.
• High EQ coupled with commercial / business aptitude.
• Comfort with ambiguity and shifting priorities.
• Executive presence and decorum.
• Innovative thinker and willing to disrupt.
• Visionary with strategic view of the business.

Celebrates & Enhances Culture

“Culture drives performance and leadership drives culture,” the DHR report said. “The CHRO is the top “culture carrier” and the most senior executive, other than the CEO, continuously focused on maintaining (and transforming) the firm’s culture in terms of values and behavior. This focus on culture is critical in any company, but it is especially crucial in fast-growing companies that need to recruit and assimilate large numbers of employees to meet customer / market demand and imbue ownership and accountability throughout the organization.”

CHROs and Future Thinking: Shaping a Positive Culture

The CHRO role has evolved to encompass not just internal talent management but also the broader responsibility of shaping organizational culture in ways that contribute positively to society. As part of this growth, Blue Rock Search’s Ruben Moreno emphasizes “future state thinking” to help HR leaders build agile workplaces aligned with business goals. The is a strategic approach that encourages CHROs to envision and build a workplace culture that supports business objectives and promotes social responsibility, sustainability, and inclusivity. “Your leaders today are the key to driving your success tomorrow,” Mr. Moreno says. What immediate actions should CHROs and HR leaders consider to secure a thriving future? Blue Rock Search lays it all out.

Now more than ever, leadership must foster a culture of inclusion that embraces and rewards the diverse talents of employees, the DHR report continued. While it is important to celebrate “who you are” as a company and maintain diversity, it is equally important to be disciplined and process-driven regarding employees who are not a good fit and respectfully help them exit the business.

Aligns with Business Economics

Along with culture being critical, the HR leader must also be strategic in thinking about how to support the business in the mission to build world-class teams in each function (and at the management team level). This requires a business-oriented HR executive who knows how to identify the key position holders – high-impact leadership roles that directly affect revenue, profit and productivity.

DHR points to this example… if the mission of a fast-growth software / SaaS company is dependent on a next-generation platform to annihilate the competition, HR better be focused on building the best engineering team in the world as fast as possible. Likewise, in a multi-site distribution or logistics business, the linkage between talent and profit and cash-flow is quite evident in the field in the ability of regional branch managers to achieve financial objectives. HR needs to know who the high performers are, develop or exit the ones who cannot be developed, and constantly be on the hunt for outside talent that aligns with the organization’s mission.

“During the lifecycle of an investment, PE-sponsored companies almost always enable significant change to increase the velocity of the business and ensure optimum accountability,” the DHR report said. “The pace of change is dictated by the PE sponsor’s investment thesis and corresponding operating plans developed by the management team. CHROs must build a change-ready organization, with a workforce that is nimble enough to maintain productivity through change and a management team fully committed to financial and strategic objectives. A culture that embraces new ideas and organizational development initiatives is a must. Transparent and direct communication across functions is required. Engagement of employees at all levels should be a constant objective to ensure a culture of ownership and accountability.”

Stays Out Front

As the chief people officer, it is not enough to be strategic and thoughtful about systems, measurement, and the economics of the business, according to the DHR report. The firm explained that the CHRO must enjoy being in the business and make constant and empathetic interaction with all levels of staff – from the board to the management to the factory floor or engineering staff – a priority.

Related: CHRO Turnover Declines Amid Workforce Shifts

“Even with the best systems and processes in place, it is impossible to be credible in the role unless the CHRO practices servant leadership and the people in the company see him or her fully engaged in the business and working closely with all functions and employees at all levels,” the report said. “This must be a genuine effort to engage with and get to know the business at all levels. Employees will observe and follow the CHRO who leads by example, just like the CEO and others.”

Knows HR Technology & Is Data-Driven

In today’s rapidly evolving world of technology, DHR explains that there are incredibly powerful tools available to HR professionals as they seek to better automate internal processes, work with outside service providers, assess potential employees, and more generally automate the “mechanics” of the HR and recruiting process.

“Specifically, the use of artificial intelligence in hiring, onboarding, learning, and talent management has resulted in increased efficiency, reduced bias in decision-making, and lower operational costs,” the report said. “The CHRO needs to be a student of these systems working with the head of IT and make sure the company is state-of-the-art in its use of technology where the ROI of these systems is warranted. For example, one of the best ways to gauge organizational health is the thoughtful use of targeted survey tools. A CHRO who does not prioritize constant learning to keep pace with the emerging technology landscape will be less effective in the role.”

“While the CHRO must act as a steward to the entire organization, the management teams of PE-funded companies are especially under fire to produce results and meet aggressive performance targets,” the DHR report said. “As a unit, therefore, they must operate like clockwork in their execution against the KPIs facing the business. An accelerated timeline and added pressure dictate trust, transparency, and direct inclusive communication at all times. Every individual on the team overseeing every silo as well as the CEO has a functional spike in terms of their interpersonal and professional strengths. The CHRO must engage with the team as a trusted one-on-one and team counselor to break down barriers and ensure optimum performance at a management team level.”

Related: 7 Qualities and Experiences Needed to be a CHRO

Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor  – Hunt Scanlon Media