CHRO Perspectives for 2024 and Beyond

The CHRO role is evolving, and the challenges have never been greater, say search firms that specialize in finding talent for that area. When a recent Leathwaite report asked CHROs about what prioritized current people challenges, leadership capabilities rose to the top concern. Let’s take a look inside the report to see what top CHROs are saying.

May 13, 2024 – A notable lack of confidence in leadership, coupled with significant skepticism around overall business performance, is raising concerns among HR and people leaders. Pressing questions are emerging about leadership capabilities that demand attention. When a recent report from Leathwaite queried about prioritized current people challenges, leadership capabilities emerged as the top concern, followed by organizational agility and receptiveness to change. “When we posed the same question to people leaders a year ago, leadership interestingly didn’t rank in the top three concerns,” the Leathwaite report said. “This shift underscores the evolving landscape, where there’s an increasing expectation for senior leaders across the ExCo to navigate the organization into the future. Unfortunately, most respondents express doubts about the preparedness of these ExCo members to lead this charge. Consequently, the responsibility falls on the CHRO to instigate a more fitting leadership ethos, a task that, from our conversations, seems to be well underway.”

Given these concerns around leadership capabilities and readiness, it’s unsurprising that Leathwaite found a significant number of CHROs (61 percent) perceive their role shifting toward mobilizing senior leaders to adapt to a changing workforce and workplace. This aligns with discussions among the firm’s clients, emphasizing the growing importance of finding CHROs who can operate as player-coaches – guiding and developing leaders with a hands-on approach.

“Successful leadership now demands qualities such as openness, trust, empathy, agility, authenticity and a greater emphasis on ESG imperatives,” the Leathwaite report said. “Many organizations are still in pursuit of the ideal elements within their leadership teams to fully unleash the potential of the organization. Consequently executive development and cultural transformation will remain important areas of focus.”

Digital Evolution Not Revolution

Challenging perspectives on the value of generative AI, coupled with sluggish progress in data-driven decision-making, indicate a general underinvestment in the digital landscape to lay the groundwork for the future, according to the Leathwaite report. “While there’s an evident eagerness to adopt data, new technologies, and generative AI to address operational inefficiencies, there’s a hesitancy and skepticism about unlocking their full potential before the organization is fully prepared,” it said. “With no immediate solution in sight, coupled with cost constraints and uncertainty about where to start, many are still navigating the journey to establish the right foundations for data and technology platform selection. In contrast, more dynamic organizations are recognizing the positive impact and are already investing and iterating with a multitude of new technologies.”

Related: How to Become a Successful CHRO

What the data underscores is that most functional leaders, including HR, view this as a fundamental change that needs to be implemented in the next 12-24 months. Leathwaite explains that while CHROs acknowledge the constraints imposed by ineffective processes, they also recognize a significant opportunity to drive improvements in data, technology, and digitization, ultimately leading to more value delivered through the function.

DEI momentum: Has it Lost its Way?

Throughout 2023 there was evidence of spending cuts to global diversity, equity and inclusion (DEI) agendas. U.S. businesses, in particular, scaled back their investments amid growing concerns of a global recession, the Leathwaite report notes. Despite being one of the focal points of the HR agenda through 2020 and 2021, the study found that DEI initiatives have experienced a tangible decline in recent years, prompting concerns about the potential reversal of the progress achieved.

7 Qualities and Experiences Needed to be a CHRO
The most common questions that come from executives who aspire to move into their first chief human resources officer (CHRO) role involve what it takes to be a strong and viable candidate. IIC Partners’ people and culture practice group, with consultants collaborating across 40 offices worldwide and, has had the opportunity to interact with many HR executives.

Leathwaite says that global social movements, including Me Too and Black Lives Matter, significantly influenced the pace and focus of many corporate diversity programs. The undeniable importance and commercial advantage of fostering a diverse workforce have been emphasized. Yet, despite this, DEI surprisingly finds itself low on the executive committee agenda.

The report notes that one potential explanation is that DEI has actually undergone reprioritization rather than de-prioritization, serving as a vital pillar within ESG frameworks and integrated into the broader talent ecosystem. As ESG gains prominence on the executive committee agenda, and with spending subject to heightened scrutiny, Leathwaite’s findings support this natural consolidation. “There’s a discernible shift towards cultivating a sense of belonging for all while simultaneously enhancing overall fairness throughout the organization,” the report said. “There’s also a notable trend towards broader CHRO mandates, encompassing both an ESG and internal communications remit.”

Related: How CHROs and CPOs Can Become CEOs

In more forward-thinking organizations, DEI is seen as an inherent part of the overall culture and ethos. Significantly, over 50 percent of respondents advocate for DEI to be integrated into all senior roles rather than existing as a distinct role. Leathwaite explains that this aligns with our belief that realizing a DEI vision should be a shared responsibility among all c-suite leaders to foster an equitable corporate culture.

Aligning HR with the Business: A Commercial Move

HR leaders acknowledged to Leathwaite the need for change, with business transformation rated second only to talent management and succession planning in terms of where HR is expected to deliver the most value in the coming months. However, the fact that fewer than one in five of these leaders allocate more than 50 percent of their time to focus on future strategy, rather than current state, raises the question as to whether sufficient time is dedicated to strategizing for and optimizing the transformative impact of the function, according to the Leathwaite report.

Even if HR leaders are forward-thinking, the Leathwaite says that question arises: is there adequate cross-functional collaboration and leadership capability at the ExCo level to bring the vision of the future to fruition? Only 12 percent of CHROs anticipate closer alignment with other members of the leadership team. “However, the trajectory towards tech-enabled, employee experience-focused HR strategies dictates a need for cross-functional solutions that address the moments that matter,” the Leathwaite report said. “If the disconnect between functional leaders continues, CHROs may find themselves delivering less than optimal outcomes from the HR strategy in everything from process architecture to organizational efficiency.”

The imperative for collaboration is clear, and fortunately for HR leaders, a potential solution may be within reach. Almost 30 percent of non-HR Leathwaite’s respondents in leadership positions identified a lack of coaching and mentoring as a barrier to career advancement. “While this response was in the context of the route to the role of CEO, it can also be interpreted as a broader call for leadership development – an intervention that lies within the gift of the CHRO,” the report said. “With upskilled leaders and enhanced collaboration, effectiveness at the top team level is almost sure to follow.”

Tackling Fatigue and Burnout

Although the immense pressures of the global pandemic have subsided, the Leathwaite report explains that they have left a weary HR community in their wake. “Enduring long hours and navigating uncharted territories, HR professionals spent over two years tackling a broad range of human capital challenges,” the study said. “Apart from the challenges posed by Covid, HR leaders faced increasing social and political pressures particularly regarding diversity, equity and inclusion. And we have seen this trend to be even more prominent across North America. While the roar of these topics has since become a murmur, conflicts in EMEA and the wider macro-economic concerns persist, placing continued strain on HR leaders and their teams.”

In times of financial constraint, Leathwaite notes that it’s common for HR to bear the brunt of the impact, whether through visible headcount reductions or the call to achieve more with fewer resources. “Budgets are tightened, and HR experiences the strain firsthand. In the direct line of fire, HR has led return-to-work initiatives with reduced resources and staff,” the Leathwaite report said. “With some offices barely reaching 50 percent occupancy, a continual struggle unfolds among executive leaders, the board, and employees who are holding onto the promised flexibility, balance, and wellness from just two years ago. HR finds itself squarely in the middle of this highly charged debate. The days where wellbeing was an executive-level conversation are a distant memory, as the current focus sharply returns to organizational efficiency and performance management.”

As CHROs find themselves increasingly involved in strategic decision making, there is still no respite as they grapple with the ongoing challenge of resolving reactionary operational work within their teams. Leathwaite explains that handling these operational aspects can be time consuming, limiting their capacity to provide comprehensive advisory support. The growing demand to achieve more with fewer resources is stretching CHROs, creating a need for new solutions. The study found that this is where the potential for AI and augmented technology comes into its own, offering the prospect of alleviating the strain by accelerating white collar productivity.

The Rising Costs of Succession Gaps

CHROs are placing the highest priority on leadership capability over the next 12-24 months, indicating a subtle shift from Leathwaite’s survey where engagement and retention took precedence. Since the relative slow-down in the hiring market through 2023, the search firm says that the current trend emphasizes the drive towards enhanced workforce and succession planning models, aiming for a more adept and better equipped organization. Leathwaite notes that leaders are now prioritizing internal capability development over external recruitment, shaping talent strategies with a spotlight on re-skilling and improved talent mobility.

Given this concentrated effort on leadership capability, it’s unsurprising that HR leaders identify talent management and succession planning as the area where they anticipate delivering the most value, according to the Leathwaite report. The firm is seeing a growing trend of organizations holding HR leaders accountable for building succession within their teams, setting KPIs and subjecting them to rigorous performance measures.

“As HR leaders chart the course for the future workplace, there’s a growing acknowledgment of the necessity for a shift in skill sets throughout the organizational hierarchy,” the Leathwaite report said. “While agility and adaptability were ranked fourth in priority in 2023 for appointing senior leaders, it has now risen to second place. We see this skill set increasingly viewed as imperative when hiring or strategizing for future HR leaders. It will no doubt help to safeguard against the volatility in the geopolitical environment, ensuring that the organization can confidently step into the future workplace.”

To read the report’s full findings click here!

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Executive Editor; Lily Fauver, Senior Editor – Hunt Scanlon Media

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