CHRO Turnover Declines Amid Workforce Shifts

December 9, 2024 – CHRO turnover remains low as organizations seek to prioritize stability amidst unprecedented socio-political challenges, new legislation across sectors, and workforce transformation concerns. Overall, incoming CHRO changes are still notably down 34 percent year-to-date since 2023, and 23 percent since 2022, according to the latest CHRO turnover report from Russell Reynolds Associates. “By retaining the top line HR functional leadership, organizations can leverage their CHRO’s expertise to maintain continuity while also developing and evolving their HR functions,” the study said.

CHRO turnover refers to the rate at which CHROs leave their roles and are replaced within organizations. It reflects leadership stability and can indicate broad trends in HR leadership. The CHRO turnover report captures data from the following global stock indices: ASX 200, CAC 40, DAX 40, Euronext 100, FTSE100, FTSE 250, HANG SENG, Nikkei 225, NSE Nifty 50, S&P 500, S&P/TSX Composite, and STI.

In response to evolving market and organizational demands, the CHRO role is expanding beyond traditional HR functions, according to the Russell Reynolds report. “Incoming CHROs are increasingly taking on broader responsibilities, including communications, corporate affairs, sustainability, governance, premises, and organizational transformation – signaling that organizations are seeing the value of people leaders’ perspectives on a broader range of topics,” the firm said.

While only 12 percent of incoming CHROs globally had expanded remits in 2022, this rose to 15 percent  in 2023 and reached 17.3 percent in 2024. And in certain markets, this proportion is significantly higher. For example, in the U.K.’s FTSE 100, 51 percent of CHRO roles now include elements beyond the ‘typical’ HR remit. “This may illustrate progression and innovation within U.K.-headquartered companies; alternatively, it could show that current leaders are bedding down—distilling their teams into smaller, tighter-knit groups as their organizations grow more efficient,” the report said. “What is clear: these shifts mark a new direction for the HR function and an updated understanding of what it means to be a CHRO of the future.”

External Hires Remain in Demand

As seen in Russell Reynolds’ second quarter CHRO turnover data, organizations continue to prefer external placements, with 65 percent of incoming CHROs in the third quarter of 2024 coming from outside the company. “As the market becomes more complex, companies are prioritizing experienced, external leaders with diverse skillsets (from both an organizational and industry perspective) who can implement best practices and influence the organization,” the report said. “This is particularly important as organizations face heightened pressures from technological disruption and workforce transformation.

Cross-industry hiring highlights the varying priorities of different industries in developing their strategy and workforce footprints. In Russell Reynolds’ analysis, they found that consumer companies consistently sought external perspectives, with 56 percent of external hires in 2024 (and an average of 53 percent over four years) coming from beyond the industry, signaling the industry’s prioritization of fresh perspectives to drive innovation and product ingenuity. On the other hand, financial services prioritizes industry familiarity – likely due to its regulatory frameworks and technical specificity– with only 25 percent of external candidates coming from outside of the industry and an average of 37 percent over the last four years.

While numbers of incoming CHROs fluctuate year to year in response to market forces and demands, the trends reveal that sectors like consumer, healthcare, and technology remain relatively open to external talent to foster fresh thinking and a competitive edge, the Russell Reynolds report explains. “While industries with heightened regulatory complexity, such as financial services and industrials, favor internal industry hires,” it said. “These trends suggest that every industry has its own distinct approach to balancing innovation with operational needs.”

How has CHRO Turnover Changed for Public Companies?

“CHRO turnover has remained steady, but the approach has evolved,” the Russell Reynolds report said. “There is now a growing preference for external hires to bring in fresh perspectives. As a result, firms are increasingly seeking more experienced individuals who have navigated complex environments to help address their own challenges. While there’s still openness for first-time CHROs, this trend may be shifting as organizations prioritize seasoned leadership in the current climate.”

Related: How to Become a Successful CHRO

The Russell Reynolds report also found that CHRO turnover is high in public firms globally due to multiple factors. “While workforce and global pressures can contribute to a need for leadership change, a significant driver is the turnover of CEOs,” the report said. “The CHRO is often considered the CEO’s close confidant, so changes in turnover in top seat are likely to have a knock-on effect on the CHRO.‍”

In 2023, Russell Reynolds found that 179 CHROs were appointed to the top HR role at public companies globally, closely mirroring the 178 CEO changes within the same period. Notably, some organizations may not have previously had a dedicated CHRO, while others experience more than one CHRO change within the year. A more robust assessment and succession planning process could have contributed to greater stability in these roles.

In 2023, Russell Reynolds also found that a total of 174 CHROs stepped down from their roles at public companies globally, with a notable 59 departures from S&P 500 organizations, 17 from the ASX, and 8 from the FTSE 100. Since the first quarter of 2023, 72 percent of the outbound FTSE 100 CHROs who joined boards are women, with these boards averaging 41 percent diversity, compared to 28% for those with CHROs who are men.

In 2023, women made up 61 percent of all CHRO appointments at public firms globally. Historically, from 2018 to 2024, the average proportion of female CHRO appointments has been 67 percent, according to the Russell Reynolds report.

In 2023, 53 percent of new CHRO appointments at public companies were first-time CHROs. Historically, from 2018 to 2024, the average proportion of first-time CHROs has been 57 percent. The average tenure of CHROs at publicly listed companies is 4.2 years, with a range spanning from 0.8 to 17.3 years.

Russell Reynolds Associates is a global leadership advisory and search firm. Its 520-plus consultants in 47 offices work with public, private, and non-profit organizations across all industries and regions. The firm also conducts in-depth organizational culture assessment and measures the cultural fit of key leadership and candidates in the following areas: arts and culture, global development, higher education, non-profit health and human services, public sector, social justice and advocacy, as well as trade and professional associations.

The firm provides executive search services across all areas of the global media, entertainment, technology, and athletics markets. The firm’s consultants bring the experience and ability to assess competencies and cultural fit of board members, CEOs, senior functional leadership and players, with expertise in professional sports teams and leagues (CEOs, general managers, coaches and players); digital, media and entertainment; and technology-based start-ups.

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