CHROs Joining CFOs In Influence, Strategic Role

July 27, 2016 – For all the value that those who occupy the chief human resources officer (CHRO) seat have brought to their companies over the years, it is only now that the role has begun to claim the fullest respect and attention of top leadership.

It’s been a long time coming, but in today’s business climate, in which responding to change and getting off the ball first matters a great deal, CHROs are playing a more critical part in moving their organizations forward.

“Historically, the CHRO has often been accused of lacking strategic input at the board level and has struggled to have a seat at the table in the inner circle,” says Mark Oppenheimer, chief commercial and innovation officer at leadership advisory and executive search firm Marlin Hawk, which is headquartered in London but has expanded its talent service offerings to New York. “Now, rather than being absorbed into the finance function as some have suggested, the role has stood its ground and flourished.”

Contributors to Value

“Traditionally, the CFO has been the CEO’s right hand man at the helm of the company. Now, savvy CEOs are flanked by the CFO and the CHRO, whose contribution in creating value and managing change through talent is seen as a decisive factor in shaping the future. Both roles manage a company’s assets, and I would argue that both roles have equally significant power in and of themselves.”

Mark, who is based in New York, engages with CHROs in all sectors across the entire country. He offers a new brand of executive search in which strategic talent management and market intelligence are emphasized before recruitment. This resonates with CHROs, he believes, who want to “up the ante” and have more in-depth dialogue with their search partners about the wider context surrounding search.

CHRO As Arch Strategist

The CHRO, of course, has always played an essential role. But changing times have helped to elevate the position to new heights. “In the words of media magnate Rupert Murdoch, ‘The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow,’” Mark says. “In a business world where transformation is the name of the game, the CHRO is taking on the mantle of arch strategist, deploying sophisticated talent management principles and practice to drive business success.”

In many ways, Mark says, the human resources and finance roles are more similar than one might initially think. “Both functions have a helicopter view of the business – cross function and cross geography – while also having feet on the ground via direct or dotted line reports within most business units,” he says. “While finance and accounting executives are naturally analytical and cultivate an unwavering return-on-investment focus, human resource executives put more emphasis on empathy, psychology, creativity and intuition.”

But HR, he adds, is not 100 percent ethereal, and it is by applying more rigor to the scientific element that the CHRO has gone up in the CEO’s estimation. “Let’s face it,” he says, “our recruiting business today is as much about science and predictability as it is about the human function. This is a massive shift occurring right before our eyes and anyone not taking notice is ether blind or has their head stuck in the sand.”

The CHRO, Mark says, has followed the lead of the CFO in five core disciplines: forecasting, risk management, modelling, auditing and analysis, and building equity. Forecasting, for starters, is grounded in understanding the business strategy and its alignment with key talent requirements. “Today’s CHROs have a real understanding of the dynamics of the market in which they operate, the competitive environment and the likely impact of technological advances,” says Mark. “They are able to interpret future trends into talent strategy, putting short, medium and long term plans in place that directly relate to the achievement of stated corporate objectives.”

Understanding where a business is heading naturally leads to future proofing and risk management. “CHROs not only have clear succession plans in place, but are now mitigating the risk of critical skill gaps by investing in pipelining activities to source and prep alternative talent,” he says. “Flight or poaching risk is increasingly counteracted by retention strategies, including the development of reward structures designed to tie in key management.”

Modelling and audit & analysis, meanwhile, have also moved to the forefront for today’s CHRO. Defining and shaping organizational models to support business goals is now an integral function of the role. “This demands an insight into peer group companies and a top to bottom re-evaluation of the best construct, systems and processes for extracting the maximum performance from people,” Mark says. “As with financial modelling, CHROs even do scenario planning to ensure the best chance of sustaining leadership capability.”

Auditing, for its part, is performed in a number of ways. “CHROs continuously assess the strengths and weaknesses of management, identify where real value is created, and focus resources on building expertise that is critical to ongoing success,” says Mark. “They benchmark existing employees against external counterparts and offer coaching to upskill where needed, conduct regular appraisals, and introduce KPIs relating to human capital productivity and value creation.”

Building Equity Through Branding

CFOs and CHROs are likewise both focused on equity, though it takes different forms for each job. On the financial side, shareholder value is what matters. CHROs, however, build equity in the form of the employer brand. “Employee engagement has been on their agenda for years but CHROs are now more sophisticated in shaping culture, gauging external perceptions of the employer brand and developing it to appeal to the type of candidate they want to attract,” Mark says. “This is increasingly seen as vital in appealing to the new generation of Millennial talent and top CHROs are putting the building blocks in place now, knowing that Millennials will comprise an estimated 75 percent of the workforce by 2025.”

When all is said and done, Mark makes it clear that businesses must never take talent for granted. He cites casino mogul Steve Wynn, who said: “Human resources isn’t a thing we do. It’s the thing that runs our business.” It’s a sentiment that Mark fully endorses. “CEOs have always been aware of the importance of human capital, but it is only recently that the CHRO has been elevated to the status of true strategic partner, on par with the CFO,” he says. “Today’s smart CHRO has come of age and could well be the CEO’s greatest asset.”

Contributed by Stephen Sawicki, Managing Editor, Hunt Scanlon Media and Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media

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