February 16, 2017 – Chief executives increasingly recognize the positive impact that HR can have on talent attraction and retention, setting company culture, and defending the bottom line. Consequently, they are demanding more and more from their top C-suite HR leaders, particularly chief talent officers and CHROs, who are responding by elevating their functional performance to deliver more for the business.
What can CHROs do to set themselves — and their teams — up for success and deliver on the promise of an engaged, responsive, and strategic HR function?
According to a report by Heidrick & Struggles’ alumnus Brian Bark and managing partner Daniel Kaplan, the CHRO’s first priority must be to ensure that he or she has a skilled “top team” in four core areas: talent, total rewards, shared services, and business partners. Assembling this team requires CHROs to embrace expanded leadership within the department to establish a culture of performance excellence as well as identify and mentor promising candidates.
While insights gleaned from the report are largely intended for new CHROs, veteran HR leaders should take note as well. Like their counterparts across other business departments, HR functions everywhere must continue to evolve to meet an ever-rising standard of performance — or face the consequences. Finally, for a CEO or board looking to bring on a new HR leader, hearing a candidate’s views and plans for these four roles can provide useful insights into how a would-be HR leader approaches the job.
Four Key Roles
While the pressure to make an impact and “get wins” is intense during a new CHRO’s tenure (and rightly so), the report authors found that upon joining an organization or being elevated within the company, the most successful CHROs make time to quickly assess the strength and depth of their HR teams in four key areas.
The leaders in these areas have disproportionate influence on the fortunes of HR — both in how it performs and in how it is perceived across the organization. The ideal is for all HR leaders to be business operators first and technicians second. For CHROs to achieve their vision for HR, at a minimum, the following four positions must be filled by highly capable leaders:
1) Chief Talent Officer
This role is no longer solely about attracting and retaining talented individuals. Increasingly, CEOs and boards recognize the one true and distinctive business advantage that can’t be easily replicated is people. Therefore, the talent director must be able to grasp the company’s strategy — for example, expanding into new regions or entirely new businesses — and find candidates with the right mix of skills and experience to execute it.
2) Total Rewards Director
Employees in this position must have not only a thorough understanding of compensation and benefits but also the acumen to work collaboratively with executives on tailoring these programs to support the business.
This role, often overlooked as transactional in nature, has the potential to make an important contribution to a company’s success. Rewards are a critical component in attracting the right talent, and when they are properly synced with the business strategy, companies set themselves up for success. Without this alignment, they often fall short of their goals or even fail spectacularly.
A Front Row Seat
Moving human capital managers from total rewards – including executive and incentive compensation specialists, benefits leaders, and communications & HRIS experts – into higher ranking HR leadership roles is big business for recruiters with an eye on this important ‘function within a function.’ Total rewards requires a comprehensive understanding in specialized areas, notably compensation & benefits. Danielle Kirgan, senior vice president – people at American Airlines, where she leads the global HR function, said it, in fact, prepared her for the position she now holds. “It was critical experience that made my move to CHRO possible,” she said. “The exposure to the board of directors, the mechanics of the core work related to the peer group, proxy disclosures and discussions about the business plans and incentives,” said Ms. Kirgan, “these were all areas that would otherwise have been less natural to have been seen and experienced in any other non-CHRO role.” In total rewards, she noted, you have a front row seat to appreciate all the nuances and details that go into CHRO roles ….. Here’s some further reading from Hunt Scanlon Media.
This Feeder Function Puts HR Leaders on Fast Track to CHRO
In building Tower Consultants, Ltd. into a leading executive search boutique dedicated to human resources with an emphasis in the total rewards sector, Donna Friedman and Chris Rose never deviated from an original blueprint first laid out in 1988.
3) Shared Services Director
As the “engine room” of HR, shared services is often overlooked (or, worse, maligned) because, much like total rewards, it is perceived as more transactional than strategic: a source of cost savings and little more. This is a mistake.
Besides the traditional abilities to enhance service efficiency and save money (for large companies, often in the tens of millions of dollars), this function fields requests and captures a wide range of data from across the organization, giving its leader a unique vantage point to identify important workforce issues and trends, spot opportunities, and even sound the alarm when the work environment shifts unexpectedly.
The role also oversees service excellence and transactional competence — a vital element in the CHRO’s agenda. In our experience, no thoughtful discussion of strategy, talent, or other high-value-added endeavors will occur if the only thing anyone focuses on is how an HR group’s shared services team is underperforming.
4) Business Partner Director
In larger organizations, HR often embeds members of their team in different business units, and these professionals report directly to those leaders (with a dotted line back to the CHRO).
As the face of HR throughout the organization, business partners have a huge impact on the value of the department and how it is perceived. However, if these positions are populated by individuals who focus more on being gatekeepers and risk managers rather than a strategic resource, business units will lose faith in HR’s ability to support them.
Worse, business partners may become so closely aligned with the business unit they serve that they lose sight of the priorities of the global HR organization.
Given a CHRO’s full slate of responsibilities, from working with the board and C-suite to strategic planning, the task of managing business partners sometimes falls through the cracks. Due to the importance of business partners to HR’s performance and internal reputation, CHROs should consider creating the role of business partner director if it doesn’t already exist. While only about 20 percent of companies have this position, the report’s authors have found that it is crucial to executing a well-coordinated HR strategy — particularly in large, global organizations. CHROs neglect this role at their own peril.
Focus on Leadership
Ultimately, the CHRO is wholly responsible for bringing in and developing the right team — but this task requires a different level of leadership, one in which strategy and vision are matched by a sensitivity to the team’s potential to grow and adapt. The most successful CHROs think of themselves as CEOs of HR. Just as savvy CEOs evaluate the executive team upon taking the helm and make the necessary changes, CHROs should also assess all direct reports and be prepared to take decisive action to put qualified people in core positions.
High potential candidates for these roles will possess not just the requisite experience and ambition but also a high degree of emotional intelligence — in this case, an ability to work well with executives in order to connect the strategic dots.
Since few candidates embody all of these traits in spades, CHROs must dedicate time to unlocking the full potential of the department’s talent and developing the next wave of HR leaders. Proven methods include rotating HR staff through key positions in other business units to give them a different perspective on the company as well as assigning team members to projects outside their specific area of HR expertise. Through such initiatives, CHROs can build stronger teams and demonstrate lasting value for the business.
Contributed by Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media