How CHROs and CPOs Can Become CEOs

The importance and value of CHROs and CPOs to organizational success has grown substantially in recent years. In a new report, NGS Global says that now is an ideal time for CHROs and CPOs to think about how they can contribute as a CEO. To be seriously considered for the role, however, four “must-haves” need to be in place. The firm lays it all out.

April 19, 2023 – Today, organizations are arguably more people-centric than they have ever been. Recruiters are saying that company culture and employee well-being are now fundamental gauges of company health. Inflation, economic uncertainty, and the pandemic presented a medley of challenges to organizations, not least the ones that involved the employee base: health and safety standards, hybrid work, and employee engagement, just to name a few. The latest research indicates that while inflationary pressures and economic uncertainty point to employees’ renewed concerns about financial compensation, other concerns, such as work-life balance and ethical alignment with their employer are still front and center to the work-related choices people are making right now.

All these elements playing out through the heartbeat of organizations are the core responsibility and remit of the chief human resources officer or chief people officer. “Other imperatives, such as attracting and retaining talent, gaining better insights from recent analytical advancements, as well as improving DEI, make this role an absolutely critical component of the C-suite,” according to a new report from NGS Global’s Cindy Yang, Bob Bellano, and Fernando de Zavala. “As recently as 10 years ago, however, an organizational HR head very often reported to the COO or even the CFO. The HR function has very rapidly transitioned from a mostly administrative role to a central strategic one, and has often become tied to executive committees, as well as a trusted advisor to CEOs in major corporations.”

NGS Global points to a few major brands that now have former HR leaders as CEOs: Chanel (Leena Nair) and Anthemis (Briana van Strijp) are just two of many examples.

The report says that it’s to be expected that some top-tier CHROs and CPOs feel they have the requisite skill-sets to lead organizations as CEOs. “They understand the employee mind-set, and have a strategic comprehension of how to build an environment that enables passions to take tangible shape into products, services, efficiencies, and client satisfaction,” the NGS Global report said. “Yet there are other experiences they will typically need to acquire to be considered for the CEO chair.”

Cindy Yang is managing partner, Korea at NGS Global and is based in Seoul. She has over 20 years of experience conducting senior-level executive search assignments, with special emphasis on the consumer, technology and life science industries. Ms. Yang’s client base includes multinational companies undertaking business in Korea, as well as Korean companies expanding their global operations. She focuses on recruiting country heads and other C-Level executives across all functional areas, including strategic planning, sales and marketing, finance, and human resources.

NGS Global notes that there are four “must-haves” for CHROs and CPOs to be considered as CEOs. The firms says that these suggestions apply to most industries and organizations, although there would also be additional skill-sets required in certain sectors.

1. Accountability for a P&L 

A key component to both consideration and success as a CEO is demonstrative responsibility for a P&L, according the NGS Global report. “Almost always, especially in the commercial sector, CEO candidates will know how businesses run from running a business,” the study said. “They will have a deep understanding of business models: how the business makes money, how it garners a profit, and how it sustains that profitability over time. CHROs and CPOs don’t traditionally have this skill-set. They can gain this experience by taking on additional responsibilities such as leading a business unit or serving on the company’s executive committee.”

Related: Are Today’s HR Leaders Ready for Tomorrow’s Challenges?

The report says that developing a deep understanding of the company’s business strategy and financials is paramount. The firms notes that additional competencies can also be gained through executive training and development, such as an MBA or other postgraduate finance degree.

2. Multi-Faceted Executive Experience

“Many leaders are exceptional at what they do, but are siloed in their skills, expertise, and outlook,” the NGS Global report said. “CHROs and CPOs looking to become CEOs need to have a considerable level of multi-faceted executive experience throughout their careers, which showcases an individual’s mettle and ability to think beyond traditional departmental boundaries. Those with cross-functional experience and/or international exposure will be favored for CEO consideration. CHROs and CPOs who have led other functional areas, such as sales, operations, or finance, will have a clear edge.”

Bob Bellano is a senior partner in the Los Angeles and Newport Beach offices of NGS Global. With over 25 years of experience in executive search, he has conducted numerous search assignments for CEOs, presidents, CFOs and senior leaders in operations, engineering, technology, business development, marketing and sales. He has placed executives throughout the Americas, Europe and Asia within Fortune 1000 companies, as well as small- to mid-size organizations, many of which are private equity- or venture-backed. His areas of expertise include technology, business services, healthcare, entertainment, interactive media, industrial, defense and infrastructure/engineering services.

The search firm also notes that experience leading even a portion of an additional functional responsibility is an advantage. Additionally, the firm says that managing teams and aligning strategy across different geographies and cultures will be seen as extremely relevant to any potential CEO appointment.

Related: How Today’s CHRO is Managing Disruption 

3. Big Picture Vision

Long-term, strategic thinking is an essential ingredient for CEO success, according the NGS Global report. “As leaders, they have an ability to envision the business, and make short-term decisions that benefit the organization over longer timeframes,” the search firm said. “Part of this decision making comes from top-tier experience, and part of it comes from having an intimate knowledge of the company’s competitive stature in the marketplace, and a vision for what can be achieved.”

Fernando de Zavala is managing partner Iberia based in the Barcelona office of NGS Global. He brings a global background of experience with over 11 years of experience in the Americas, 12 years in Europe and seven years in the Asia Pacific region. His career has been focused mainly on the human resources industry.

For CHROs and CPOs, NGS Global says that it’s important to establish your own informed and considered vision for the organization, and how you will lead as CEO. “Communicate this clearly and effectively,” the firm said. “To establish this vision, actively seek out learning opportunities within the business. Participation as an active member of the board is ideal, which will enable access to big picture strategic challenges and opportunities, as well as provide insights around the priorities of other functional leaders (the CFO, COO, etc.). More broadly, develop a thorough understanding of your key industry trends and emerging technologies. Developing a digital-centric mindset to solving challenges is beneficial.”

4. An Effectively Supercharged Network

Navigating complex challenges and driving business growth is the hallmark of CEOs, yet they are only as good as the network they have around them. “Having the support of not only the senior executive team, but the broader management structure, and the employee base, is imperative for success,” said NGS Global. “The current focus on company culture means that successful CEOs have to foster positive, collaborative and transparent working environments.”

CHROs and CPOs usually already excel at this must-have, and tend to have more experience in this than CFOs or COOs. “They are, as their title implies, people people: they usually have very well-established company networks, with stakeholders, the board of directors, other executives, and of course employees,” the search firm said. “Establishing even stronger strategic ties, both internally and externally (think: investors, government, media) is prudent.”

Related: The CHRO Trends for 2023

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media

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