July 12, 2019 – Successive waves of global disruption — political, social, demographic, technological — are compelling today’s CHROs to consider how they may safely bring their organizations, and specifically their people, through the turbulence.
But that disruption also presents an opportunity for them to examine how, and how swiftly, their own roles must change.
A new report from Spencer Stuart, ‘CHRO 2025,’ delves into how that disruption is impacting top HR leaders.
The firm spoke with various CHROs about the challenges they face in order to gauge what the CHRO of 2025 might look like. Spencer Stuart discovered that it is apparent that expectations of how the HR function needs to change are outpacing the speed at which the profession is actually upgrading.
If the CHRO is going to carry weight in the C-suite, this seemingly perfect storm of upheaval demands an agile and complex response, said Spencer Stuart. An overhaul is already under way, as more and more boards — and CHROs themselves — recognize that a transformational CHRO need not come from an HR background. Increasingly, CEOs expect their CHROs to bring strong business acumen and an understanding of how the organization makes money — and how that feeds into top-tier decision-making.
As technology such as AI, predictive analytics and blockchain automates and streamlines significant parts of HR, the CHRO of 2025 will be open to technology’s role in bringing greater capacity and value to what will very likely be a more focused HR function. “An intelligent, forward-looking response to fast-evolving expectations of HR’s role can strengthen both its visibility and viability,” the report said.
Spencer Stuart talked to Hein Knaapen, CHRO at ING, who is steering his HR function through a major transformation from local admin to global services. “Our HR function is in a state of continuous development, steering away from our federated legacy towards offering global solutions,” Mr. Knaapen told the search firm. “For this we need more data analysts and the ability to formulate the right questions for them to work on. We also need more innovation in the function.”
Safe navigation of these many disruptive changes demands the focus of HR leaders to shift from hands-on administration to strategy, said Spencer Stuart. An insular function will struggle to contribute; rather, the tech-aware, business-focused CHRO of 2025 will seek to promote flexibility in their organization by breaking down hierarchies and streamlining processes.
Business is Everybody’s Business
“Many CEOs are already recalibrating the skillset they will expect from their CHROs in 2025 — the primacy of business ability, alongside a grasp of technological possibility, is evident in the way they view the function, just as it is among the CHROs with whom we spoke,” said the report. “CHROs should have plenty of business acumen if they are to play a central role in the evolving strategy of any organization. The emphasis of every CHRO’s core capabilities will have to shift to that of a business leader first and foremost.”
Valerie Frederickson has helped hundreds of companies during the past 20+ years build and improve their HR organizations. She is founder, managing partner and CEO of Frederickson Partners, an executive search consultancy specializing in HR. In the following interview Ms. Frederickson discusses the evolving roles of CHROs. Here are excerpts from that discussion.
Valerie, what is your expectation for how the role of the CHRO will evolve by 2025?
By 2025 the global workplace will be dramatically different from even today’s most forward-thinking, high tech employers and the skill sets and expertise—the very nature of the type of person who will inhabit this role—will be vastly different from today. The employees will be an increasingly two class workforce of the ultra-skilled and educated, and the service workers whose entire jobs will continue to disappear. The highly educated, specialized workers will be able to pick and choose between opportunities even more than today. How you recruit and engage these employees, and how you make sure that you keep enough of the internal corporate employee knowledge and learnings when so much of the workforce is transitional will become increasingly critical concerns for HR executives.
How do you see data and technology impacting the CHRO role and the search process?
Since 1993, I have planned that up to 1/3 of our duties are replaced by technology annually. This strategy has allowed us to invest deeper in to technologies that allow us to do our work better, faster and with more meaningful expertise while saving time and money. Our continued technology transformation allows us to provide more strategic value through sharing data analytics, giving seasoned advice and developing even deeper personal relationships with our clients and HR candidates.
Where do you focus on adding value?
We focus on adding value to our CEO clients through HR strategic whiteboarding sessions, determining what their HR/People organization should look like as their headcount and revenue grow, and helping the best candidates understand what next turn they should take in their careers. We counsel candidates on their values and how to get more meaning in their professional lives and perform deeper selection and assessment exercises.
Is there a specific characteristic that you believe will be the most important for an effective CHRO over the next five years?
Be the disrupter. Embrace disruption. Plan for change. Gather information from the limited amount available and plan for the future. Connect the dots and synchronize information from many sources.
Chris Van Steenbergen, CHRO at Heineken, told the recruitment firm that he believes that “the kind of credibility that comes from knowing the business, talking the business’s language,” is becoming non-negotiable. “One way to get that credibility is by having been a business leader yourself.”
“Thus, if a CHRO does not thoroughly understand the business, they will struggle to contribute at the highest level,” the report said. “If by 2025 the HR function is to take its rightful place at the heart of business strategy, then organizations must concentrate on recruiting people into the function who are willing to pursue more than a single-stream specialism — people who are potential general managers.”
Andreas Hugener, CHRO at Swissport International, said that HR teams today are still far too absorbed in operational and transactional tasks such as administration and payroll, a view echoed by many interviewees. “The continuing digitization of all business processes is the game-changer,” he told Spencer Stuart. “It enables us to automate a growing share of our processes and frees up capacity to shift our focus from transactional tasks to actual value creation for our employees and the company — more forward looking, and nimble in unlocking growth potential. Going forward we see more fluidity and less functional separation. The HR function will change fundamentally.”
Data is Your Friend
Several CHROs that Spencer Stuart spoke to described their function’s use of analytics and technology as so accomplished that their CIO colleagues were using data that was coming out of the talent resource. To avoid internal friction around data ownership, it is critical for the CHRO and the CIO to define clearly how they will work together.
“That said, many of those who joined our discussions observed that the HR function is still insufficiently engaged with technology, data and analytics,” said the report.
Phil Read, senior vice president of HR at Tetra Pak, said that an effective CHRO will understand not only how to marry data analytics and business judgment, but will have the confidence to use that skill to influence business decisions and to drive the agenda. “There’s no need to be a tech geek but you do have to understand how HR fits into a digital world,” he said.
Think Like a CEO
To understand how the nature of work will change over the coming years, CHROs will have to adopt a more externally-facing approach to their role similar to what is seen in the most successful CEOs. “CEOs thrive on the value of networking with other CEOs and are not afraid to benchmark themselves against their peers,” said Spencer Stuart. “By acting as ambassadors for their own organizations, they share and receive high-quality insights across a range of businesses, industries and indeed countries they might not otherwise encounter.”
If some HR leaders have not prioritized networking with their peers in the past, now more than ever they must expose themselves to cutting-edge thinking in order to anticipate the direction work will take under the rapid adoption of digital, AI and analytics. Outward-facing CHROs tend to be intellectually curious, open to learning and eager to explore possible sources of best practice, for example by engaging directly Silicon Valley tech companies, said the report.
Foster a Learning Mindset
External networking is not the whole story. Instead, many CEOs expect to see their functional heads eager to learn from multiple sources at all levels in their organization, said the report. CHROs need to embody open-mindedness, inquisitiveness and inclusivity if they are to lead their HR function through the next phase of digital transformation.
By 2025 all CHROs must hope to foster a work environment imbued with a powerful sense of spirited curiosity — a culture of learning that endorses the idea that it is possible to learn from any person anywhere in the organization at any time, said the search firm.
Develop and Retain Talent
Some of the CHROs Spencer Stuart spoke to advocated cooperating with other companies to give high-potential staff opportunities for rotation into non-HR fields — a model that can act as a powerful retention motivator for talented staff.
“We must be progressive in how we partner up with our suppliers, vendors, and other organizations and do more talent exchanges, bringing talent back once they’ve been exposed to a range of different experiences,” said Abbe Luersman, CHRO at Ahold Delhaize. “Talented employees are going to expect work to be more fluid and flexible — they’re going to expect work to be defined differently.”
This rejection of the narrow HR career path and enthusiasm for professional experience outside the function is welcome, said the report. It is closely related to the growing idea of bringing people into the CHRO role who have been exposed to other functions and who can demonstrate business acumen in addition to technical expertise and broad-based functional knowledge. Spencer Stuart said it is also seeing greater value being placed on those who have been exposed to customer-facing roles, as well as those with overseas experience.
What Great HR Looks Like
Jason Hanold is managing partner of Hanold Associates, an executive search firm specializing in HR leadership recruiting. He serves a large global client roster that includes Nike, eBay, Google, Riddell, Fossil, the NFL, the UFC, and Amazon, among countless others. In the following interview. Mr. Hanold discusses the evolving role of CHROs and how they are adapting in the 21st century. Here are excerpts from that discussion.
Jason, with the CHRO role evolving so much in recent years are there any new traits that companies seek in their incoming HR leaders?
The expectations continue to heighten as boards and CEOs become more sophisticated in their appreciation and understanding of what ‘great HR’ looks like and can accomplish. Today’s contemporary HR officer must possess ever deeper business acumen, and credibly voice substantial perspectives on the business beyond just people practices. Unfortunately, too many CEOs report that they simply want one who is ‘proactive’ in their approach. That is a pretty basic operational characteristic – it’s fundamental – and some still occupy that top role yet do not drive and own their results. More companies are thinking of the CHRO as a potential successor C-suite executive role, including that of the CEO.
What can HR leaders do to adapt to the evolving CHRO role?
The most distinctive HR leaders absorb and elevate with their respective businesses. They consume more about their business than anyone in the company. They learn about the agenda and outcomes from board meetings and they have advisors who are business leaders, outside of HR. They always have perspectives on the business, beyond just people and talent issues and implications. Really seasoned HR leaders stay interested and become known for an invaluable gift that they bring the executive team outside of the HR know-how.
What do CEOs expect from their CHRO, and will that change?
It has already changed, the pendulum has swung, and the functional leaders will continue evolve. CEOs expect more from their CHROs than ever, including viewing the best CHROs as potential eventual successors to the CEO role. If the CHRO is not evolving they are being moved aside for a business leader who is driving the strategic talent agenda, while executing with operational discipline and savvy. CEOs are thirsty for a leader who is proactive, action-oriented, accountable, transparent and financially literate with a growth-mindset and a continuous learner.
A core aspect of retaining talent is assessment, specifically for the purposes of development and to discover where talent might effectively be redeployed. Willie Smit, CHRO of Nyrstar, said he believes that the speed at which organizations develop talent is too slow to keep pace with what lies ahead. “There needs to be heavy investment in the assessment of people, since we have only scratched the surface of developing the potential the talent that is there,” he said. “We must also have a more flexible approach to talent management, moving people around the business — the days of keeping someone in a role for three to five years are gone.”
Martha Desmond, CHRO at Apollo Tyres, said she believes that the way HR skills are being taught is too theoretical. “It is a much more fluid, ambiguous world today,” she said. “We also need to have more learning innovation to replace traditional and outdated methods such as classroom learning.”
Still All About the People
As working patterns evolve and the employer brand becomes more closely aligned to the purpose of the organization, CHROs will have to ask themselves these questions: What do people want out of the workplace? How do you best motivate them? How do you keep your workforce connected to you as they adopt different, networked ways of working?
Arne-Christian van der Tang, chief HR officer at TomTom, said that the modern HR challenge is to create a differentiated employee experience — people services are moving away from traditional HR. Yes, one needs to be able to “connect the dots within the organization,” he said. “But the best way to improve employee engagement remains to “make sure you’re an outstanding employer.”
10 Key CHRO Characteristics
1. Social Skills
Waves of disruptive factors do not erase the fact that HR is about people. Integrity, empathy, human understanding, good judgment and independent thinking remain essential to the credibility of any HR leader
2. Communication and Negotiation
The CHRO must demonstrate they have the communication and negotiating skills to allow them to convey clarity, confidence and influence at all levels of their dealings. That means talking, being a moderator, but without losing sight of the assertiveness to follow through on strategic decisions. Articulating the company mission and strategy clearly is critical at a time when the waves of change-driven initiatives may seem endless to all levels of an organization.
3. Business Acumen
Preferably achieved by meaningful time spent working on the business side of an organization, and allied to a clear understanding of how a business makes money. This aspect is fast becoming at least as evident in the modern HR leader than previous HR experience, as boards recognize that a CHRO is more valuable as a strategic partner and innovator rather than an overseer of processes. In addition, understanding profit and loss, being able to read a balance sheet, accelerates how a CHRO is able to align HR with overall business strategy.
Confidence in technology and data, and openness to the contribution they can make to a business when harnessed to free up the HR function rather than encumber it. Willing to identify and then delegate tech strategy in innovative and assertive ways. Proven transformation skills in this realm.
5. Exceptional Networking Ability
As global changes make their presence felt in the HR suite, the successful CHRO will be exploring how and where that outside world is taking the function. That wide-angle view of the world is also what characterizes the outward-facing spirit of exploration and engagement seen in so many successful CEOs. A well-networked CHRO possesses a wide set of connections both in and outside their organization, knowing that it plays a key part in understanding the big disruptors — current and future — that are changing business.
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6. Strategic Thinking.
The CHRO will be a willing partner in driving strategy and delivering insight, in and outside the organization. Just as business has radically changed shape, so too has the workplace. The HR leader has to be a trusted advisor to the CEO on what this means for the business.
7. Driver of Innovation.
Beyond identifying where — and what — disruptions are pushing the future of work, a CHRO also has to show that he or she understands their implications and that they possess superlative change management skills capable of identifying and driving the innovations needed to survive the upheaval.
8. Cultural Fit, Cultural Change.
The CHRO needs to forge relationships of trust and confidence with the CEO and board chairman in particular. Over and above this, he or she has to be an excellent fit with the corporate culture of the organization, allied to an unerring instinct for identifying its more nebulous characteristics — and for fixing them when needed. They should demonstrate the clear ability to drive cultural change at an organization.
9. International Experience.
Boards increasingly value this facet in a CHRO. It shows the kind of openness and international mindset that allows the cultural nuances of a diverse workforce to thrive, rather than flattening them into shape to fit a wider organizational culture. Someone who has lived and worked overseas is also likely to have a heightened level of adaptability, a spirit of curiosity and on-going thirst for knowledge and experience.
10. Talent tracking.
Demands for talent grow ever more specific and urgent. A good CHRO will initiate ways to track high-performing individuals into a variety of business-critical streams, for example, by rotating them through a variety of functions. Nor are they afraid to accomplish this by partnering with outside organizations to deliver talent exchanges — recognizing that such opportunities are significant levers of retention. And it is this kind of openness and collaboration that reinforces the mark of a confident, learning-oriented CHRO.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media