October 22, 2018 – The role of the chief human resources officer is changing again. Over the years, the best CHROs became much more focused on the business and its strategic needs. Today, however, the needs of the business have evolved — and with it so have the demands on the CHRO, according to a report by Heidrick & Struggles.
Long-established business models face disruption across sectors, said the report, co-authored by recruiters Brian Klapper and Mike Theilmann. As a result, HR leaders are being forced to focus much more on radically different talent needs, including elevating the employee experience and encouraging diversity and inclusion, while strengthening corporate cultures. The disruption touches all areas of the CHRO’s traditional portfolio: who and how to hire, how much to pay, how to develop and train, and how to rate performance.
The CHRO job, according to the report, has become much more like that of a chief transformation officer. To succeed, the 21st century CHRO must master five key skills that were barely even on the CHRO radar screen five years ago: embracing disruption, practicing agility, solving for organizational structure, employing data analytics and facilitating new work environments.
The study set out to explore how such attributes relate to the work of CHROs and what these executives can do to flourish in the new environment. “Companies that get the right person in this role will greatly improve their chances of being able to take advantage of the big changes afoot in the marketplace,” said Mr. Klapper.
5 Keys to CHRO Success
“The best CHROs at global enterprises bring to the table the flexibility and ability to adapt — as well as that ineffable quality to see around corners — that we observe in smaller, venture-backed companies,” said Mr. Theilmann. “These leaders have what boards of directors and CEOs are looking for in today’s CHRO: transformational skills.”
Such skills are embodied by five key attributes, said Heidrick & Struggles:
1. Embracing Disruption
Big companies are seeing their long-established business models disrupted, often by nimble start-ups. They’ve seen what has happened in retailing (e.g., Amazon), consumer goods (e.g., razor blades) and the automotive sector (e.g., ride-hailing companies, autonomous cars).
Brian Klapper is a partner with Heidrick & Struggles and founder of the Corporate Lab. He is an internationally recognized expert in operational and cultural transformation and has worked with global companies in a variety of sectors including: financial services, consumer products, manufacturing, food service, utilities, retail and healthcare.
Navigating disruption has become a key skill-set for CHROs. “As a CHRO, how do you help your company disrupt itself before somebody else does the job?” asked Mr. Klapper. “Some are creating partnerships with start-ups — or example, in Silicon Valley — and putting people on the ground there to become part of the ecosystem so that they can learn and establish complementary partnerships. Others are leading management teams by going offsite — not to stale meetings at lush country clubs or resorts but to visits with executives at innovative, fast-moving companies.”
Such meetings can benefit both parties, whether it’s simply a matter of sharing experiences or even developing partnerships or a strategic acquisition. “Forward-leaning CHROs are engaging with incubators or other business accelerators as another way of tapping into the ecosystem to be on top of potential industry disruption,” said Mr. Klapper.
2. Practicing Agility
Savvy CHROs recognize that industry disruption is anything but neat and linear and that even the best-laid corporate plans may need to be quickly altered to adjust to changing business dynamics. This makes agility a critical skill for CHROs to possess and to develop in their organizations.
“Agility implies the ability to spot opportunities and threats and to adapt and pivot faster than one’s peers,” said Mr. Theilmann. “It also means preparing for, withstanding and recovering from setbacks quickly. The key for CHROs, and other C-suite leaders, is to zero in on four core elements of agility that Heidrick research identifies as the most important: foresight, learning, adaptability and resilience.”
Today’s top CHROs ensure that leaders of the organization are continuous learners, able to spot threats to their industry and business. They also provide coaching to the C-suite to help leaders sharpen important skills such as self-awareness, as well as help the team develop a fail-fast-and-learn mind-set. “Such skills help leaders adapt to the changing environment quickly, be it in the form of new entrants to their space, a competitor’s strategic pivot, technology disruption or regulatory changes,” the report said. “The CHRO is the keeper of the company’s culture, and embedding these traits from the top of the organization through to those serving the customer every day fuels success for the business.”
3. Solving for Organizational Structure
CHROs must also be able to leverage the organization in new ways if it is to benefit from agility and move nimbly. The challenge for a CHRO is significant, said the report. Leaders must ask: How can I put teams together to solve a specific issue or problem, complete the project, and then redeploy those people — and do this in weeks, not months or years? How is this project informed by the company’s strategy, and what are the deliverables?
Related: Data-Driven CHROs In Demand
The challenge is compounded by hidebound tradition. For the past 100 years, said the report, the facts of corporate life have been, “I report to this person, that person reports to that person, then that person reports to that person, and that person reports to the CEO; I’m seven layers down.” By contrast, the goal today is, “I’ve got these types of skills, and I get pulled into these kinds of projects very quickly to actually solve a problem.”
Mike Theilmann is the global practice managing partner for the global HR officers practice at Heidrick & Struggles. He leads senior-level HR searches including CHROs, heads of total rewards, heads of talent management, heads of organizational development, chief learning officers, and heads of recruiting for companies in every industry.
Today’s CHRO clearly confronts a different organizational model. In other words, work is no longer defined by an organizational chart. Work must be determined by what a company’s customers want now. “In the gig economy, a company needs to move quickly to serve its customers—or somebody else will,” said Mr. Klapper. “That might mean attacking functional silos. Despite years of discussion in big enterprises, silos endure, limiting a company’s ability to reinvent itself, move faster, increase revenue, and better understand and delight customers. The best CHROs are working to eliminate silos.”
“Historically, when you’re in the C-suite, there may be a sense of ‘I’ve arrived,’ which therefore makes you less willing to take risks or invert the organizational model,” Mr. Klapper said. “Today, CHROs especially have to be willing to take these kinds of risks on behalf of the company — and bring the C-suite along on the journey — because of the disruption going on around them.”
4. Employing Data Analytics
Companies are beginning to employ data analytics throughout the organization, and the top CHROs are leading the charge in their areas of responsibility. They are using tools such as machine learning and artificial intelligence to help assess performance and organizational gaps, including diversity and inclusion issues; to better understand where decision making is taking place; and to assess internal talent in terms of developmental needs and readiness for new roles.
A large entertainment company is also using big data to inform its talent agenda. “Managing an operation with several hundred thousand employees is challenging to do on spreadsheets, not to mention a HR enterprise resource planning system,” said Mr. Theilmann. “The company is mining its data to make better staffing, promotion and deployment decisions.”
5. Facilitating New Work Environments
Not long ago, most employees went to work every day in offices. “As we know, that’s not how people work anymore,” said the report. “They work on the fly. They don’t want to sit in an office all day. They want to be able to work out of a coffee shop one day and at home another. They want to have flexibility. They want to be able to collaborate with their colleagues. And since we’re speaking mostly of younger generations who want and expect this type of flexibility, we don’t think this approach to work is going away anytime soon.”
An Up-Close Look at the Transformational Role of the CHRO
The HR role has transitioned tremendously over the past 20 years, as the function has gained in stature and prominence. But evolution in such a role does not necessarily come about by major changes and careful planning for the future.
“Particularly in technology and financial services, we’re seeing the work environment as an area of attention for CHROs,” said Mr. Klapper. “At one bank, the job of one high-level human resources leader focuses completely on the work environment. This isn’t just about what kind of snacks to offer but how the work environment can have an impact on engagement, collaboration, innovation and velocity — for example, how to move employees to virtual desktops and virtual machines. How to do this represents a new skill-set for CHROs.”
Wanted: The 21st-century CHRO
When CEOs and boards hunt for their next CHROs, they want people with transformational skills. “Mastering the five attributes we have discussed here will go a long way toward building a CHRO’s 21st-century tool kit,” said the report.
Some HR people seeking to move up to the C-suite proudly state in job interviews, “Here’s how I run the function.” Today’s CHRO role, however, is not about running a function, said Heidrick & Struggles. Of course, the CHRO is responsible for a human resources team. But the bigger job is about having a positive impact on the whole company — the business, employees, customers, and communities touched by the company. “To do that, the CHRO must master the aforementioned five key attributes,” said the report. “He or she must reimagine the work and therefore reinvent the human resources function. Achieving that will elevate the role to what it really needs to be today—the organization’s chief transformation officer.”
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