December 22, 2021 – More and more, CEOs have recognized the strategic role the human resources function plays in the core strategic issues their companies face, including growth strategy, mergers and acquisitions, restructuring, increased board oversight, and evolving governance and reporting. HR can also ensure that clear changes are made to recruitment and capability-building processes by determining the characteristics of a “purpose driven” employee and embedding these attributes within recruitment, development, and succession planning.
At the same time, diversity and inclusion executives have emerged as key leaders during this enormous period of transition. With a global workforce shifting in complexity, there is a growing need for diversity experts who can shape the vision, culture, and very face of organizations. Organizations and their very cultures thrive on diverse talent and it is now falling on top DE&I leaders to make it happen.
Executive recruiters are growing first-hand witnesses on how the HR role is evolving and the influence that diversity and inclusion is playing across human resources. Recruiting these senior leaders and their direct reports remains a key reason why search firms are busy today.
“In my 30-plus years of working with HR executives, this has been one of the most critical times I have seen for a company to have a highly capable HR function with strong leadership,” said Alan Berger, vice president, human resources search at StevenDouglas. “Setting and implementing a strategy of how to make sure the workforce stays engaged and highly productive in an onsite, hybrid or remote setting, with the headwinds of a labor shortage and unprecedented resignations, is incredibly challenging. In the end, the work has to get done and deciding on how that can be accomplished and under ever changing COVID rules and mandates falls squarely on HR leadership’s plate.”
The shift to remote and hybrid work is affecting HR executives’ jobs, Mr. Berger says, but many roles can be accomplished remotely without skipping a beat. “The challenge comes with organizations where the employees have to be onsite to accomplish their mission as in manufacturing, healthcare or hospitality,” he said. “While it was all very new to us back in March of 2020, most everyone I have spoken with has fallen into a groove and has adapted to the new normal. It’s created a new paradigm, but no one knows what the long-term impacts will be on company culture, loyalty and tenure.”
“The CPO/CHRO has become one of the most critical roles in the majority of organizations as they have been needed every step of the way to navigate the challenges of the pandemic and life after,” Mr. Berger said. “Whether it was addressing testing, communication, travel, PPP or coming up with a plan to set up employees with company equipment to work remote, HR executives had to think fast and come up with a plan that works for both the company and their workforce. They have to work like never before with every leadership function within an organization, to understand the challenges and opportunities that were created by the pandemic, and to come up with actionable plans for retention, employee engagement and talent acquisition in an environment where most employees have shown a preference for remote or hybrid work.”
Strategic and Nimble Leaders
The market has evolved to a place where most client organizations need to hire HR professionals who are strategic and nimble, according to Dana Feller, founder of Hudson Gate Partners. “Being a safe pair of hands is no longer enough,” she said. “To effectively compete, organizations need to have HR departments that proactively create human capital value. Before the pandemic, hedge funds and PE firms were growing their core infrastructure teams, but with less of a focus on strategic HR. Now that we are through the pandemic and firms are realizing that their greatest source of differentiation is often their work force, there is a huge need now to bolster HR teams.
The world has changed. The CFOs, GCs, and office managers who were executing HR functions before the pandemic now realize that HR cannot be cobbled together. It is much too important of a role. Post-pandemic, there are now huge legal and safety ramifications for employees, as well as more of a push for diversity.”
Funds have realized that HR must be a separate, well-defined department, and have a seat at the table, Ms. Feller said. “Also, as we find ourselves in the midst of the Great Reshuffling, the talent market has never been more competitive than it is right now. Talent acquisition and retention is crucially important now. There has never been a greater need to hire professional, pro-active, creative and strategic HR executives who know how to create a positive, vibrant culture that will attract and retain the highest quality employees.”
This year has changed the HR landscape dramatically, Ms. Feller says. “HR executives are now expected to be the gatekeepers when it comes to any health updates regarding the pandemic,” she said. “They are expected to redesign the offices to ensure the highest level of safety. They need to work with management to devise competitive flexible work options. All of these new, crucial responsibilities are in addition to all the other more traditional duties such as talent acquisition and strategy, performance management, compensation, total rewards, retention, succession planning, leadership & development, HR operations, and employee relations. And diversity and inclusion is at the forefront of every one’s priorities, and finding the best talent has become increasingly difficult.”
“Some key challenges facing HR executives today are managers who are unreasonable regarding working conditions,” said Juan Gaitan, founder and chief experience officer at Talento Human Capital Management. “Climbing compensation ranges also make retention and recruiting challenging,” he said. Then there are competing offers, he added.
HR is leading from the front, as never before, according to Wendy Murphy, managing partner and global practice leader at ZRG. “Not only is HR leadership stewarding the workforce, ensuring employees are cared for, and mitigating risk on behalf of employees and the employer, but also working with the CEO and leadership team to address whether the organization has the right operating model of the future,” she said.
“The digital transformation that most organizations had underway has been now been accelerated, impacting across employee populations, industries and geographies. Further, this acceleration of digital transformation poses an even more challenging question for HR: Do we have the right talent for the future and are we fostering the culture that employees want to contribute into? Cultural connectedness includes important aspects such as: regularly seeking employee feedback; short, fast and consistent communications from leadership and HR; and driving an employment theme that invites people into a friendly, highly inclusive, engaged and caring environment where individuals and team alike win, and the company drives impact.”
Ms. Murphy also notes that the Great Resignation is real. “HR is now leading in a different world,” she said. “Not only are we remote, but we are operating in one of the most competitive global talent markets society has seen in the last two decades. Talent is being poached, courted, and social media is providing a tantalizing and insidious path for people to explore the market, even for the most engaged leaders and employees. HR has never been more important in leading the initiative on attracting, retaining, developing, and leading a robust succession planning process in this hybrid workplace. Communicating talent practices, opportunities and employee engagement is mission critical to retaining talent, and it is HR’s job to get ensure they are partnering with their leaders to understand the needs of employees, motivations, etc. Culture is not HR’s job alone.”
Diversity & Inclusion
“Generally I think it’s clear that organizations are well intentioned in their efforts to address DE&I, many of which seek to gain traction in their acquisition of underrepresented professionals,” said Soladé Rowe, managing partner, diversity & inclusion practice at Jobplex, a DHR company. “Some organizations have done better by appropriately diversifying their leadership ranks by focusing on the meaningful success factors that translate to high performance and their readiness to assume roles of increased responsibilities.”
“More companies are creating roles for and hiring DE&I leaders,” said Dwain Celistan, managing partner, diversity practice at DHR Global. “Most of those roles continue to be staff and influence positions. For many organizations, their mission and metrics aren’t clear. It will be important to monitor their impact on attraction, retention, and promotion of diverse talent. Ideally, improvements in those areas will also correlate to improved business performance. Most of these new leaders are only moderately involved with talent acquisition. They are rarely the driver or decision maker on selection of leaders,” he said.
“Many larger firms, particularly with a consumer facing element tend to be more aware and involved in the area,” Mr. Rowe said. “By contrast, B2B, not-profits, PE owned, and mid-sized firms are likely to be laggards. There are many noteworthy exceptions to those observations. Consumer-based industries, both product and content, have been, for the most part, proactive in the DE&I efforts given the more direct correlation between their sales and marketing strategies directed to diverse consumers with increased purchasing power and the bottom-line financial results. It would be tough to single out an industry that’s behind the curve,” he said.
“I see diversity as the elements of everyone,” Mr. Rowe said. “Equity is creating an even playing field for everyone to compete. Inclusion is an environment where all have an opportunity to participate. This matters because we know through countless studies that diverse teams win; but also, those who contribute to that end also win.”
McKinsey & Company data has shown improved levels of diversity in board and senior leadership positions is correlated with improved business performance. “Within the context of our work with clients, we define diversity primarily via demographics, women globally, women and people of color in the U.S. These are critical measures,” Mr. Celistan said. “Inclusion is critical to keep a focus on engaging all employees. This enables organizations to retain talent and hopefully, get their full contribution. Diversity is very important in talent acquisition. We believe providing diverse talent is critical to our clients’ ability to evaluate the best talent in the market,” he said.
“I’m cautiously optimistic that the focus on DE&I will continue without the breaks that I’ve seen in years past,” said Mr. Rowe. “I do believe that we will see greater outcomes from underrepresented groups among the senior executive ranks in the years to come.”
“My estimate is that there will be a dichotomy,” said Mr. Celistan. “Organizations who have actively pursued DE&I efforts will largely continue. A portion will drop off and reallocate emphasis to other areas. It is unlikely that many firms not pursuing these efforts now will add them in the future. Leadership will be moderately more diverse. We’ve seen modest improvements over the past decade, and I anticipate that the trend will continue.”
Top human capital positions are becoming more mission critical to the success of an organization,” said Brad Newpoff, co-founder and president of MalinHughes. “This is the only C-suite position that is a true partner to every other C-suite position. Top HR leaders recognize that every company and every industry is going through a transformation in order to stay relevant. There is no right or wrong way to approach this but there is a critical need to do something in order to remain relevant. This is not a problem but a huge opportunity. Most companies have this very unique and special opportunity to reinvent themselves and how they relate to both their customers and employees. HR leaders will be at the core of this transformation,” he said. “They will be required to be the visionaries, strategic advisors and executors of new concepts and ideas that. Most importantly, he/she will be helping to maintain or recreate new company cultures that will send their employers on a new business trajectory,” he said.
“Many of the most progressive companies realize that the timing is now to reinvent and transform,” said Mr. Newpoff. “Human resources leaders will be managing more responsibilities than ever before as they help their company’s take advantage of this new business environment. In addition, understanding that flexibility is a new compensation and that the ability to work remotely or spend more time with family or to pursue outside interests is a currency that they can invest in to recruit and retain top talent,” he said.
“Executive search firms need to transform as well,” Mr. Newpoff said. “In order to continue to add value to our clients and specifically human resource leadership we first must understand the challenges that they are facing as well as being prepared to offer solutions above and beyond talent acquisition to help HR tackle these challenges. The value of our services will be more about creating and building long-term, value-added solutions, rather than just filling open positions. We must be innovative and help our HR partners stay ahead of industry trends so that they can remain competitive and build value for their organizations. Search firms must also wear multiple hats. We can no longer be just a staffing solution. But we need to be prepared with strategic insights on how to build a world class organization as well as having the right resources to assist our clients in accomplishing that.”
Pivot and Change
“In this time of great change and extreme competition for talent, HR leaders must be able to articulate, more effectively than ever, the company’s value proposition – why this company, why this role – as candidates are evaluating what is meaningful work for them and how job structures meet their personal situations. Recruiting methods are moving outside the box to reach passive, selective candidates,” said Elisa Sheftic, president and managing partner of Right Executive Search (RES).
“At the same time, HR has to be actively addressing those changing structures and practices to ensure that current, loyal and long-term staff feel engaged, valued and heard. This has been difficult in a more remote and hybrid work world, with the unfortunate overlay of politicization of COVID-related health and safety issues.” HR must remain a voice of reason, she said, while the ‘next normal’ is still taking shape.
“After the initial, sudden upheaval of the pandemic, HR is still showing its ability to pivot and change, and this is likely to continue as all the downstream effects on operations, workflow and corporate culture become more fully apparent,” said Ms. Sheftic. “In company budget hierarchies, HR was not always equipped with the latest technologies – but now that’s critical. They need to be able to recruit, onboard, train, and coach virtually, and to do a lot more strategic analysis with their data beyond personnel recordkeeping. Data helps to show what’s working and what’s not, without the bias and emotion that may be swirling around them. At the same time, the basic human issues of group and individual engagement and employees’ mental well-being in a more remote world have never been more critical. Employee relations remains a focal point.”
The best executive search firms work with HR as strategic partners, not mere recruiters, Ms. Sheftic said. “Companies looking to fill senior roles should seek search firms with expertise in attracting and vetting talent in that distinct career field and expect to have in-depth and ongoing communication about the role and the qualities that make a good fit for the organization. Outlining the requisite skills and experience is just a start. To make the right hire, you’ll need to determine soft skills, leadership styles, environment, focus, pace, agility, and more,” she said.
“Sometimes the desired ‘nice to have’ attributes emerge gradually during the interview process – you didn’t realize you needed it until you didn’t see it,” she said. “A great search firm helps you recognize and refine all the details. And finally, what is the company offering? Is it staying competitive in the talent war? A good search consultant will help you promote the value proposition of the company as an employer and the benefits of the position itself – be it challenge, fulfillment, work/life balance, or growth potential – as well.”
“In today’s world of hyper-accelerating change and uncertainty, the people function is emerging from the pandemic as an evolving space of rapidly increasing importance,” said Katie Chevis, associate partner, HR, people and culture practice at Savannah Group.
“Where it used to be the case that the competitive advantage of a business was defined by its products and services, it is increasingly recognized that people, talent and culture are critical differentiators to business success. With many organizations undergoing ground-breaking change and transformation, navigating ever-accelerating digitization, rapidly evolving customer behavior, seismic social shifts and enormous changes in traditional and potential products and services, organizations without exceptional people functions are going to quickly lose ground,” she said. “The right leadership of the people function has never been more important, nor has it had the scope to be more impactful. All organizations, no matter their sophistication or size, are acutely aware that they have to get people matters right.”
The right executive search firm is a true partner, an extension of the brand and organization that they are supporting to attract and engage with the very best possible talent, Ms. Chevis said. “Having the right ambassador out in the market on your behalf has never been crucial. The war for talent has never been stronger, and innovative, inspirational leaders are in high demand right across the board. A well networked and respected search firm can open doors and elevate conversations for you which you may not be able to do yourself, as they have the dialogue and trust already with these candidate pools.”