Why Chief People Officers Can be Great CEOs

June 20, 2023 – There is a growing shift in the way that companies view their people and culture function. No longer simply the human resources department or another cost center, the name change appears to be helping people and culture become recognized as the strategic business partner they always were – one that not only enables but also plays a crucial part in helping to drive organizational success, according to a new report from TRANSEARCH International’s Silvana Pardo. “A chief people officer can play an integral role in the executive leadership team, and often serves as a key advisor to the CEO) – a trusted right hand,” said the study. “Certainly, the pandemic elevated the role of human resources further, inspiring CPOs (and other leaders) to think about the well-being of their people and innovative ways to ensure their organizations continue to have a positive culture.”

“Based on the evolution I have witnessed over the last decade in human resources, observing first hand through consulting how P&C professionals and chief people officers are perceived, there appears to be a growing recognition of the potential for a CPO to be an effective CEO,” said Ms. Pardo. “In practice many chief people officers take on broader responsibilities and play a more strategic role within an organization. This has led to a greater recognition of the skills and competencies that CPOs bring to the table.”

Can a CPO Be Seen as a Potential Successor to the CEO?

“If we agree that chief people officers play a critical role in the leadership of an organization, it is interesting to consider why it is not more common for CEOs to have a career background in the people and culture function,” Ms. Pardo said.

The TRANSEARCH report says to consider the following examples of an executive who successfully transitioned from CPO to a CEO role:

Susan Lloyd-Hurwitz began her career in human resources and held senior HR positions at companies such as Westpac and the Australian Gas Light Co.. She was then appointed as the chief people officer of Mirvac Group in 2007, before being promoted to CEO in 2012. The Financial Review recently reported: “Outgoing Mirvac CEO hailed as a true leader of our time. When Lloyd-Hurwitz was parachuted in to lead the company, some thought she would not last. She leaves next month after a decade of transformation and with the business thriving.”

Mary Barra was another who ascended to the role of CEO and chair at General Motors, making her the first female CEO of a Big Three car manufacturer. She was the VP of global human resources earlier in her career. Ms. Barra is now ranked in the top five on the Forbes list of The World’s 100 Most Powerful Women.

Related: Finding HR Leaders and Diversity Chiefs Remains Hot Spot for Executive Recruiters  

“In recent years, there has been an even greater emphasis on people and culture, as companies both feel the impacts of a global talent shortage and recognize that their success is dependent on retaining a highly engaged and motivated workforce,” Ms. Pardo said.

Transferrable Skills from CPO to CEO

While a solid understanding of financial management is an important aspect of a CEO’s role, a financial background may not be necessary, according to the TRANSEARCH report. “There’s a strong argument to say that a CPO can make an excellent CEO without the financial background, by leveraging their strength in other critical skills and competencies that are equally important,” said Ms. Pardo. “Qualities such as leadership, strategic thinking, problem-solving, communication, stakeholder management, and change and transformation. Financial acumen will be enhanced by working closely with financial experts, and can be further developed through professional programs.”

Silvana Pardo is a director of TRANSEARCH International Australia. She has over 25 years of experience and an extensive business network of human resource professionals. Ms. Pardo has worked with C-suite and executive leadership teams in global, national and SME organizations across a range of sectors including: Manufacturing, FMCG, industrials, government, health, community service, education, retail, aged care, not-for-profit, hospitality, arts, and sports, leisure & entertainment.

Ms. Pardo notes that the best people leaders are not and cannot be subject matter experts in all functional areas. “Instead, they harness the expertise of their teams and lead organizations by providing strategic vision,” she said. “They understand operational excellence, inspire people at all levels of the organization, are great listeners, and develop their people to be the best they can be.”

“High-performing chief people officers who are exceptionally skilled and effective in their roles, are typically well respected within their organization and considered to be among the best in their field,” said Ms. Pardo. “Their expertise in organizational culture, transformation, and strategic thinking can be leveraged to create a positive and high-performing workplace culture that drives business growth and success. CPOs are also skilled communicators who excel at building relationships and collaborating with cross-functional teams, which are essential qualities for any CEO.”

TRANSEARCH is a global search firm with representation in all of the major economic capitals, with about 60 offices in over 35 countries. It was founded in 1982 and today completes more than 1,500 senior executive search assignments a year. Its global client base is in the financial services, technology, consumer and retail, life sciences, and industrial and resources sectors.

Related: How the Chief People Officer is Reinventing HR

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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