The significance of the chief HR officer is on the rise. Driven by a combination of factors such as a shortage of talent, increasing compensation transparency and CEO recognition that organization capability is the most critical component to business success, corporate boards are recognizing the need for and inherent importance of the CHRO role.
No longer the administrative and policy figure heads, CHROs now sit in the C-suite and are found on corporate boards with greater frequency. According to Equilar, a provider of board intelligence, the number of CHROs appointed to the boards of publicly traded companies has tripled since 2005. There is even emerging evidence of a pathway to CEO, as evidenced by the ascension of Mary Barra at General Motors.
As the appetite for strong CHROs grows, CEOs are faced with the challenge of finding the right individual for this highly complex and important leadership role. It stands to reason that they would consider executives with a traditional HR background, from either within or outside the organization—someone who can potentially transcend HR and become an enterprise leader with a vision for positively impacting the business.
But this is not a role the typical HR executive is used to playing.
Throughout their careers, HR executives have typically been rewarded for technical contributions, as opposed to the leadership or strategic accomplishments. They may have deep and impressive expertise in specific areas of HR, such as talent development, compensation or technology, but they haven’t been required or expected to drive business outcomes. Few companies groom HR executives to become CHROs. Settling for some ill-equipped to make the transition can be extremely risky.
A dynamic labor market is emerging for aspiring CHROs. For talented HR professionals seeking to pursue or assume the role of CHRO role for the first time, we offer the following advice:
You Are Not Just a Division Head Anymore
From moment one, you must embrace the reality that your new job is very different from your last one. It’s time to cut loose of those daily HR activities and begin engaging the C-suite and the board, and focusing on ways in which you can drive enterprise-wide business outcomes. As a divisional HR lead, you probably inherited the strategy from above. Now, you need to be an active participant in C-suite business conversations, leading the charge on talent and culture and becoming confidante and advisor to the CEO and board.
Know What You Don’t Know
In your time as an emerging HR executive, you probably developed deep expertise in one or more areas of the trade. As CHRO, management and oversight of all components of the HR function are your responsibility. The performance of the HR function will be a reflection of your leadership. Identify where gaps exist in your team and fill them quickly with the right resources and top talent. Be ruthless in ensuring team members underneath you have the technical expertise to ensure you do not get pulled down into daily functional matters. Having the right people and systems in place will give you the freedom to devote your time to tackling your new CHRO responsibilities.
The CHRO role can be an intense and a rather lonely position. The CEO has you as a key sounding board and confidante. Where can you turn when you need guidance and advice as you are transitioning into your new role? Look outside the organization for a network of CHRO peers with whom you can collaborate, seek advice, share experiences and bring best practices into your organization. Consider retaining a coach to aid in your transition, as well.
Learn the Business Beyond HR
New CHROs must have a deep and holistic understanding of the business, well beyond issues pertaining to HR. CEOs and Boards will expect that you understand and have opinions around investor concerns, the value creation plan, markets serviced, growth initiatives, products and services—again, none of which fell into your remit during your time in HR. As you acclimate to your new role, do whatever is needed to quickly acquire this knowledge. Talk to peers across the business, participate in customer calls, tour critical operations areas and don’t be afraid to ask questions.
For CHROs elevated from HR positions within the company, look for opportunities to immediately deliver a quick win and make your mark, something that has the potential to impact the broader organization. This will help you gain credibility and be seen as a peer by the CFO, general counsel and other top-ranking senior executives in the company. Demonstrate the courage to propose a new and bold idea. Make quick and assertive decisions related to your team. Target and engage select executive team members with whom you can begin to build strong relationships. Intervene where necessary to solve a problem. Remember, this is not the time to be passive.
Across multiple industries, CHROs have successfully elevated their game and are now exceptional business- and impact-oriented senior executives. Increase your chances for success by understanding the role and having an action plan that delivers results across the organization.