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Once upon a time, chief financial officers (CFOs) were considered glorified accountants. Today they are crucial members of the C-suite, often second in line to the CEO.
Here’s how it happened: Growth became the holy grail of business, and senior executives began to see the organization more as a system of investment than a system of production. Financial capital was seen as a scarce good—and the shortage of it as the primary constraint on growth. At the same time, financial decision-making became increasingly sophisticated as alternative approaches to accessing capital and funding projects proliferated. All of this transformed the role of the senior finance executive into a position requiring new levels of strategic thinking, thereby elevating the CFO’s profile.
Now there is another executive role that is undergoing what is certain to be a transformational journey. The role began as similarly administrative but, at its heart, focuses on an element critical for success—the scarcity of which has now become among the biggest constraints on corporate growth.
Welcome to the new world of the chief human resource officer (CHRO).
The scarcity of talent is raising the profile of this crucial professional. Thirty-nine percent of top executives at large companies were unable or barely able to find people with the skills their organizations need, according to Deloitte’s 2013 Global Talent Survey. Without a ready supply of highly skilled, passionately engaged employees, companies can’t fulfill their ambitions.
But few HR leaders are ready to step into the critical strategic role of the CFO. Many companies are looking outside their own HR offices, hiring either CHROs from other companies or executives without a traditional HR background.
If HR managers want to rise to the occasion and rise in prominence, they must transform themselves and move away from their administrative roles, as CFOs have, to become both more creative and strategic.
Consider the following chart, which shows the CHRO’s evolving role.
CHRO Past to Present
Although today’s CFO evolved over decades, CHROs will not be afforded the same leisurely time frame. The rapid pace of change in talent markets, technology, and social norms and mechanisms demands a more timely, systemic and strategic response. Rather than build up, or onto, their existing role, CHROs should envision what this increasingly vital leadership position will require in the future, using the current model of the CFO as a guide to plot a transformative path.
The CHROs who can do that will be in a position to move into the top spot.
Cathy Benko is a vice chairman and managing principal at Deloitte LLP.
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