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A key to success for chief executive officers (CEOs) may be the skill sets and knowledge possessed by their organizations’ chief human resource officers (CHROs), recent research has revealed. Several studies have found that a growing number of CEOs and boards of directors are handing more responsibility to CHROs and expecting them to provide insight and counsel in key areas, such as organizational talent needs, leadership development and workforce capabilities.
“CEOs and boards are asking CHROs to take on more bottom line responsibility,” concluded the 2013 CHRO Pulse Survey, published by Korn Ferry International. “CHROs are focused on tying HR initiatives to the broader business strategy; they must also be acutely attuned to what their companies’ CEOs and boards expect.”
The pulse survey revealed that CHROs believe their largest impact on the bottom line can be made through building organizational talent and leadership capabilities. Other research has confirmed that an increasing number of senior-level managers and board directors agree with CHROs and now consider talent development to be a critical business strategy and a top challenge their organizations face. Studies completed in 2014 by the Korn Ferry Institute examined the value of developing concrete succession plans for an organization’s senior leadership and the strong correlations between learning agility and leadership development.
An Evolutionary Process
“This corporate focus on talent management and leadership development didn’t just suddenly occur,” said Richard Antoine, president of the National Academy of Human Resources and co-author of The Chief HR Officer: Defining the New Role of Human Resource Leaders (Jossey-Bass, 2011). “Instead, I would call the emphasis on talent management an evolution. Several years ago, just some CEOs focused on it, but that has continued to grow and include more and more. It’s really not something that just changed overnight.”
The most effective executives tend to possess the skills and leadership styles needed to excel at talent management. Research by the Korn Ferry Institute has found that that the best executives possess leadership styles that motivate workers and develop business leaders. In addition, Korn Ferry researchers concluded, successful senior executives usually have similar leadership styles and talent management skills. As business leaders have put more time and energy into identifying and developing talent pools, then the knowledge, skills and perspectives that CHROs possess have grown to be more valuable to their organizations.
“CEOs are definitely spending more time on talent management, and because of this trend, CEOs and CHROs have certainly grown closer together in recent years,” said Edward Lawler, professor of management and director of the Center for Effective Organizations at the University of Southern California’s Marshall School of Business. “It hasn’t been a cosmic shift, but it’s a something that’s definitely worth watching.”
A Skills Alignment
Some researchers have taken the data gathered by groups such as the Korn Ferry Institute, the Cornell University School of Industrial and Labor Relations, and the University of South Carolina’s Darla Moore School of Business, and concluded that the skill sets possessed by successful CHROs more closely align with successful CEOs than any other senior-level management positions—often referred to as the “C-suite.” Lawler and Antoine agreed that the business focus on talent management and leadership development is changing the dynamic among CEOs, boards of directors and CHROs. However, a sudden shift of elevating CHROs to become the most influential member of the C-suite and heirs apparent to their bosses isn’t likely to happen any time soon.
“Just look at the number of CHROs who serve on the boards of directors of Fortune 500 companies,” Lawler said. “I know there are some, but it’s a fairly small percentage. And I can’t think of one CEO of a major corporation, besides Mary Barra [CEO at General Motors], who [previously] served as their organizations’ CHRO or spent significant time in their companies’ HR functions.”
In addition, Lawler pointed to the fact that many CHROs of large corporations have not had any significant experience in HR management before being appointed to their current position.
“It’s somewhere between 25 and 30 percent of CHROs who had no HR experience at all,” Lawler said. “So in a way, this clouds the issue somewhat of what skills are actually needed to become a successful CHRO.”
The Crucial CHRO Skill Sets
Lawler and Antoine asserted that talent management, leadership development and communication skills are all crucial to being an effective HR leader.
“Sometimes we refer to these as people skills, and we all acknowledge that to be an effective CHRO, you must use talent management, leadership development and communication skills every day in your job,” Antoine said. “The question has become, How much time are CEOs spending on things like talent management and leadership development?"
Although there’s no standard for how much time should be spent thinking about or developing organizational talent, Antoine said the time that CEOs devote to these crucial management issues has expanded in recent years.
“Several years ago when I was a CHRO, I participated in an interview with my CEO when the reporter asked how much time he spent on talent and leadership development,” said Antoine, who retired as the top HR officer at Procter & Gamble in 2008. “He estimated that he spent 40 percent of his time working on those issues. Later, we calculated the actual amount of time he spent, and it worked out to 37 percent, so that wasn’t too bad an estimate from right off the top of his head.”
Antoine said that his former boss’s focus on talent issues surpassed a typical CEO, but he added that a CEO in 2014 should be spending at least 15 percent of his or her time thinking about or working on talent development.
“Anything less than that, then you should really rethink your priorities, because your organization could suffer because of it,” he said.
Setting Talent-Based Priorities
Lawler agreed, and said that the best performing CEOs typically spend 25 percent to 30 percent of their time concentrating on those priorities.
“Everyone now understands the strategic value of hiring and retaining the best talent possible,” Lawler said. “And the emphasis that CEOs and boards are placing on the issue reflects this. The focus certainly has changed the role of many CHROs to become strategic partners within their organizations, but this is not necessarily translating to all CHROs nor is it drastically transforming the HR function for most businesses.”
Lawler said the best way to tell if an organization truly values its CHRO and HR function is to examine the corporate reporting structure.
“Does the CHRO report directly to the CEO, and is the CHRO a member of the corporate board?” he asked. “If so, then the CHRO is most likely valued as a strategic partner in the organization.”
The fact that the head of an organization’s HR function doesn’t have a seat at the board table or isn’t a member of the C-suite shouldn’t diminish the value and skills HR executives offer, Lawler added.
“It’s really all about demonstrating the strengths and skills you as a CHRO can bring to the table,” he said. “If you can prove your worth, then a CEO and the board will certainly take notice and increasingly depend on those skills and knowledge.”
Some research is being conducted to examine the performance levels of CEOs who have built strong strategic partnerships with CHROs, and in organizations that have strategically focused HR departments. While the research is still preliminary, some results seem to suggest that businesses with CEOs who focus on talent management issues and have partnered with their CHROs tend to outperform other corporations.
“The indicators are there in the research, but right now it’s just not definitive,” Lawler said.
Bill Leonard is a senior writer for SHRM.
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