Should New CEOs Have HR Expertise?

​A CEO's most-important responsibilities typically include maximizing employee performance, setting values to define the organization's culture, overseeing the company's return on investment, and making sure the talent pipeline is full of needed expertise for years to come.

Maybe that's why some of the most-profitable companies—Dunkin' Donuts, Xerox and General Motors— have former HR executives as their CEOs.

Yet, the typical route to the C-suite doesn't often lead from HR, originating instead from sales, finance or marketing.

However, some experts argue, that should change. The path to the CEO suite should run through HR, they say, especially now that organizations are realizing that sweeping societal, economic, technological and demographic changes are heralding a new era in management that centers on the people who are doing the work—and how they are treated.

Businesses "are no longer assessed based only on traditional metrics such as financial performance, or even the quality of their products or services," Deloitte's 2018 Global Human Capital Trends report pointed out. "Rather, organizations today are increasingly judged [based] on their relationships with their workers, their customers and their communities as well as their impact on society at large—transforming them from business enterprises into social enterprises."

And in a world where an employee's actions can nearly ruin a company's brand—think Starbucks managers tossing out black customers, Uber not initially addressing sexual harassment, NBC allowing harassment to go on for years—HR and people issues are paramount to business success.

Who better to address them at the CEO level than those skilled in human capital management?

From CHRO to CEO

In their new book, Talent Wins: The New Playbook for Putting People First (Harvard Business Review Press, 2018), Ram Charan and co-authors Dominic Barton and Dennis Carey advocate for a dramatic remake of the HR role so that chief human resource officers (CHROs) working with CEOs and chief financial officers (CFOs) can manage human capital with the same zeal executives apply to financial capital.

"Leaders at talent-driven companies are as focused on talent as they are on strategy and finance," the authors wrote. "They make talent considerations an integral part of every major strategic decision. They ensure that their own focus on talent is woven into the fabric of the entire company. And they are comfortable leading flattened organizations—often centered around the work of small, empowered teams—built to unleash the talent that will drive outsize value."

But does that mean those organizations should have chief executives with backgrounds in HR?

"Absolutely," said Gaylyn Sher-Jan, chief people officer and vice president of enterprise services for Insitu, a Boeing company in Portland, Ore. "HR leaders are perfect for the chief executive role."

Sher-Jan, who has worked closely with CEOs for decades, said, "The roles of CHRO and CEO are intertwined. The successful transformations of HR leaders into true business partners has enabled a new succession plan to the CEO role."

She added that "chief people officers and CHROs are ready to take on the business functions, customers and internal operations now that they've had a seat at the table. Their ability to handle and navigate the tough issues of culture, ethics and values puts them in a unique position for leadership."

They're certainly qualified for it.

According to data from the Los Angeles-based Korn Ferry Institute, chief human resource officers "are among the most qualified in the C-suite when measured against CEO competencies."

Writing for Korn Ferry, Alan Guarino, vice chairman in their consultancy board services practice, stated that "in a study of executive assessment data, researchers analyzed 360-degree assessments of thousands of leaders in six C-suite functions" and found that "the traits of CHROs matched up closely with those of CEOs."

Brent Filson, founder of the consultancy The Filson Leadership Group Inc. in Williamston, Mass., agreed that HR leaders are "prime candidates for the CEO position." He argued that they bring a trait other company executives may not have yet developed: people-centered leadership. "Most CEOs neglect a vital dynamic … I call it a 'leadership strategy,' " said Filson, author of 23 business books and a former consultant for General Electric who worked closely with former GE CEO Jack Welch.

"Without a concomitant leadership strategy, a business strategy seldom measures up," Filson said. That leadership strategy should include the "heartfelt commitment of the people who must carry out the strategy. And because a leadership strategy is animated not simply by the skills CFOs, COOs and sales and marketing leaders can bring—but by the people-centered know-how HR must acquire and apply—HR leaders will be prime candidates for CEO positions."

[SHRM members-only online discussion platform: SHRM Connect]

What's in the CEO Job Description?

To be sure, installing a new CEO with HR experience as part of a knee-jerk response to people management failings could be a poor decision.

"The idea of placing HR executives into the C-Suite because employees are perceived as valuable assets is a reaction to a culture of abuse, inequality and bias promulgated by intense media coverage of high-profile events," said Victor Vogel, a former HR executive and organizational change consultant in Brighton, Mich. Having worked in HR for more than 30 years, Vogel added, "when I see someone say there is a need for more HR executives in CEO roles, it creates a lot of questions in my mind as to whether that person is the best CEO candidate or is a company reacting to publicity."

He and other experts agree CEOs should have a broader understanding of the entire business, and many in HR may not.

"Before corporate boards get anxious over Uber, an anomaly in American industry, they should first use what HR would consider sound hiring principles," he said. "First, what is the role of the CEO? What are the primary criteria an individual must possess to assume that role? What factors are affecting the organization? What is the culture of the organization? If hiring internally, would the HR executive have proven experience in the primary skill sets for a CEO role?"

Christopher Collins, an associate professor of human resource management and director of the Cornell Center for Advanced Human Resource Studies in the Industrial and Labor Relations School at Cornell University, went a step further. He said it may be construed as a conflict of interest for a CHRO to consider a promotion directly into a CEO role. "I actually think if HR leaders aspire to be the CEO and put themselves in the running, often they can't do big portions of their jobs," which includes advising the CEO on talent and other people management issues.

"I don't know that I could coach a peer on the senior leadership team if they think I'm their rival for the CEO seat," Collins said. "I worry about the CHRO role as the path to the CEO because it really prevents CHROs from" guiding CEOs.

Collins added that it's not an issue if a CEO candidate has left HR to gain other experience before lobbying for the CEO position. And, he added, no matter where an executive works, whether it's in finance, marketing, sales or operations, "all of them need to become better at understanding the people part, because [people will always be critical] to competitive advantage."

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