BW 40
12/23/2021

The Strategic Role of the CHRO

“People are our most important asset.” You will find some version of this phrase in almost every company’s website.  The use of this phrase, however, includes a degree of risk.  As Lean Enterprise Institute pointed out, it can be read as disrespectful to the very people it refers to, reducing them to one of many corporate assets to be managed.

Even if we take the statement at face value, we see areas of shortfall. Those areas of leadership that affect people most directly – HR and Finance, for example – are too often treated as ancillary functions and not as strategic partners to the other members of the C-Suite, particularly the CEO, this despite the fact that in recent years an increasing number of companies have added a CHRO to their C-Suite. This elevation, however, has too often been titular, with little change in the relationship of HR to strategic leadership.

The most forward-looking companies have done more than titular elevation. In these companies, the CHRO owns the human capital agenda. They operate just as a business unit president who is accountable to the CEO for the success of their unit. CHROs are in the people business. They are the CEO’s lead service provider for the enterprise’s talent agenda—not the administrative agenda alone, but also the strategic and tactical talent agenda. “For a CHRO, it’s all about alignment of talent to the growth and performance agenda,” says John Berisford, former McGraw-Hill Financial CHRO and now President of Standard & Poor’s:

So if I were to offer advice to a CEO looking to hire executives into the CHRO or CFO role, I would urge him or her to recruit individuals with the objectivity and business broad-mindedness to put shareholder value above all else. And then throw them into a foxhole together.

Overall, HR leaders are evolving from administrative managers to strategic thinkers. It will require them to build some new skills and think of workforce from a different perspective – from a growth mindset.

Now, with our economy becoming increasingly more knowledge-and service-based, the movement and application of people is what produces the most value for companies. In fact, according to Workday intangible assets make up over 85 percent of a company’s value —up from 40 percent in decades past.

Just as the position of CFO evolved when it became clear that the movement of money, all by itself, can create value for a company, the increasing importance of people-based intangible assets –engagement, creativity, intellectual property, demand the evolution of the CHRO position and the CFO-CHRO partnership is seen by many as critical to future success.

So what impact does this have on the recruitment of a CHRO or CPO for a fast-growing company in this emerging decade? One thing is that it will require finding candidates with new skill sets including enterprise leadership, teamwork, and strategic thinking as well as extreme growth mindsets.

Ideally, companies would have the time, expertise, and reach to find this kind of talent, but given the current competition for top talent, this can be a substantial challenge.  Finding world-class talent takes an experienced recruiting firm, a firm that has recruiters who are themselves experts in finding top specialized talent that can differentiate talent that is up to the task the CHRO requires and present the client with only the candidates most suited to their particular needs.

 

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