An organisation is the sum of its people. Its success is a product of the collective effort and expertise of its employees. There was a time, not too far back in the past when the employees in an organisation were considered a cost centre and a liability. Fortunately, with the times and attitude changing, we have left this thought process in the past. Today, employees are seen as the worthiest assets of an organisation that attract a significant investment of time and financial resources. The business and economic environment are in a constant state of flux due to rapid globalisation, the complexity of business models and disruptive technology. This constant change is further perpetuated by the exponential pace of innovation that the world has witnessed in the last two decades. Organisations that are looking to stay ahead of the curve and either hold on to or expand market share, need to put together an army of capable people who have the talent to thrive in this new paradigm. Such an environment behoves the need for a nimble, decisive and well-executed people agenda that is tethered to the strategic goals of the organisation.
The need to foster a robust partnership between a CEO and a CHRO
At the crux of value creation in any field or business lies talent and the people who bring their expertise and commitment to the table. Therefore, it follows that talent management and the role of a CHRO in an organisation is integral. In current times, the top challenges, as articulated by the leaders in multiple studies, research invariably pertain to leadership and talent management.
The Global Leadership Forecast 20181 revealed that developing “Next-Gen” leaders and a failure to attract/retain top talent were rated in the top five business challenges by 64 percent and 60 percent of respondents, respectively.
An effective and robust leadership strategy forms the bedrock of an organisation’s business strategy and is integral to its future success. However, in a vast majority of companies, HR is not a part of the strategic conversations. There is a clear paradox in the role that CHROs can play and the way they are viewed by the CEO.
According to a study by Kellerman, B. (2012), “leadership strategy should never standalone from an organization’s strategic plans, yet only one in four HR professionals are involved in strategic planning from its inception”.
This has to change and the onus lies upon the CEO to include as well as empower the CHRO to migrate to a more strategic role within the organisation. The war for talent will continue to intensify and CHROs are key drivers to ensure that the right strategic environment is in place to both attract quality and maximize talent motivation. For this to happen in a productive and value accretive manner, the CHRO needs to move from the fringe and start playing a more immersive role within the organisation. This will only come if there is a “buy-in” by the CEO. In today’s business environment, where product and services are largely homogeneous, intellectual and human capital share the mantle with financial capital. Just as the CFO rose from an accounting role to becoming the right hand of the CEO, it is time that the CHRO moves towards a more strategic role to become the other pillar of the CEO.
Role that CHRO can play in making this partnership successful
Make talent the core focus to drive the strategic agenda of the company! If “talent” is the topmost challenge of the leaders, CHRO needs to dig deep and devise the talent strategy which provides impetus to the business strategy and not just remain another initiative of HR. Though the CHRO are believed to perform well in their functional role, there are concerns that they do not understand the broader business workings and wider company objectives. The CHRO needs to step out of the mould of a functional expert and envelope the role of a strategic leader that cultivates and steers the human capital of the organisation.
1- Strategic Partners Driving Growth
To provide strategic value, a CHRO needs to fully understand the company’s long-term vision, its intermediate term goals, its potential talent needs and its implications for the current and future workforce structure. At one point of time it was expected that the CHRO would need to the “business-partner”. Even the day business partnering is passé. True value would be generated by being a “predictor” / by being a “anticipator”. What this essentially means is that the CHRO not only needs to manage the human capital extant but also needs to assess future requirements. An organisation, where the HR’s approach is aligned with the overall business strategy of the present and has an extremely keen eye towards the emerging trends of the future, finds it easier to achieve its goals and weather intermittent storms in the business environment. Instead of being passive spectators, CHROs should keep abreast with the changing environment and evaluate innovative and disruptive products and services that can give the organisation an enduring edge over its peers.
2. CHROs as Custodians of Culture
Many companies, globally as well as in India, have exemplified the value of culture and brand. If people are what form an organisation then its culture is the life-blood of the organisation. There is great value in the cultural aspect of an organisation. Instead of letting the culture of the organisation ossify into status quo, the CHRO should ensure that it collectively evolves without losing its DNA. Organizations wherein the CEO and CHRO recognize the importance of building a Collective Leadership arena would be more successful in managing the ever changing external business paradigms, harness diverse thinking to find solutions to the toughest of issues, have an openness that leaves little space for ambiguous conversations. Harnessing the talent of the various people in an organisation leads people not just towards a shared vision but also manage the relationships among the different parts in the system in a more effective manner. CEOs must recognise that a CHRO can play an integral role in creating an organisation of collective leadership where there is shared responsibility, decision making and accountability.
3- Providing an Unbiased Perspective
A successful CHRO not only helps the CEO steer the organisation towards its strategic goals but also acts as an anchor to the CEO by providing the social insights to the strategic agenda of the CEO and keeping his/her grounded in reality. The role demands CHROs to become partners and trusted aides of the CEO. Someone that the CEO can rely upon for an honest opinion and an unbiased perspective. This unbiased perspective can strongly influence the CEOs’ decision making and consequently have a strong impact on the organisation.
4- Cultivating a Future Ready Organisation
The Global Leadership Forecast 2018 discovered that the biggest challenges business leaders face is in the company’s effectiveness to operate in a digital environment and use analytics, with just 37% reporting that they felt they had a digitally prepared workforce. This is a great example of a situation where the CEO and the CHRO should work in tandem to make the organisation “future ready”. The CHRO should ideally be in a position to identify such change in trends, predict the requirement for the future and accordingly prepare a people strategy that is well aligned with the strategic goals of the firm. In order to become an organisation of the future, the CHRO also needs to adopt and leverage technology. Predictive analysis of data and trends can help the CHRO better understand the future requirements of the business and accordingly carve out a current and future plan to fill the gaps. Technology can be used to understand the employees better and provide real-time insights to carve out more customised solutions that are geared towards meeting the forthcoming business requirements and challenges.
An organisation is better positioned to meet its strategic goals if all the cogs in the wheel are well oiled and move in tandem towards a common goal. This will only come if the CEO gives the CHRO a seat at the table and accords the people agenda the same status as it does to finance or marketing. Concurrently, the CHRO needs to step up to better anticipate and provide for the strategic and business objectives of the firm.
Bibliography- The Global Leadership Forecast 2018 – a three-way collaboration with Development Dimensions International (DDI), The Conference Board and EY. Report , https://https//hbr.org/2015/07/people-before-strategy-a-new-role-for-the-chro