Bill Brewer, my practice partner at McDermott & Bull Executive Search, recently published an article, What Companies Look For from the Human Resources Function, examining this question from the perspective of the CEO. A three-time Chief Human Resources Officer, Bill has first-hand experience leading the HR function as a strategic partner to CEOs, and as an Executive Search Consultant, has seen a wide range of CEO-CHRO relationships. What he has consistently found in speaking with CEOs is that they have two main expectations: focus on results (rather than process) and that HR understand the business and its strategy across all its functions.
As a former President/CEO now in retained executive search, I partner with Bill on senior-level searches, combining our HR and general management perspectives that mirror those of our key client contacts. In doing this, I’ve had the opportunity to examine the flip side of Bill’s question—what are HR leaders looking for from their CEOs? The most common response I have heard is “a seat at the small table,” reflecting the desire to be a genuine partner and advisor to the CEO and the rest of the senior management team. Importantly, every CHRO who has given me this answer has also followed it up with the recognition that this isn’t automatically given, but rather occurs when HR has earned the CEO’s confidence by demonstrating the above-mentioned results and understanding of the business. Strong human capital professionals can accurately be described as business executives who happen to be heading up HR; they view themselves in this context, leading their CEO to do the same.
So, what are the key areas where CHROs can demonstrate this business savvy and become a valued partner to the CEO? There are many, but the following are mentioned again and again by CEOs:
- Compensation – Constructing a compensation plan that fills the traditional “attract, motivate, and retain” objective is a given, but CEOs especially recognize the value of the “motivate” component when it is structured to align the employee’s compensation-maximizing objectives with the company’s strategic objectives. Simple, but we see countless examples of sales bonuses paid solely on top line when aggressive EBITDA growth is the top company objective. CHRO understanding of company strategy across all functional areas can lead to spectacular results when individual compensation is tied directly to contributing to achievement of company objectives.
- Organizational Effectiveness – Particularly for companies in growth or turnaround mode, performance assessments and succession planning can be the difference between maintaining positive momentum and losing it when new and unfamiliar business challenges arise, or particularly, when a key team member’s position becomes vacant.
- Culture – Ultimately, company culture is the responsibility of the CEO, and strong CEOs recognize and embrace this; they also realize that they need a trusted source of objective feedback as to how vision is communicated and received, as well as an effective coach for the entire senior management team.
Virtually every CEO I have met agrees that an exceptional CHRO who can serve as a trusted strategic advisor can be every bit as valuable as an exceptional CFO or COO, and is a part of senior management they would love to have on their team. Given that most CHROs envision their ideal role in the same light, it’s often attained by not just simply “talking the talk” but “walking the walk.”