The evolving role of Chief Human Resources Officer (CHRO)
by John Duncan
How has the CHRO role changed?
The Chief Human Resources Officer (CHRO) role has evolved in recent years such that its focus has become increasingly strategic and less transactional in nature. Today, a CHRO is a key member of an executive team. CHROs link people and business strategies, while developing human capital programs to support business objectives. CHROs serve both as business leaders as well as human resources (HR) leaders. They spend equal time with team leaders and the board of directors as they do with HR leaders and their teams.
The CHRO works closely with the board on all aspects of talent management, including succession planning for the chief executive officer (CEO) and other C-suite roles. In most organizations, the CHRO reports directly to the CEO. In larger organizations, the CHRO also works closely with the board of directors, in particular with the chairperson of the human resource and compensation committee (HRCC). Interaction with the HRCC occupies a great deal of a CHRO’s time and attention. Corporate boards are placing an increased emphasis on the design of executive compensation schemes.
The CHRO needs to ensure that total remuneration, including bonuses, is well aligned with company business performance. The development of rapport and establishment of working relations with HRCC chairs and the maintaining of the confidence of CEOs as a trusted advisor have become increasingly important as critical success factors for individuals transitioning into CHRO roles.
The CHRO interacts with other C-suite executives in managing disruptive change. In this role as a change leader, the CHRO provides strategic advice and counsel to the broader executive team. CHROs need to determine the best allocation of scarce resources to those change initiatives that will deliver the most significant results for the company. CHROs must have the capability to put in place comprehensive HR performance metrics supporting the overall talent management agenda linked to the organizational structure and strategies.
What are vital forces causing the change?
The strategic importance of the CHRO role in the executive suite is paramount.
In a Canadian survey commissioned by the Human Resources Professionals Association (HRPA) conducted by the human capital firm Knightsbridge, Balthazard and Robinson, (2011) concluded that:
“CEOs expect their senior HR executives to apply their professional expertise with a focus on issues and trends that mattered to the business. If there is one area where CEOs want HR to perform better and would do things differently themselves if they were heading the HR function, it is knowing what the real business challenges are and applying expertise to managing and solving these challenges proactively.”
In addition to the CHRO’s reporting relationship to the CEO and the rapport with the Chairman of the HR and Compensation Committee, a fundamental peer-level working relationship is with the Chief Financial Officer (CFO). A strong CFO and CHRO working relationship will improve overall company performance.
The CHRO role has increased profile and strategic importance –considered in many organizations to be on par with the CFO. The close and triangulated relationship between the CEO, CFO, and CHRO is deemed to be uniquely essential and has branded as a group as being the “G3” (Charan, Barton, & Carey, 2015). Accordingly, the hiring CEO will need to evaluate the financial literacy and business awareness of potential CHRO candidates to ascertain the appropriateness of fit with CFO.
Where does learning and culture shaping fit in this evolved CHRO role?
The CHRO in many organizations is often the de facto Chief Learning Officer (CLO). Often, the CLO will report into the CHRO, or sometimes the CLO will be a direct report to the CEO. Both roles need to concerned with proper alignment of learning strategies to support the business objectives of the company. CHROs provide a pivotal role in ensuring that the corporate curriculum and related learning activities are closely linked to key business initiatives. They also need to be very concerned with strengthening the overall executive/management team, as well as advancing employee engagement objectives and cultural change.
Concerning cultural change, while all of the senior executive team share collective responsibility to nurture organizational culture, CHROs play a key role. Like learning, culture also needs to be aligned with the business strategy. As the leadership guru Peter Drucker observed, “Culture eats strategy for breakfast”. CHRO’s are increasingly accountable for ensuring that the business’s culture drives customer focus, employee engagement, and operational excellence across the organization.
John Duncan. Management Consultant, Executive Coach, Board Advisor. Former SVP, HR at Canada Post and Group HR Director at Royal Mail, UK. Current executive doctoral candidate on the UPenn CLO program.