Both a company’s chief executive officer and chief human resources officer play key roles in a company’s biggest battle: The ongoing war for talent.
While CEOs and CHROs tend to agree that a strategic approach to talent is essential for company success, fewer teams coordinate their efforts optimally. “Research by McKinsey and the Conference Board consistently finds that CEOs worldwide see human capital as a top challenge, and they rank HR as only the eighth or ninth most important function in a company,” say Ram Charan, Dominic Barton, and Dennis Carey in the Harvard Business Review.
As artificial intelligence and similar tools make hiring, employee evaluation, and career planning easier, technology also opens up new avenues of communication between leadership. The right tech tools can facilitate CHRO-CEO partnerships and translate a shared vision into actionable career plans for the people they lead.
The Rise of the CHRO
For many years, companies had no position equivalent to today’s chief human resources officer. In recent decades, however, CHROs have become increasingly common as corporate leadership connects the dots between human performance and the ability to reach goals.
“CEOs and CFOs were starting to look at their people strategy and starting to challenge, ‘Where are the people who can execute this?’” says Verity Creedy, product management director at global leadership consulting firm DDI. “And those people weren’t in HR.”
Where were they? Everywhere. While some CHROs rise to the position on a traditional route through human resources, many gain their experience through other leadership roles.
For instance, in one review of 100 CHROs’ biographies, Matthew Guss and fellow consultants at Russell Reynolds found that 29 percent of CHROs had previously done international work, 27 percent had worked in general management, and 21 percent came from finance. Management consulting, sales and marketing, corporate communications, and corporate strategy and development also produced successful CHROs.
The number of CHROs with non-traditional backgrounds is increasing, as well. “We observe a 56 percent increase in international experience among newer CHROs compared with longer-tenured ones, for example, and similar upticks in general management and finance experience,” write Guss et al.
This cross-training gives CHROs a diverse, informed perspective when it comes to tackling the strategic challenges of hiring and career development. CEOs can benefit from this perspective.
In addition, CEOs who understand human resources improve their own ability to strategize and plan in a wide range of business areas. “To be a good business leader, you need to understand HR,” says Dominic Barton, global managing partner emeritus at McKinsey. “I hope we’ll see more CEOs coming from the HR function.”
The Shared Responsibility of Strategy
CHROs play a highly strategic role in the organizations they serve. “Businesses grow or die based on the quality of their people, so the human resource executive role is arguably the most strategic in the company. If I weren’t the CEO now, I’d probably want to be the CHRO,” says Owen Mahoney, CEO of Nexon.
When it comes to finding the right people, the right strategies are essential, and the CEO and CHRO are perhaps the two leaders best poised to take charge of that strategy.
Many articles and books on management and leadership claim that people are a company’s best asset. Business consultant Avik Bhattacharya pushes back on this adage in an article for Hospitality Insights, pointing out that the wrong people can cost a company thousands of dollars in disengagement, mistakes, and eventual turnover. It’s not people in general that are a company’s best asset, he argues; it’s the right people that are.
The right people are those who bring certain key attributes to the table, Bhattacharya explains. These attributes vary according to a company’s specific goals and approach to work, but they always align with and support the company’s vision, values, and goals. When CHROs and CEOs work together on hiring, career building, and retention strategies, they can bake in the company’s vision, values and goals at each step. They can also find new ways to identify and develop key attributes in both existing employees and candidates under consideration.
How can CEOs and CHROs begin to coordinate their vision and strategy? Gartner’s Model of a World-Class CHRO, an aspirational model seeking to describe the best vision of what a CHRO can be, recommends that CHROs and CEOs begin the process by discussing priorities of the CHRO’s positions, “based on the CEO’s priorities and the strategic position and direction of the business.” These same steps can be taken between a CHRO and CEO who seek to improve their company’s ability to find and retain top talent.
CEO-CHRO strategic partnerships remain relatively uncommon in the business world. “HR will have to continue to advocate to truly be utilized as a strategic business partner,” predicts Saralynn Malott, vice president of human resources at checkout-free technology provider Grabango. Currently, the advantage of focusing on human resources strategically remains underutilized by many companies.
CEOs and CHROs who take the initiative to pair as strategic partners may thus gain an advantage over competitors, especially if they use artificial intelligence and other tools as part of their work.
Using Technology to Take Employee Career Planning to the Next Level
Embracing artificial intelligence took time, but once companies saw the value of the technology, a tipping point occurred.
In 2017, for example, an EY study found that 74 percent of middle-market CEOs worldwide eschewed the idea of adapting robotic process automation in their enterprises. Just one year later, however, 73 percent of these leaders told EY they would begin using AI tools within two years.
AI and other tools continue to automate routine human resources tasks. As these tasks are transferred to software, human resources staff members, including the CHRO, find themselves free to focus on the complex, qualitative questions that computer programs cannot easily solve.
“With most operational parts [of human resources] being handled by automation, HR has a greater focus on strategic objectives of the business. This is the direction in which the CEO–CHRO relationships will move, in near future,” says Amit Ramani, founder and CEO of Awfis Space Solutions.
Building Trust Begins With Building Relationships
Many leaders hesitated to embrace cutting-edge technologies in part due to the risks these tools posed. Yet when applied correctly, AI and other tools can help leaders better understand risks, allowing them to seize opportunities and avoid calamities.
“For anyone looking to convert digital disruption into meaningful, long-term business value, building a bedrock of trust is key. And a better understanding of risk, and the risk professional’s role, is key to building that trust,” writes Michael Bertolino, EY global people advisory services leader.
While Bertolino takes a broad view of risk management that encompasses every employee, the seeds of a solid risk management plan can be sown in the relationship between the CEO and CHRO, including in the tools they use to understand risks related to hiring and career building.
AI tools can help CEOs and CHROs trust the process as they scale hiring and retention efforts, as well. Often, hiring stalls in a growing business because leaders who were used to knowing each candidate personally struggle to release control of that process, says Hung Lee, cofounder and CEO of workshape.io, a matching service for tech talent. Leaders who employ the right AI-based tools, however, can feel confident that they’re still seeing analyses that account for a vast array of variables, allowing them to focus on strategy.
Businesses worldwide are just beginning to embrace the value of a strategic partnership between CEOs and CHROs when it comes to finding the right people, training them effectively and building their careers within and to the benefit of the company as a whole. Companies that take this chance, and choose the right tools to support it, can transform their approach to hiring and their ability to achieve major goals.
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