May 19, 2021

The Key to a Successful CHRO/CEO Partnership

HR’s most urgent challenge for the future is to transform itself by gaining an entirely new skill set. The administrative skills and humanistic attributes of the industrial age are now obsolete. Attention must be paid to learning how to define and lead change that is guided by a deep understanding of the value creation for an organization. If HR is unable to accomplish this, then it is destined to become obsolete as well.

Our belief is that it’s not actually a question of HR transforming itself so much as it is the emergence of a new function that will blend two critical business competencies: HR and Finance. The fact is, many business leaders, especially entrepreneurs and start-up CEOs, have a visceral reaction to the notion of “Human Resources.”

They will do almost anything to avoid hiring HR people because they equate them with bureaucratic minutiae and administrivia. Netflix, which has been credited with “reinventing” HR by doing away with many traditional HR practices like paid time-off policies and formal performance reviews, is a prime example of a company that has taken this tack.

Yet, these same business leaders clearly recognize the importance of talent to their success. Their resistance to HR is due to the perceived administrative burden, rather than the ultimate value they place on taking care of their top talent. At some point in an organization’s growth, however, it becomes necessary to assemble some type of HR team. It seems evident that a new breed of human capital professionals is required to ensure that a measurable talent strategy can be developed that truly reflects a deep understanding of the connection between talent and the company’s value creation.

In a manufacturing-based economy where tangible capital was the primary means of value creation and the largest expenditure, a close connection between Operations and Finance was required in order to fund and execute economically sound business decisions.

Today, Finance and HR need to build an equivalent relationship since human capital is now the primary means of value creation as well as the largest expenditure in our new economy. This relationship will enable companies to maximize people-related financial outcomes and measure the results of these efforts. In order to be successful, the role of CFO and the role of CHRO must evolve to complement each other. These two roles must champion a new way forward that is rooted in an understanding of the impact of talent on market valuations.

 

 

Tom McGuire is perhaps the only person to have held the roles of both CFO for a public company (Revlon) as well as head of talent acquisition and human capital planning for a Fortune 500 firm, Coca-Cola. As Managing Partner of Talent Growth Advisors, he leads the firm’s strategy and research practices. Tom can be reached at tom@talentgrowthadvisors.com.

Linda Brenner’s background spans operations, talent acquisition, and talent management for companies such as Gap, Pepsi, and Home Depot. She is Managing Partner at TGA and leads client engagement for the firm. Linda can be reached at linda@talentgrowthadvisors.com. Learn more about Talent Growth Advisors by visiting www.talentgrowthadvisors.com.

This post was excerpted from the book Building Business Value Through Talent. Order via Amazon or directly through the publisher with a 30% off discount code, TALENT30.