THE ROLE of senior HR leaders in national and global companies is changing as HR and talent issues command a prominent role in today’s headlines – workforce demographics and global talent trends, corporate scandals and intensifying regulatory challenges, technological innovations that enable new ways of working, increasing globalisation as well as endless pressures to boost the profitability and performance of the workforce.
As such, HR chiefs will increasingly find themselves at the centre of such challenges, according to a recent report, as they are increasingly required to act as both strategist and steward: leaders who not only manage the HR function and operations team, but also collaborate directly with the CEO and board of directors on a range of critical business issues.
HR has had a legacy of being administrative and not adding to strategic thinking, and this perception may still exist with some executives, according to William Chafetz, principal and national co-leader of CHRO (Chief Human Resources Officer) Services for Deloitte Consulting, which released the report, Strategist & Steward: The Evolving Role of the Chief Human Resources Officer.
“HR still is not as evolved, or at least as understood, as some of the other disciplines. In other words, the marketing and sales executive gets the CEO’s ear because they can ask for resources and make a pretty good prediction on the effect of sales. Or the CFO can ask the CEO to talk to bankers or analysts and know that it will favourably impact debt terms,” he said.
The CHRO has fewer tools, outside of cost reduction, that can be tied directly to the balance sheet or income statement, Chafetz added.
As such, the CHRO must try to exert strategic influence while also being responsible for a high risk, high volume operation. Unlike the CFO or vice-president of strategy, he said the HR leader must oversee an operation that touches every employee.
“The programs and services HR deliver can influence employees’ connection to the company. And employee behaviour – toward other employees, customers, and in ethics lapses – can introduce significant financial and reputation risk to the company,” Chafetz said.
In dealing with a potentially sceptical executive, Chafetz said this comes back to strategy execution. Every executive can think of examples where a strategy was laid out but not fully executed because of people, organisation and change issues, he said. In such cases, the CHRO can point to where better leadership and execution in operations and control could have better achieved the goals of the strategy.
Lisa Barry, an Australian partner in human capital consulting at Deloitte, said it was important to avoid the “This is how I can add value to your business” conversation.
“It’s easier to get traction in the relationship by concentrating on a specific change challenge that the executive has. Be clear about the benefits he/she will derive through your involvement,” Barry said.
In order to improve both their personal and business skill set, she recommended HR professionals develop their command of the two most talked about business currencies, being operating margin and growth rate.
“Determine what the most influential human capital dimensions are for each and develop a binary and compelling connection to these vital performance metrics that any good business leader could not resist,” she said.
Chafetz advised HR professionals to take a rotational assignment outside of the function, and preferably with operational responsibility or at the least one that is heavily involved in taskforces, study groups and other teams that are focused on bigger business problems.
The future roles of the CHRO
Chief Human Resource Officers (CHROs) will have four major categories of roles and responsibilities, according to Deloitte Consulting.
Workforce strategist: Business strategy and overall performance are increasingly tasks of a company's workforce. In addition to supporting and implementing overall workforce strategy, CHROs must now play a key role in developing and informing that strategy - helping the CEO and other leaders craft strategies that make sense in light of global labour trends, available talent and next-generation leadership and workers.
Organisational and performance conductor: Companies today face an overwhelming number of choices from departments operating across geographic boundaries, virtual teams, contingent workforces, telecommuting and job-sharing to flexible hours, workforce diversity and more. Today's CHROs must help navigate all of those options as a change master and an organisational structure and rewards program architect.
HR service delivery owner: Today's CHROs must spend less time overseeing their own HR operations systems and processes and more time juggling a complex mix of in-house resources, employees and managers, as well as self-service and external vendors - seamlessly integrating internal and external services into a cohesive whole.
Compliance and governance regulator: Today's CHROs must work directly with the board on workforce issues that directly relate to the critical areas of risk management, regulatory compliance, ethics and integrity. They also must assist with a wide range of board-related issues, from member selection and orientation to executive compensation and succession planning..