The following guest post is courtesy of our board member, David Creelman.
A recent Harvard Business Review online article written by myself and two colleagues, Peter Navin and John Boudreau, titled “Why More Executives Should Consider Becoming a CHRO” has attracted a lot of attention. Many CEOs have thought of bringing in business leaders without HR experience to run HR; and it’s a tactic that is rich in both opportunity and risk. However, it’s not the tactic that grabbed people’s attention, it was the experience business leaders had when they moved into HR.
The experience is captured in an observation by executive search leader Phil Johnson: “When a CEO asks a business leader to run HR, the most frequent response is ‘What did I do wrong?’ It’s not seen as a desirable role; it’s seen as punishment. Of course, they haven’t had a chance to think it through, but that’s the first reaction.”
That first reaction is not entirely unfair, HR has a reputation as a bureaucratic backwater. Never mind that research by Dave Ulrich and Ellie Fisher shows that the CHRO’s competencies closely match those needed for a CEO; joining HR isn’t usually seen as a great career move. No wonder most business leaders are surprised if they are offered the role.
But wait, that was not the big surprise.
The big surprise for business leaders is that the CHRO role is absolutely the best one they’ve ever had. It has unparalleled scope and freedom. It has massive impact across all elements of the business—and it’s fun. Let’s imagine you have a problem with too many bugs in your new fintech app. Maybe the solution is to change the incentives. Maybe it’s improving hiring or re-working the job design. Perhaps training needs to be better or you need a fix to the corporate culture in terms of collaboration. Almost all the levers for solving these business problems lie within HR; no wonder business leaders found running HR to be the best job ever.
The lesson for CEOs is to stop thinking of HR as an administrative support unit. See the CHRO as one of the top two or three roles in the company and set expectations accordingly. An unleashed HR department, staffed by the right people, is a massive competitive advantage for firms willing to think differently.
One can’t help but be reminded of Kronos which is now a $1.3 billion-dollar company, that has delivered 9% compound annual growth over the last 5 years while also successfully transforming from an on-premise to a cloud technology provider. How did it do that? Well, a big part of it was elevating the HR function so that it could deliver the impact it is capable of. Kronos’s HR function focuses on the business and makes its decisions based on the best available data and evidence. As a result, HR has played a big role in the organization’s success, and the company regularly shows up on best places to work lists.
Here’s one final lesson. David Almeda, Chief People Officer at Kronos says, “I don’t think we’re doing anything exceptional.” We got the same feeling from everyone we interviewed. No one was boastful about the cool or innovative or important things they were doing. Their successful deployment of the HR function was just a natural part of applying their best intelligence and business savvy to the issues facing the enterprise—and doing so in tight collaboration with the other business leaders.
CEOs need to change their expectations of HR; and business leaders from all functions should be fighting it out for a chance to get the best job in the C-suite: the job of CHRO.