Episode Transcript
[00:00:08] Hello everyone. I have a bonus podcast I'm going to put together just for this July 4 week because I want to get some stuff out there that's really interesting. I think a lot of you probably know that we have been embarking on a large research project to study the CHRO, or HR leader job. What are the success factors? What are the derailers? What are the characteristics and capabilities of the high performing people in this role? How do you develop your skills to take on this role? Who are the people that have moved into this role? What are the demographics of the role on and on. This is going to be a really interesting project. It's going to go on for many years and we will share much of this with you. We will also be launching a CHRO version of our membership for those of you that are Chros who want to get direct access to all this content and support from us. So let me give you just a little bit of sense of what we're finding so far. So we're working with a talent intelligence company by the name of seek out, which has a massive data set. And we have collected about 47,000 people around the world that have this job. The job, as we've defined it, is the person who's responsible for the multifunctional HR function. And that may be titled a SVP or EVP of HR of a business. It might be a chro of a large enterprise. It could be an SVP or SVP or VP of HR of a small company, of a medium company. And when you look at these people, they are in many shapes and sizes. Some are running HR for public sector organizations. Some are running HR for investments. Some are running HR for family offices. Some are running HR for school districts. And of course, the traditional companies in tech, healthcare, financial services, insurance, manufacturing, and all of the other things that companies do. But in all cases, when we get to know who these people are, they all have fairly similar roles in some respect, that they're trying to figure out how to manage this highly multifunctional, complex professional function in the company. And as you know from our systemic HR research, there are more than 400 job titles in HR. We have 94 capabilities in our capability analysis. By the way, we have now assessed more than 50,000 Hr people. We're going to share that in another launch when we get that analysis done. So we understand the skills relationships of those 50,000 people to each other and to themselves. And these chros generally have EVP, senior VP, c level, or at least VP titles. So they are operating for the most part on a par with other c level functional leaders. So they are typically the peer of the CFO, the peer of the CIO, the peer of the head of sales or marketing, and the head of legal and so forth. Now, interestingly enough, when we started doing the analysis, the first thing we did is let's look at the background of these people. By the way, one of the ways we're evaluating the performance of these c level or senior level people is looking at the financial performance of the companies they're in, which is actually very complex because some of these are in business units within a larger company, but also their relative score in the systemic HR framework. So we have taken five or 600 of them and sliced them out. And look at them relative to systemic HR. In systemic HR, about 7% of companies are operating in this highly dynamic, high performing way. So we've been looking at the level three level fours as a group versus the level ones, level two s, and then we're looking at the financial performance of the companies and how fast they're growing. Also, there's a lot of analysis to do here. We're certainly not done yet, but I want give you sort of a preview. So a couple things that I think come to mind that we're going to produce in the next report. The first is that, as I mentioned, you know, on the video that I published a week ago, most of the chros did not come from their own company, only about 18 or 19% in general, only 13 or 14% of the high impact ones. So because of the lack of succession management, lack of internal development, and probably lack of confidence of the CEO in the HR team, very few of these people grow up in their own companies. I think that is an indictment of the profession that we have to deal with because it essentially says that we're not developing this pipeline. And c level non HR executives don't seem to trust the people in their own company to take on these roles. Which means that the most prevalent way you become a CHRO, if you aspire to do this, is to quit your company and go somewhere else and take your expertise with you and impress somebody else with all the things you've been able to do in another company or another industry. I had a lot of time with the head of executive recruiting for chros at Heidrick, Brad Warga, over the last couple weeks. And Brad has shared with me that there is a real gap in the market for c level executives in HR, at least in the large companies where he works. The CEO's are asking for HR leaders who have the ability to go to basic principles and reinvent whatever needs to be reinvented, which is actually not exactly what we need chrs to do. But I understand why CEO's believe that. So that's a bit of a mismatch. He believes and he didn't share the statistics with me, but he did tell me that a high percentage of the Chros he has placed in the last year or two did not succeed in the role. They were then not replaced, but they were then given a new leader later to help them do the job. Which gets back to the issue I mentioned in the beginning. They were not really developing these people well. And also that many Chros, as I know from my experience talking to many of you, are not sure how to manage their own careers because once you've reached this pinnacle role, it's not clear what the next step is. You're certainly not going to become a CEO. That's very unusual. Lena from Chanel is the only one that I know that's done that. And that's because Chros oftentimes don't have p and l responsibility backgrounds and it's intimidating for them. And they're just probably not really qualified to be in charge of all the other functions in the entire p and l of the company. I'm not saying that you're not all capable of that, but that's at least what the data shows. And I would say our research is bearing that out. I get a lot of calls from chros asking for advice on HR things, but also asking for career advice because this is such a strange position to be in the that it's not clear where it goes. Second thing I want to mention about the CHRO role, and I'll talk about the data in a minute, is there's this sort of strange belief in many companies. I'm not saying all that the CHRO role is a job rotation. And so there's a lot of companies I talk to where a very senior executive in another business function has been given this job not because the person aspired for it or wanted it, but because it's a developmental assignment to get them ready to be a CEO. Now, I don't have a problem with that. That makes perfect sense to me, but it is a little disrespectful to the HR function.
[00:08:12] Would you take a head of sales and marketing and give them the job as your CFO?
[00:08:18] Would you take the head of sales and marketing and give them the job as your CIO?
[00:08:24] Would you take the head of sales and marketing and give them the job as your chief legal officer. I kind of doubt it, because we do consider those other c level jobs very professionally deep. But for some reason, we don't believe the HR function is professionally deep. So we can just rotate anybody we want in there, just for kicks, for a year or two and see how it goes. Most of the people who get put into HR leadership roles like this that I talked to tell me that it's much more complex than they realized, and that's not an indictment of their capabilities, but it's simply a little bit of a strange situation where I'm not sure people outside of HR understand how complex this area is. So we'll be talking more about that. So one of the other things we've been looking at is the background of people who get into this role. And as you can imagine, most of them have multifunctional HR experience. They've worked in talent jobs. The vast majority of them have worked in talent management or talent related jobs, not necessarily single functional areas like head of talent acquisition or DEI. You have to really understand the systemic nature of HR in order to be a great chro, because that is a job of stitching pieces together. Most of them did not come from it or CIO backgrounds in HR in terms of their educational backgrounds. Some of them have PhDs. A lot of them have master's degrees. Almost all of them have bachelor's degrees. We actually did some interesting analysis that's actually very interesting to me. We went back and looked at the educational degrees of the high impact Chros versus the general pool. And interestingly enough, business degrees have almost no correlation, or perhaps a negative correlation with being a great ChrO. Because, you know, in business school, you don't really learn much about this. And so you may or may not be equipped. Economics scores very high as a feeder. Academic background, engineering scores high. Labor relations and law score low. If you studied labor relations or law, you probably would be a good labor relations leader or chief legal officer. But you may not be a good CHRO because being a CHRO is really all about people and organizational dynamics and culture and business strategy. Backgrounds in psychology actually score high. Backgrounds in science score high. Backgrounds in political science, score high. Backgrounds in marketing, score a little high. So, as you might expect, and by the way, backgrounds in HR are about neutral. It seems to be a not a driver of high success, but not a driver of low success either. So, you know, based on all of this early, early data, which we will be producing in a report in the next probably six, eight weeks. The findings are kind of as difficult to move into these roles unclear succession or progress. There's no development program that works for this. This is not a job where you can go to a two day ChrO academy and come home and suddenly learn what to do. It's a highly multifunctional job. Generally speaking, I would say based on what we're learning so far, there are five broad capability areas that make you a great Chro. Number one, you have to have HR domain expertise, experience. You have to know the basics and have been through many of them before. So you have an understanding of where to start, how to hire people in a general respect for all the different disciplines. Number two, you have to learn how to become a c level executive. I think most people who are thrust into this job think it's a head of HR job, but that's only part of it. It's also a c level executive job. You're leading the culture initiatives in the company. You're leading the transformation, you're leading the solution to daunting people problems. You're dealing with crisis issues all the time. And you have to have trusted, strong relationships with your other C level executives. I have talked to a lot of chros who failed or left their companies because they did not get along with the CEO. And it's not going to be a good strategy for you to think you're going to change the CEO. You might have some impact on him or her. But if you don't feel a certain amount of simpatico in your strategy and the way you think and the way you make decisions, that is a problem. Ditto with the other C level executives. You know, if it's a boys club and you're the only woman and they don't respect you, you know, I would get out of there and find someplace else to go. Number three, great Chros are systemic thinkers. That's why I think backgrounds in political science and marketing psychology seem to contribute to this. You are seeing the interrelationship of many, many things. You're seeing the people issues, the leadership issues, the employee engagement issues, the labor market issues, the competitive issues. You have to see how all of that comes together in your own mind to prioritize decisions that you have to make in HR on behalf of your business leaders. You cannot only be an order taker in a sense, from the rest of the business. You have to sort of make distinct recommendations, business oriented, not just promote the DEI strategy or something, but really understand how these pieces fit together. That is a way of thinking. I know this is something that a lot of people are good at and a lot of people are not good at it, and it's something you have to learn how to do. Number four goes without saying. You have to be comfortable with data and technology. You don't have to be a technologist, but you cannot be intimidated by it. You cannot let the CIO or the vendors drag you around. You have to be willing to invest in it. You need to understand AI, etcetera, or at least be comfortable learning about this stuff. And number five to me is you have to be a really good judge of human nature. I hate to say this, many CEO's and other business people, you know, are not really people oriented. They're engineering, technical, sales, whatever, and they're not thinking about all of the intricacies and subtleties and frailties of human beings. I think great Chros have that fifth capability as well. I'm not saying you have to be a touchy feely psychologist type of person, certainly not because, you know, there's a lot of tough decisions that have to be made. But if you're not sensitive to those people issues, you're not going to be able to deal with the frailties that come up in organizations, including the frailties of your peers. So that's number five. So I'm really excited about this. We have a lot of research projects going on in our company. We do this all the time. But this one is particularly fun because it's a really unsolved problem. You know, I witness many things happening in the market, chro groups coming together, Chros talking to each other, et cetera. We're going to be doing more work on this. We have a Chro roundtable as part of our membership. You can join that if you're a member. If you'd like to work with us individually as a CHRO, we have an offering for that now. Bill, myself, Kathy, others on our leadership team will be working with you directly, and we're going to do a lot more work on this. Also, if you would like to share your career history, what you've learned with others, and you'd like us to help you do that, we would be thrilled to interview you in either a podcast form or a video form. We're going to get a whole bunch of stories. We already have about 40 or 50 career stories of different c level leaders in HR and what they've been through and what they recommend to others. We want to continue to do that, and we're going to globalize this. So even though most of us are in the US, not all of us, we have a lot of experience in Asia, a tremendous amount of experience in Europe. So you don't have to be a us based business ChrO in order to work with us. So that's a little bit of where we are. It's coming up on July 4. I hope you have a great holiday for those of you in the United states, and we'll talk more again in the next week. Thank you.
