Your company had decided to grow by a merger and acquisition strategy (M&A), the firm has almost 90% of market share and have been experimenting 2% organic growth reduction every year due to an aggressive competition and market conditions. Hence the CEO had decided to transform the organization in order to be back to the sustainable growth path launching new products to customers in new markets. This business transformation would involve a change in talent, cultural shift and organizational capability overhaul. How will the organization can face this major organization strategy change? Who is responsible for the Human side of the business? and what do we need to re-align the organization toward the long-term growth?
The questions above describe the active role of CHROs and HR teams in business transformations. CEOs are expecting CHROs to translate business strategy into the right organizational and talent management practices to generate impacts in the customer value creation, foster culture, leadership pipeline and prepare the entire organization for change.
CEOs expectations shine the spotlight on one of the most critical positions at the C-Suite level: CHRO role. In the last 10 years, we have seen the evolution of the Chief Human Resources Officer (CHRO) from a classical transactional HR partner to an organizational business advisor to provide a talent value proposition link to bottom line results.
In order to assist the organization to deliver value to its clients, customers and shareholders, CHROs need to have a different approach: design a talent strategy from the “outside-in”. This is a term used by Dave Ulrich that implies that CHROs need to have business management skills to design people strategy that support the company’s growth and profitability. In this context, CHROs need to have the following focus:
1. First, CHROs need to develop a broader action-focused thinking style that enables them to understand the competitive business environment and the challenges that the organization is facing to execute strategy. Understanding business landscape, CHROs can design a tailor-made employee brand to attract and develop key talent but at the same time, be an influencer across the organization to onboard business leaders to be the company’s brand ambassadors and responsible for employee development and team engagement
2. Second, CHROs need to have a business acumen mindset to understand how the organization can face business challenges and what’s the best strategy to support long-term growth. This implies that CHROs need to understand financial drivers, Merger and Acquisition (M&A) strategy, product development and supply chain
3. Third, Technology is evolving making processes more efficient and making our world more mobile and digital. Technology would enable organizations to drive operational excellence, customer intimacy, improve services and access to people-data making organizations more competitive in the marketplace. CHROs need to be technology savvy in order to drive alignment and synergies across the organization and deliver a core HR strategic functionality with reliable people-data and analytics link to business outcomes
4. Fourth, the ability to transform HR processes to face global demographic trends and business transformation involved to manage a diverse multigenerational talent, promote a high-performance culture and leadership to streamline processes and align the organization (organizational design) for sustainable growth in accordance with the corporate strategy. CHROs need to make sure that culture, talent, and leadership pipeline are adaptable in order to support any business transformation or re-alignment due to market circumstances, political changes and or new customer needs/expectations
5. Fifth, CHROs need to be the people advisor to the CEO and the board. We are talking about influencer skills; to have that privilege exposure, CHROs need to earn it in the sense that stakeholders need to see CHROs as inspirational leaders and the HR function as the department that deliver solutions. Furthermore, and most importantly, CHROs need to be viewed as someone that builds trust and credibility through their leadership style across the organization. It has to be someone that can have a flexible mindset that allows her/him to be a people leader but at the same time a business leader that engages the organization to make things happen. CHROs should bring solutions to the board meetings and the compensation committee on how talent challenges could affect business decisions and how could potentially impact/risk shareholder value.
Considering the insights described above, your CHRO would play a critical role either for your organic or M&A growth. However, the board, CEO, and C-Suite executives need to be aware that a CHRO will bring general management skills, with people value proposition experience that most likely would imply a new organizational mindset towards HR across the organization. All parties need to understand that having a CHRO would involve to change the face of the HR function and be open to share business information and let the CHRO learn the business and how the company operates while delivering results in order to create the right people and organizational strategy.
To sum up, its CEO responsibility to allow the new CHRO to assess the organization, capabilities, culture, and leadership. Most likely this would also involve to transform HR (in case your HR function was focused on transactional work) and assess practices, process, and talent. Your CHRO alone won’t change the face of your business. He/She needs to be surrounded by highly qualified HR talent and have the support from C-Suite executives to deliver transactional and strategic results while assisting the organization to meet the business agenda
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Albert Loyola is Managing Partner with Ignite Organizations, a talent and organization consulting firm. He serves as a trusted advisor to leadership teams on future workforce strategy, HR technology capabilities and integrated talent and HR solutions, he enables clients to address their future workforce needs and lead change in the face of digital transformation.
Albert is a People Technology Advisor & Speaker on the Future of Work, Employee Experience, Design Thinking and Artificial Intelligence in HR. His work has been featured on different business and HR tech magazines. Albert holds a Master Degree from Cornell University, in Human Resources