Despite many years of CHRO capability and competency models, coaching and mentoring offerings, development programs, succession planning processes, and books and other resources on CHRO effectiveness, only about 40%-50% of CHRO roles are filled with internal candidates from a departing CHRO’s own company, according to a 2022 report from Talent Strategy Group. Why is it that more than half of companies remain unable (or perhaps unwilling) to develop CHRO-ready successors? Is 50% readiness good enough? Can and should we do better?
In addition, even though a relatively small percentage of CHRO jobs are filled by people from outside the HR function, what does it say about the HR profession when these “non-HR” placements do occur? Should we be proud of infusing non-HR talent into CHRO roles, or troubled by it?
Further, it is common—and many would say likely—that a change in CEO will yield a change in CHRO. Recent Korn Ferry research found that the average CEO tenure is about 6.9 years, while the average CHRO tenure is 3.7 years, down from 5 years in 2016 and among the lowest in tenure levels of all C-suite roles. Quite often, the CHRO changes when the CEO changes.
These questions and facts are not intended to criticize the great work and significant progress that has been made over the years in preparing CHROs for what they are facing today and will encounter in years to come. In fact, such questions arise from a place of love and respect for the HR profession and the people in it, driven by a healthy commitment to advancing the effectiveness and relevance of HR leaders.
The bottom line is … what does “good” or “great” look like when it comes to CHRO succession planning and readiness? Are we, in fact, ready for CHRO readiness?
On May 16, 2023, I was honored to convene and lead the CHRO Readiness Summit and was joined by 25 current and former CHROs, academic thought leaders and up-and-coming HR leaders. We met to debate and discuss important questions, examine underlying trends and challenges, and highlight critical capabilities and experiences most directly related to CHRO readiness. We were generously hosted by Susan Kelliher, senior vice president and chief people officer of The Chemours Company, at their headquarters in Wilmington, Del. (click HERE for a list of all Summit participants).
As exciting and energizing as it was to be with this great group of HR thinkers and practitioners, it was equally thrilling to discover that more than twice as many people wanted to participate in the Summit but were unable to join us due to various schedule conflicts. So, we felt it was our duty to represent not only ourselves but them as well, along with so many others inside and outside the HR profession whom we believe will benefit from our Summit proceedings.
The summary that follows is intended to be just that: a summary. We had a full day of debate, discussion, breakout groups and debriefs with people representing well over 600 years of HR experience, insight and wisdom. You may not have been in the room, but it felt very much to us like you were.
Our focus was quite specific and intentional. We wanted to zero in on CHRO readiness rather than potentially broader issues affecting the entire HR profession; although as you will see, there are some overlaps. We also did not want to unnecessarily revisit or replicate, or unintentionally criticize or dismiss, the considerable good work that has already been done through CHRO capability and competency models, development programs and experiences, or books and other learning content. Our view was that all this prior work is relevant and valuable and serves as a foundation upon which we could base our Summit discussions and recommendations.
Accordingly, we have done our best in this article not to repeat most of what many inside and outside the HR profession already know. We will instead address key Defining Trends, Differentiating Capabilities and Development Accelerators that we agreed during the Summit could take CHRO readiness to a whole new level. In so doing, our conversation was guided by the following questions:
- What has changed the most over the past 5-10 years, and what will change the most over the next 5-10 years in work, the workforce and the workplace?
- What are the top implications of the above-identified trends and themes for the CHRO role and successor readiness?
- In what ways are CHROs and their potential successors most—and least—ready to address the top challenges, trends and implications?
- What are the most important and effective (and least important and effective) development actions and experiences to best ensure the readiness of CHROs and their successors?
- What is already being done (past and current actions) versus what still needs to be done (gaps and future actions) to effectively develop and best ensure the readiness of CHROs and their successors?
- What highest-priority specific new or improved actions must the HR profession take to ensure the readiness of CHROs and their successors?
The answers to these six questions provided a framework for discussion and enabled our Summit findings and recommendations to be explored through multiple, diverse lenses. Here is what we found to be most important and highest priority …
While literally hundreds of things have changed and are continually changing in the world of work, the workforce and the workplace, Summit participants agreed the following “top 10” trends appear to have the most significant, defining implications for CHRO readiness:
- Technology—AI, analytics and digitization
- Work—flexible, hybrid and remote
- Workforce—work life to whole life
- Workplace—networked with less hierarchy and structure
- Purpose—mission, culture and values fit
- Talent—scarcity, skills mismatch, and unsustainable pay and opportunity disparities
- Leadership—empathetic, vulnerable and transparent
- Force for Good—social impact, public policy, governance, workplace safety/violence and wellbeing
- Change—accelerating pace, complexity and inevitability
- Bandwidth—broader, deeper and more challenging charter for CHROs
As our Summit participants discussed, the 10 trends summarized above create significant opportunities for and generate enormous pressure on CHROs and those who aspire to the role. These themes cut across, and are in addition to, the long list of things we already expect CHROs to know and do pertaining to leadership, talent, culture, organizations, advising, processes, practices, policies and areas of HR functional expertise. However, while HR functional expertise is expected and essential, foundational elements of the role are less differentiating than ever before.
Increasingly, CHROs and their successors will be distinguished by certain select capabilities that will make them different from and better than their CHRO peers. It became obvious to our Summit participants that many traditional CHROs and other HR leaders may simply not be very good at or comfortable with some of these differentiators.
While we discussed a wide range of capabilities at our Summit, the following emerged repeatedly as the five most differentiating things highly effective CHROs must know and do, and about which they must ask the right questions.
Most CHROs and their potential successors know something about HR Information Systems (HRIS) and related HR technology. Far fewer have deep expertise in artificial intelligence (AI), data analytics or how to turn data into actionable insights about people and organizations. This shortcoming must change.
CHRO readiness necessitates confronting an uncomfortable truth: CHROs, CEOs, boards and other leaders do not know enough about people and organizational strengths, weaknesses, capabilities, vulnerabilities, risks and opportunities to accurately decide where to allocate resources and invest in the most promising ideas and pivotal talent. Our understanding of people analytics must become much more nuanced and possibly even more intrusive, which might lead to legitimate questions about privacy and personal freedoms.
Those debates should take place, and ethical questions and ground rules must be addressed. But CHROs who are ready to face the trends and challenges of tomorrow’s organizations must be able to assertively lead the discussion—and the solutions—around the insertion of AI and analytics into people-related decisions. One Summit participant cautioned, “We will struggle in HR until we face our lack of data about people.”
Work and Organization Models
Despite protestations from a segment of CEOs and other leaders, work and the workplace are becoming increasingly more flexible, hybrid, remote, networked, freelanced, transparent and trust-based. The adage, “if I can’t see you, how do I know you are working?” no longer fits. More and more, CHROs are dealing with a workforce that expects and demands the freedom to work when, where, how and with whom they want. These trends are being shaped primarily by the changing demands of key talent and our entire workforces, not by company strategy or CEO preferences. A Summit participant reminded us that, first and foremost, the CHRO charter is to “elevate human performance and potential.”
COVID-19 substantially accelerated an already-growing trend that enables certain people to work remotely or to come into a physical work location on fewer or more select occasions. Post-pandemic, most organizations continue to struggle with the right hybrid models for determining when people need to be together in person and when it doesn’t matter where they work. Productivity and results are fast becoming the logical substitutes for face time at the office.
CHROs and their potential successors must not only be experts on flexible and remote work environments but also on how to build leaders, employees and organizational cultures that thrive where trust-based relationships and business results are more important outcomes than showing up to an office every day. CHROs and their successors will need to be much more adept at these new ways of working than more traditional CHROs and CEOs who struggle with these modern work constructs.
The CHRO role may be morphing into the “Chief Force for Good Officer.” Social justice issues, political division, public policy debates, ethical dilemmas, concerns about workplace violence, economic disparities, mental health and wellbeing challenges, unexpected crises and the erosion of trust in traditional institutions, among other things, are causing companies to become the places where “goodness” and values are protected. As one Summit participant shared, “What people looked for in their church moved to the government, and then to the workplace.”
This evolution is demanding a delicate balancing act among and between a broad range of internal and external constituents. Most CHROs and other HR leaders have been pretty good at understanding and working effectively with internal stakeholders. They are much less practiced and experienced, however, at dealing with external stakeholders including activists, customers, investors, regulators, policy-makers, suppliers, social media advocates and critics, and many more.
Board members are one of the most glaring and crucial constituent groups requiring more CHRO expertise and attention. The vast majority of CHROs say that working with the board of directors is the area they feel least well-prepared to handle upon stepping into their first CHRO role. They are particularly concerned about interacting with the board chair, compensation committee chair and other board members who engage in people- and organization-related matters such as executive compensation, succession planning, engagement and talent initiatives, ESG and Corporate Social Responsibility, safety and others. This development gap must be addressed so that new and emerging CHROs are much better prepared to be effective with board members—and other important external key constituents. The stakes are too high, not only for the CHRO but for the CEO.
When CHROs are not serving as the “Chief Force for Good Officer,” they are often playing the role of “Chief Transformation Officer.” Increasingly, CHROs are being called upon to define reality and outline the need for change, and to lead others to see that need and address it. CHROs must also put the change plan together and program manage it, reward and hold people accountable for taking action, and advise and coach other leaders and key influencers to overcome resistance. Most importantly, CHROs must drive sustainable improvements.
These responsibilities imply a need for agility, speed, resilience and persistence, as well as the ability to see around corners and connect the dots among seemingly disconnected things. The best CHROs must anticipate, but they must also respond. They are required to lead change, but they are also charged with preserving what is historically good and right about the organization, its people and its culture.
The best CHROs and potential successors are seen as champions and advocates for transformational change. Less effective CHROs and successors are seen as slow, risk-averse, bureaucratic, resistors. We must transform the transformers to be comfortable with and lead transformation. According to one Summit contributor, “Change management used to be something we did, but now it is something that is.”
We saved the best (or worst) differentiating capability for last. Demonstrating an understanding of the business is an oldie but goodie when it comes to CHRO readiness and effectiveness. Business acumen is perhaps the most talked about yet least understood dimension of HR leader readiness, and we have been debating it for decades. Are we getting better? Yes. Are we anywhere close to where we need to be? No, not yet. Why?
The business acumen expectations bar keeps getting raised. Many of us with long HR careers recall the days when it was enough to be invited to the operating leader’s staff meetings or to learn how to read a Profit and Loss (P&L) Statement. That was how we thought we could demonstrate our understanding of the business. Those days are long gone.
CHROs are now expected to be involved in priorities and issues that never were contemplated in past decades. Expectations about the need for broad business knowledge and requirements for systemic expertise across a wide range of topics have substantially increased. The best-prepared CHROs are now expected to be savvy in strategic, financial, operational, customer, competitor, supplier, public policy, governance, global and many other issues beyond the historically important elements of leadership, talent, culture, organization and HR functional expertise. The definition of business acumen and the scope and charter of the CHRO role have continued to broaden. Therefore, even significant improvement in CHRO business acumen over the years may look and feel like slow incremental progress.
Despite the efforts and progress related to business acumen, there appears to be another reason we have been talking about improving HR leader business savvy for what seems like forever. Many HR people still don’t understand the business or want to. They prefer to continue to rely on deep HR functional expertise and strong relationships. That is a problem. A Summit contributor summed it up as follows, “HR people need to be more curious about the business.” HR functional knowledge and good relationship skills are essential, but they are insufficient to ensure CHRO readiness as current and future organizational demands continue to evolve.
Summit participants identified dozens of experiences, learning opportunities and/or actions that could be utilized to enhance and accelerate the development of CHROs and their potential successors to best ensure their readiness for the role. The framework below summarizes 24 specific highest-priority actions most identified by our Summit participants. These development steps can help a range of professionals change the trajectory of CHRO readiness, including CHROs, potential CHRO successors, CEOs, senior leaders, board members, HR executive search and other consultants, HR academics and universities, HR professional association leaders and others.
If we collaborate on select development priorities and integrate these actions into existing and new CHRO readiness efforts and succession planning processes, we can collectively make a huge contribution to future CHRO effectiveness and success. Think of this CHRO Readiness Development Accelerators framework as a checklist or menu of potential development experiences and actions, options that can be customized for each CHRO’s or successor’s personal development needs and tailored to the unique requirements of each CHRO role and organization.
(If you’d like to download the above slideshow, click here.)
The CHRO Readiness Development Accelerators framework is not intended to replace or eliminate the need for current resources being used to develop and distinguish CHRO and successor readiness. Instead, our recommended development actions are designed to complement and supplement existing efforts, to be integrated and embedded in coaching engagements, development programs, learning content, experiences and succession planning processes that are already in place. Summit participants do not want to reinvent the CHRO readiness wheel; we want to improve it and accelerate its effectiveness.
Is complete mastery of all 24 experiences and actions outlined in the Development Accelerators section of this article necessary to achieve CHRO readiness? Not at all. However, if a CHRO or potential successors have none or very few of the development experiences we have suggested, and these HR leaders also do not possess the potential and learning agility to address CHRO readiness gaps over time, these CHROs and potential successors should be considered “CHRO readiness risks” relative to other more fully prepared candidates. We strongly recommend using the Defining Trends, Differentiating Capabilities and Development Accelerators presented in this article as a roadmap to best ensure the identification, development, effectiveness and success—the readiness—of CHROs and potential successors.
Our CHRO Readiness Summit participants left the meeting extremely energized and optimistic about the CHRO role and the continued positive impact our profession can have on business success. As the person responsible for authoring this article on behalf of our Summit contributors, I am grateful for the opportunity to summarize the collective wisdom of our very passionate and experienced group!
In closing, I would like to share my personal perspective and address my comments directly to CEOs and board members: You have the right to expect even more of CHROs and other HR leaders than our profession may have been ready to deliver in the past.
If you are a CEO or board member looking to hire, fire, promote, develop and/or assess a CHRO or potential internal successors or external candidates, please do not compromise. You and your organization deserve—and need—the best CHRO you can find. First, determine whether the HR leader knows a lot about leadership, talent, culture, organizations and classical HR functions. If yes, next ask yourself the following differentiating questions…
- Does this CHRO or potential successor epitomize the modern definition of business Acumen?
- Can this CHRO or potential successor embed Analytics into people- and organization-related decisions?
- Does this CHRO or potential successor have a track record of collaboratively working Across functions, disciplines and organizational boundaries to orchestrate solutions to complex business and people problems?
- Has this CHRO or potential successor shown the Agility and flexibility to plan, experiment, adjust, learn and change quickly based on evolving circumstances?
- Is this CHRO or potential successor able to demonstrate Advocacy and display the courage necessary to push back on the things that don’t make sense and push forward on the things that do, even if difficult or unpopular?
- Would you welcome this CHRO or a potential successor to play an Advisory role for you, serving as a trusted coach and thought partner?
If your answer is “no” to any of my six “CHRO A-List” questions, find another CHRO, potential successor or candidate. Raise your expectations. You can—and should—do better. Are YOU ready for CHRO readiness?
Join HRE and an elite group of HR leaders later this year in San Diego to collaborate and share your vision of the future of work and other issues paramount to the industry at the Human Resource Executive® Strategy Summit. Learn more about this event here and indicate your interest in attending.