Many CEOs are disappointed in their HR people.
According to business advisor to CEOs and corporate boards, co-author of the book, Boards That Lead, and Spire HR Summit 2015 speaker, Ram Charan, most CEOs would like to be able to use their chief HR officers (CHROs) the way they use their CFOs – as sounding boards and trusted partners – rely on their skills in linking people and numbers to diagnose weaknesses and strengths in the organisation, find the right fit between employees and jobs, and advise on the talent implications of the company’s strategy.
“But it’s a rare CHRO who can serve in such an active role,” he writes in the Harvard Business Review.
Terry O’Connor, Group CEO, Courts, believes that any CEO who is disappointed with their CHRO [or as he refers to as Chief Talent Officer (CTO) in Courts] should be disappointed in themselves because this means that they are not working as effectively with the people’s side of the business as much as they are with the numbers.
“Consider how much access and exposure to the wider facets of the business agenda and strategy a CHRO is given, and the face-time that CEOs give to their COO or CFO,” he says. “It would hardly be fair to expect CHROs to be as strategic as the other C-level roles.”
Still, CEOs are, arguably, smart people, says Prof Arijit Chatterjee, Associate Professor – Management Department, ESSEC Business School, Asia-Pacific. “Even if they employ top executive search firms (who look at past accomplishments and references), or use the usual competency and diagnostic tools (that supposedly take a sneak peek into future potential), CEOs are likely to use their own judgment to assess whether a particular person will be the right person for the job in that particular firm,” he explains.
“If we think of the executive search firms as property dealers who know both supply and demand well, bringing that capability in-house is quite difficult.”
Chatterjee says that while the CHRO might know more details about the profile that the firm needs, it is quite difficult for him or her to know what is available in the executive labour market. “Moreover, to be able to assist CEOs in finding the right person, CHROs need to be aware of not only the supply and the demand, but also about the most effective team composition that is likely to deliver results in the firm,” he adds. “CHROs, therefore, have a tough task.”
Apart from recruitment, getting people to perform is another task altogether. “With the proliferation of CXOs, I wonder if the CEO is increasingly getting out of touch with his or her own organisation,” Chatterjee ponders.
“We know that most strategies fail because of bad execution. Leadership cannot be delegated, neither is it only about board meetings and analyst interviews,” he says. “Implementation challenges, therefore, must be accounted for (even in stretch goals) during strategy formulation and the CHRO needs to flag the “people issues” to the CEO early in the process. These issues can range from propelling middle management to anticipating potential interpersonal conflicts at the top.”
What’s C-level talk?
Having effective C-level conversations requires a blend of understanding of what goes on in the mind of a CEO as well as knowing what motivates them and gets their attention.
The starting point for CHROs to engage their CEOs in a strategic conversation should be from business objectives rather than from an HR perspective, says Don Yeo, Deputy CEO – Policy & Corporate Development Group, CPF Board. “This requires CHROs to acquire a far deeper understanding of the business in which their organisation operates than what is typical of CHROs today.”
O’Connor says that CHROs will intuitively know what’s in the mind of their CEO if they are exposed on a regular basis to the overall business strategy and are given enough face time. “This bridges back to the earlier question about involving CHROs in strategic conversations and ensuring that they are set up for success,” he explains.
The Hershey Company has got it right. All functional leaders, including the head of HR, attend all key business reviews. “More than any other subject in these reviews, the talent discussion involves all leaders,” says Frieder Rummel, Senior HR Director – Asia, Europe, Middle East and Africa, the Hershey Company. “The head of HR is leading and facilitating these talent discussions.”
A CEO is largely interested in five things, says O’Connor:
“Conversations between CEOs and HR chiefs should revolve around how best to support the growth of the company and if we have the right people to be game-changers,” he explains. “The HR agenda in terms of the breadth of resources and talent should line up with the business objectives.”
Questions to ask include:
As far as contributions from HR are concerned, Rummel believes most CEOs see themselves as key owner of the company’s talent, and they want effective support from HR in attracting, developing and growing the talents. “Some CEOs are also interested in personal feedback and coaching,” he adds.
To avoid being perceived as an administrator or payroll personnel, HR needs to be brief about the day-to-day, and instead focus on the high-level strategic agenda, exciting top hires with the hiring policy and building company culture and shared values, says O’Connor.
“Whilst I strongly believe in the importance of paper credentials, it is even more critical that an HR Chief is a ‘people person’ who has a well-rounded knowledge of the business,” says O’Connor.
“Kiran Kaur, our Chief Talent Officer, is a fantastic example of this. She started out in Courts leading our customer service team, before moving into warehousing and operations,” he explained. “Her exposure to different facets of the business gave her a keen understanding of the culture and people-oriented values and she has proven to be a truly top-flight HR leader.”
Chatterjee says that CHROs can best engage with top level executives by:
“CHROs should integrate themselves with all members of the top management team through information exchange, collaborative behaviour, and joint decision-making,” he adds.
Indeed, HR should support all its talent, leadership and culture recommendations by meaningful numeric performance indicators – business leaders are used to base their decisions on quantitative facts and rightfully expect HR to work accordingly, says Rummel.
“Talented HR leaders should acquire business experience through assignments in other functions and aspire and prepare to become CEO candidates themselves,” he adds. “This will increase their business literacy and understanding of their business leaders’ expectations.”
|Key to great CEO conversations
Source: Terry O’Connor, Group CEO of Courts
|More CEOs are narcissistic
Business media often bemoans the narcissistic tendencies of top executives.
About ten years ago, Professor Don Hambrick and Prof Arijit Chatterjee, Associate Professor, Management Department, ESSEC Business School, Asia-Pacific undertook large sample studies on CEOs who have high self-regard.
“We found that CEOs with narcissistic tendencies favour bold actions that attract attention, resulting in extreme and fluctuating organisational performance,” says Chatterjee.
In another study, the professors examined why some CEOs take more risk than others. “We introduced the concept of ‘capability cues’ – contextual signals that decision makers might reasonably interpret as indicators of their current level of overall ability – arguing that positive cues will induce boldness, while negative cues will induce timidity,” Chatterjee explains.
Analyses showed that capability cues generally influence executive risk taking, but highly narcissistic CEOs are much less responsive to recent objective performance than their less narcissistic peers; in contrast, highly narcissistic CEOs are especially bolstered by social praise.
“In sum, both context and character can be a source of CEOs’ confidence, which in turn influences their risk-taking behaviour,” says Chatterjee. “Instead of considering them in isolation, it is a fruitful endeavour to understand how they interact to affect decisions.”
The article first appeared on HRM Asia.