How can the CHRO be a valued business partner to the CEO?

Statistics show that more HR leaders now have a place on the leadership team.

But those numbers are only part of the story. HR still has to muscle in to exert its influence.

In reality, most decisions aren’t made in meetings. The debating, exploring, and influencing occur outside the formal meeting, so minds are primarily already made up. It’s that dynamic that the CHRO needs to master.

Many CHROs find themselves in the job – but not in the room when it matters. Why is that?

I hear about this scenario far too often. A CEO says all the right things at an interview, so the CHRO takes the job. The CEO said they wanted to build strong leadership, positive culture and high engagement, for example. But it turns out either they were paying lip service, or they didn’t understand the implications – and when it gets complicated, they fail to listen to the CHRO, back HR leaders up or make real-world budgets available.

What many CEOs want is simply for the CHRO to fix problems for them. They don’t want inconvenient advice or uncomfortable truth about what’s happening under their leadership. They don’t want to invest in activities that produce results that aren’t easily related to the bottom line.

CEOs understand the value of the CHRO intellectually, but …

In Accenture’s 2024 report ‘The CHRO as a Growth Executive, ‘ their research proves you can take a CEO horse to water, but you can’t make them drink:

‘The importance of CHRO impact is gaining attention from top leaders: in fact, 89% of the 570 CEOs we recently surveyed say that the CHRO should have a central role in ensuring long-term profitable growth.’

Great news, BUT …

‘But only 45% of those CEOs, by their own admission, are creating the conditions that allow CHROs to lead business growth.‘

From the CHRO’s perspective, Accenture reports ‘that just 29% of CHROs are playing that role, having both the profile and the conditions they need to act as High-Res CHROs.’

The maturity of business leaders is a key factor.

For many leaders who are less mature in their thinking, it can appear that success comes from achieving short-term targets and purely financial results. It takes experience and a broader perspective to understand that sustainable success is built upon a more complex foundation. Total Stakeholder Value is a more comprehensive measure of organisational health, and people are key within that formula.

As Cisco’s Chair and CEO Chuck Robbins puts it: “CHROs have the ability to drive a company’s growth and business outcomes by effectively using people strategy, data insights, and technology to the company’s advantage. When a CHRO is empowered to operate in this way, the result is a culture that benefits both people and profitability”. Accenture article 2024 ‘High Res CHRO’.

What stops a CEO from empowering their CHRO?

As one HR leader said, “the traditional mindset doesn’t consider HR a profit-driving department”.

However, the HR function has insights from all functions in the organisation that have the potential to drive profit. These insights have implications that may be difficult to hear – it may be processes, for example, that aren’t enabling people to perform well:

“CHROs are asking the tough questions that no one may want to ask and connecting data across the organisation in new ways—whether it’s people-related or not. Ultimately, there isn’t an ‘HR agenda’. The agenda for CHROs is the business agenda.” Christine Deputy, Chief People Officer for Pinterest.

What are the CHRO’s tools and weapons?

It’s a tough job. The CHRO has to rise above the strong egos and ambitions that prevail in the C-suite. Yet, they themselves need to attain the stature of a wise and credible sage because their remit is so complex and so human. CHROs need both a sword and a shield.

The sword is the truth and HR leadership’s ability to use data to hold up a mirror to the organisation’s leaders. Ignoring the truth is wrong and unproductive, but handling that must be done skillfully.

The shield is self-care, self-respect and firm beliefs. While HR leaders often look after others, research shows they could be better at caring for themselves. The CHRO’s deep understanding of what will create value for all stakeholders will sustain them. Their ability to get that across will be a defining factor in their success.

Five strategies to build impact as well as confidence in the CHRO role

1. Play the numbers game

The language of business is numbers, so that’s the language that HR leaders must master. Show continuously that you understand what drives success, and link people analytics to that. The CFO and the CEO must see evidence of the CHRO’s confidence with numbers, or they might experience (as did one CHRO I interviewed) ‘the CEO / CFO relationship being skewed to exclude the CHRO from strategic meetings and decisions.’

CHROs can learn from Mercer’s 2024 report ‘Evolving the CHRO role’. CHRO’s said that the top two areas they wished they’d learned more about before they became CHRO were: ‘Greater depth in HR data analytics and insights’ (41%) and ‘Greater depth in non-HR topics (e.g., finance, operations)’ (40%).

2. Secure trusting relationships across the leadership team

The relationship between the CEO and CFO is often quite cosy as they’re both on that critical numbers page. And that’s precisely why the CHRO needs to muscle in and redress the potential imbalance. There’s no one better to quote on this than Dave Ulrich: “People are our customers’ greatest asset”.

The interface between the customer and the company will provide powerful ammunition for the CHRO’s battle to build sustainability and culture. Spending time at the organisation’s front line helps to provide evidence as well as build credibility in discussions with every C-suite colleague.

3. Build HR alignment with business goals

The truth is that many business leaders don’t really understand in what way people drive business success, e.g. the impact of retaining or losing key talent.

The CHRO must engage their board colleagues in discussions that illuminate precisely how to leverage people’s contribution and how that drives business success. This demands a compelling mix of consulting, educating, learning and facilitating others’ thinking. Our Strategic Roadmap provides a structured way to involve all key stakeholders and achieve alignment and respect for HR’s activities.

4. Master positive political intelligence

Self-promotion doesn’t tend to sit comfortably with HR leaders, but leading the function demands that the CHRO builds credibility, respect and influence. This can be done without playing the games one HR leader observed in her CFO: “The only thing that mattered was making the CEO ‘look good’ and not rocking the boat.”

The CHRO can rise above this and win respect by being the wise and honest broker.

Alongside this sagacity, the CHRO can use some deft swordsmanship to ensure they’re not left out of crucial meetings – be firm and explain the value.

5. Be a supportive leadership coach

This tends to be an implicit part of the CHRO’s remit and provides a powerful opportunity to build trusting relationships. It can be a burden to be the one who has to give difficult feedback to a CEO, but it can also be a privilege, as it opens doors to deeper understanding between you. Helping talented leaders grow and succeed can be the most rewarding part of the CHRO’s role, especially when business results confirm their value.

These five strategies will help the CHRO build the business savvy, credibility, and trust to get involved in strategy and decision-making early in the process. The outcome is to be in the room when the CEO is thinking and be their sounding board and trusted advisor.

References

• Strategic Roadmap – free resource for HR leaders
• Accenture report – ‘The CHRO as Growth Executive’
• Mercer report – ‘Evolving the CHRO role in a rapidly changing world of work’
• Enable-HR report ‘How to get HR to the next level’
• ‘Empowering HR’ by Deborah Wilkes
• Maturity Institute.com
  ‘Organisational Maturity builds human-powered organisations, which reconcile responsibility and performance, to deliver the very best outcomes for people and planet.’
  ‘Organizational maturity is a measure of the health of the whole management system.’