Canadian HR Reporter

Credit: gemphoto (Shutterstock) By Neil Shastri I n an economy where growth plays a constant game of hide-and-seek and disruptive trends such as technology rapidly change the nature of doing business, what role must CHROs play? What makes some CHROs successful and others not? Are fi rms and the HR profession doing enough to develop the next generation of CHROs? To fi nd out, Aon Hewitt spoke with 45 CHROs across the globe, collectively rep- resenting more than 3.3 million employees and more than one trillion dollars in rev- enue. e most disturbing fi nding for HR? More than one-half of the respondents did not have a "career HR" background (see chart). Perhaps more disturbingly, 16 per cent came from line or staff functions, with no background in HR before taking on the top role in the function. Executive placement fi rms confi rmed this wasn't a sampling bias (they, in fact, see a much larger pro- portion of non-HR CHROs being hired by employers). So why is this the case? Here are some factors making non-career HR persons at- tractive CHRO candidates: Change agents: Non-career HR CHROs often grow from within a fi rm. In fact, 46 per cent of this pool were promoted to the position internally, compared to 33 per cent of career HR persons. e reason? ese in- dividuals have often been in charge of large- scale transformations at their organization in the form of strategic shifts, acquisitions, diversifi cation or global expansion. ere- fore, they have immense credibility with the CEO and the board in terms of their ability to get things done, and drive change. One CHRO in the study had spent his career at the fi rm, starting out as an engi- neer and rising to leadership positions on the business side. But he was always seen as a change agent at the fi rm, so he was con- sidered the right fi t as the fi rm was looking at streamlining its various units to lever- age synergies, which meant a mindset shift from a talent standpoint. Visibility: Seventy-one per cent of non- career HR persons had board exposure prior to taking on the role, compared to 62 per cent of the career HR group. is makes them aware of the board's agenda, their in- terpersonal dynamics and its relationship with the CEO. It also gives them inti- mate knowledge of what data and issues to bring before the board and, perhaps more importantly, what not to bring forward. A number of the non-career HR participants had been stra- tegic advisors to the board in the past, either play- ing roles such as the general coun- sel or an external consultant. Bu si ne ss u nder- st and i ng: Knowle dge of how a firm makes money is table-stakes for any C-suite member. However, in many cases, non-career HR individuals had a profi t-and-loss responsi- bility and, therefore, deeper knowledge of business and strategy. e expectation is that they be able to translate these into the people needs of the fi rm. In fact, when asked to state the fi ve most important competencies required in a CHRO role, 70 per cent of non-career HR individuals cited "business knowledge" compared to 59 per cent of career HR individuals. e transition isn't always smooth Non-career HR CHROs, especially those without any background in HR, don't al- ways fi nd the going smooth. One such CHRO who earlier lead a business unit shared his experience: "HR meetings were a turnoff : ey'd spend two hours on discussing dress code and none on discussing business impact. e incumbent CHRO was retiring and suggested my name since I was always push- ing HR to change the tone and agenda of their meetings. I went to the com- pensation committee meeting with no idea of what to say. But you learn on the job." The transition is particularly difficult for someone coming from the outside, or someone who has grown into the role internally, shifting from a subordinate to a peer. For a non-career HR CHRO to suc- ceed, she must have a strong second-line that understands technical de- tails, especially in areas like ex- ecutive compensation or health and benefi ts. e board and the CEO must also create space for the person to make mis- takes while learning the ropes. Most of these CHROs had a well-defi ned action plan in terms of the outcomes they'd want to achieve over a two- to three-year period. Many enlist the help of other peers in the C-suite, particularly that of the CFO (for fi nance and executive pay-related advice) and the general counsel (for compliance and labour-related advice). Others join CHRO networks in their region to build their knowledge and to use peers in other fi rms as sounding boards for their ideas. Stepping stone to broader positions e CHRO position is also being increas- ingly looked at as a "stretch assignment" to test a high-potential C-suite member or successor on his ability to fl ex and handle a completely alien function. Far from be- ing seen as a terminal or retirement option, CHROs (both career HR and otherwise) are now using their knowledge of having handled the function to move onto much larger assignments. Since the time of the study a year ago, three of the CHROs have moved to broader roles, including CEO of a strategic division at a Fortune 500 fi rm. e HR function is in a state of fl ux. On the one hand, there are calls to split the function, while on the other there is an increasing drive from within the function to revamp itself to help fi rms drive value through people. CHROs from outside the function bring a unique perspective and deep business understanding. e onus is on HR professionals to rein- vent themselves, talk the language of busi- ness and start embracing data and analytics — the wave of the future. Neil Shastri is leader of global insights and in- novations at Aon Hewitt in New York. Inside out • 60 per cent of CHROs interviewed were hired externally, while 40 per cent grew from inside. • When CHROs are hired externally, 50 per cent are career HR; however, when people grow internally, only 39 per cent are career HR. • No other function, except for IT, has so many leaders coming from outside the function. Career HR 47% Mix 24% Consultant 13% Sta 7% Line 9% Background of CHROs FEATURES HR EDUCATION Many leaders are developed internally Many leaders are developed internally – without a background in HR

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