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Grabbing a Seat: Developing CHROs in the 2000s and Today

September 12, 2012
Related Topics: Executive Development, Career Development, Management Skills and Development
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The 2000s could be considered the decade of war. The "war for talent" became entrenched in the corporate lexicon, while the "war on terror" dominated the headlines and the federal government marshaled its forces to combat the Great Recession.

In 2001, terrorists flew planes into the World Trade Center and the Pentagon as one plane crashed into a Pennsylvania field on Sept. 11—a date that will ever be remembered in U.S. history, and an event that propelled the United States into war in Afghanistan. Two years later, U.S. troops invaded Iraq, as well.

On the home front, corporations began to fret over the expected retirement of the oldest baby boomers and worried how to soldier on with the anticipated gaps in the workforce.

But the country's prosperity in the early half of the decade quickly dissolved into economic havoc as the housing bubble burst, the stock market tanked and unemployment soared. The federal government doled out stimulus money and corporate bailouts as a means to help prop up the economy.

The war for talent stalled in many quarters. But today, workers' patience is wearing thin. They are ready to move up—or on—so companies are, again, forced to gird themselves for battles over top talent.

And that's where the chief human resources officer comes in. CEOs resemble generals, surrounding themselves with their top lieutenants. Over the course of the 2000s it became more common to find CHROs with a seat at the table, amid the chief financial officers, chief operating officers and other C-suite officers.

"A decade ago, chief human resource officer was a pretty rare title to find anywhere," says Paula Larson, who joined the global payments company Western Union Holdings Inc. as CHRO last year, after spending six years as CHRO at the London-based technology group Invensys.

Now being part of the C-suite is critical for many organizations. "If I'm not in the discussions, I'm not contributing to the solution," Larson says.

"The role is becoming much more crucial than it was 15 or 20 years ago. In a sense it's becoming more impactful. When it's done well, it can have an extremely positive impact," says Patrick Wright, longtime professor of strategic human resources at Cornell University, who recently moved to the Department of Management at the University of South Carolina.

Elevating the role of the head of human resources was driven in part by corporate scandals, Wright says. "It focused boards on the risk inherent in decisions made by senior leaders."

The other major motivator comes from "the increased recognition of CEOs of the reality of the war for talent. They're increasingly focused on the need for the organization to attract and retain the best talent," Wright says.

A 1998 article in the McKinsey Quarterly first trumpeted the concept of the war for talent. It said in part: "You can win the war for talent, but first you must elevate talent management to a burning corporate priority. Then, to attract and retain the people you need, you must create and perpetually refine an employee-value proposition: senior management's answer to why a smart, energetic, ambitious individual would want to come and work with you rather than with the team next door."

Talent remains in the spotlight today. The 2011 CHRO Challenge: Building Organizational, Functional, and Personal Talent, a survey conducted by the Cornell Center for Advanced Human Resource Studies, found that for more than 90 percent of CHROs, talent was part of the CEO's agenda for HR, making it the No. 1 concern.

"Talent is interpreted as the attraction, development and retention of employees in the talent pipeline," according to the study, which drew 172 responses from U.S.-based CHROs, and 44 responses from European ones.

For U.S. CHROs, succession planning, cost control, HR alignment and employee engagement each were on the battle plans of about 20 percent of CEOs.

The drive for top talent is crucial, and the expectations on the head of HR have changed over the years, says Dermot O'Brien, recently named CHRO at Automatic Data Processing Inc., the HR outsourcing and employee benefits company. Previously he spent nine years as executive vice president of human resources at the Teachers Insurance and Annuity Association-College Retirement Equities Fund, a financial services organization better known as TIAA-CREF.

Before, the leader of the HR function was viewed as the head of personnel, which is a monumental change from today. "The expectation of being a business leader first is greater," O'Brien says.

Mara Swan, who has been executive vice president, global strategy and talent, at the ManpowerGroup since 2009, agrees. Swan began her career in HR in 1983. In the early years, the focus had been on labor relations, compensation and benefits, she recalls. By the early 2000s, the emphasis was on cost cutting, which eventually evolved into boosting productivity from existing employees.

"We moved from being a supporter of business to having an active role in the operation of the business," Swan says.

That means those serving in the CHRO role need to have a strong grasp of both business behavior and human behavior in order to understand "how to drive more business performance through human performance," she says.

And that mix of business and people skills can be hard to find. In a 2008 interview with Workforce, HR icon Libby Sartain, who now sits on the board of a number of companies, including ManpowerGroup, said she was very concerned about the next generation of HR talent and the difficulty of finding those with lieutenant-level abilities. "I get a lot of headhunter calls for great jobs that are very strategic, that are focused on all the right things.

"And then I try to think, who do I know who can do this job?

"What we've done is we've created some real specialists in HR. So you specialize in compensation or you specialize in organizational development, or you become a generalist. But we haven't created the right mixes of experiences so that enough people get everything they need for that top job."

That continues to be an issue today. Swan says she often talks to young people who say they want to go into HR because they don't like numbers. The straight shooter would tell them they're in the wrong profession. "Fifty percent of this job is business metrics, business results," she says.

These days, CEOs want someone with broad business experience, says Lauren Doliva, managing partner in the CHRO practice of the executive search firm Heidrick & Struggles. "They are looking for leaders, not practitioners. They're not looking for administrators. They want someone who can shape the agenda and drive business success."

That demand for business skills may have been a major factor in Jennifer Steinmann moving into the role of chief talent officer at Deloitte. Until last summer, Steinmann had been a principal in Deloitte Consulting's Financial Services practice. Given her professional experience, "it's a very strong signal that a background in business is actually one of the key success factors for future CHROs," she says.

In fact, The 2011 CHRO Challenge survey shows that about two-thirds of U.S.-based CHROs worked outside of HR at some point in their career. "These results may indicate that working outside of HR not only develops business knowledge, but also builds a personal credibility with peers—showing that you not only understand the technical aspects of the business, but can also relate to the pressures of having profit/loss responsibility," the report states.

Larson says, "A decade ago, many of us recognized the need to move to value-added analysis." CHROs need to be able to translate the implications of HR statistics, to help business leaders know what to do—and what not to do.

Jim Gillece, chief people officer and senior vice president of human capital management at AlliedBarton Security Services, which provides security officer services, says for HR leaders, "It's one thing to support strategy. It's another to form and shape strategy."

"There isn't an HR strategy that is separate from business. You don't have HR strategy in a vacuum," adds Johnna Torsone, executive vice president and CHRO at the global technology company Pitney Bowes Inc. She has been in the CHRO role since 1993.

A CHRO needs strong "connection skills" to make the HR strategies mesh with the business strategies, says John Murabito, who has spent nine years as executive vice president of human resources and services, at insurer Cigna Corp.. "If you're not on the leadership team, you just can't make the connections as easily."

By being part of the C-suite, CHROs also are aware of changes coming down the pike, and are armed to reshape their hiring strategies as needed. So if executives plan to put heavy emphasis on a new technology over the next five years, the CHRO is in a position to plan for the kind of talent and skills that will be needed to meet those demands, Murabito says.

And even among the other C-suite executives, CHROs have important roles to play in various skirmishes, such as making it clear how a change in corporate culture or strategies will impact employees, he says.

CHROs also serve as coach, not only for those who work for them, but for those in the C-suite. "The CEO has a very lonely job. They do not have too many people they can be vulnerable with. They can act like they're omnipotent and omniscient," ADP's O'Brien says. A good CHRO "can really help them develop" and help the rest of the team in the C-suite develop as well.

Along with having strong business skills and people skills, HR executives today need a wide range of other talents to succeed, CHROs and experts interviewed for this story agreed. These skills include aptitude to tackle topics such as benefits and compensation, the ability to oversee outsourced services, diversity issues, risk management, government regulations, change management and compliance issues. "The function has gotten leaner, yet the expectations have gotten higher," Murabito says.

CHROs also need the self-awareness to identify where their strengths and weaknesses are and turn to others in the department who are skilled in those deficit areas, Torsone says.

Other shifts are taking place as well. Companies are becoming more global, so CHROs have to be knowledgeable about what's happening in the world at large, and comfortable working with people across international boundaries, says O'Brien, who grew up in Ireland and has lived in a number of countries.

And these days top talent isn't necessarily found in a corporation's back yard. Instead, it can be located anywhere around the globe, Deloitte's Steinmann says. While some want to work full time for a company, others want to work part time or on a contractor basis. "Forward-thinking companies are open to different ways of interacting with employees—if you can even call them that."

Doliva of Heidrick & Struggles says many corporations lopped off staff during the recession as a cost-cutting measure. "Now CEOs recognize it might have been a short-term fix, but 'right-shaping' the workforce for the long term is the better thing to do."

That means companies need to have measures in place to address talent gaps, Gillece says. Younger employees may desire more opportunities to work from home or be able to take part in virtual conferences. "We need to really cater to the employee experience. Taking care of your employees also helps your clients." Providing exceptional service to clients, in turn, helps grow revenue and market share.

Good CHROs also work to develop bench strength and undertake succession planning. Giving talented employees a wide range of experiences can help develop their leadership potential, Gillece says.

Perhaps ironically, top HR executives haven't necessarily been able to move up to CHRO within their own organizations. The Cornell survey found that only 36 percent of U.S.-based CHROs surveyed had gained their position through internal promotion. In the majority of cases they were brought in from the outside.

"We don't seem to be good about developing internal successors," Wright says. Major corporations may be reluctant to give the position to someone who has never been before a board of directors before, and instead are more willing to bring in someone who has held a CHRO position at a midsize company.

For those who aspire to lead an HR team, Torsone says it's critical to have a seat at the table. "Why would you go somewhere where you're viewed as a second-class position?" Instead, they need to be front and center, and prepared to lead their organizations in the battle for talent.

Susan Ladika is a writer based in Tampa, Florida. To comment, email editors@workforce.com.

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