Transforming the Future The CHRO as Chief Change Officer Todays top CEOs now expect the CHRO to be adept in general management skills with broad business perspectives and a strategic mindset as a business leader.Todays top CEOs now expect the CHRO to be adept in general management skills with broad business perspectives and a strategic mindset as a business leader. The key charge for the CHRO functionally is to turn talent management into an instrument of business transformation that advances strategy, develops agile leaders, and coalesces in culture. How do outstanding CHROs unite these strategic and operational demands? By becoming, in effect, the chief change officers of the organization. No role in the C-suite has been transformed more or has the opportunity to become more transformative for business than that of Chief Human Resources Officer (CHRO). As CEOs have increasingly recognized the value of talent to drive business outcomes, they expect CHROs to possess broad business acumen and to transform traditional HR practices into powerful competitive advantages creating a new way of working in a world of continuous change. Says William P .Sullivan, CEO of Agilent Technologies, “I have always believed that a CHRO has a much bigger role than employment strategies alone. Weve seen proof of that at Agilent where our HR leaders have a deep understanding of business strategies and are always at the table in making strategic decisions and shaping the companys direction. ” To fulfill this strategic role, the CHRO must possess a broad range of business knowledge and leadership skills, including: Vigilance in scanning the external environment to anticipate business and talent threats and opportunities. Strategic thinking skills to work with the CEO and executive team to set direction. Cross-functional business understanding with a P shortages of technical, scientific, and engineering talent; waves of senior people retiring in countries that experienced the baby boom; unrelenting technology changes creating new business models, shifting cost dynamics in labor markets around the world; and global reshuffling of economic power and geopolitical instability. In this environment, CHROs can neither conjure talent out of nothing nor simply say that talent constraints preclude an otherwise promising strategy. Instead, as chief change officers, they must be able to design and manage the continuous evolution of the culture of the business and the talent ahead of any change and execution of strategy. 4 Transforming the Future The CHRO as Chief Change OfficerSays Donna Morris, Senior Vice President, People and Places, Adobe Systems, “As strategic business leaders, CHROs need to constantly re-evaluate and recommend organization and people changes, and have the courage to disrupt what might no longer contribute to business growth. ” For example, as many hardware companies moved to software, and software companies moved to the cloud, they required completely different talent at all levels. As the world at large has moved to mobile and digital, every business has had to adapt and to harness new types of talent. Consider numerous other transformations and migrations: bricks and mortar retailers adopting e-commerce, content moving from TV to smartphone, distribution becoming integrated supply chain, BPOs shift to provide analytics to their customers, not just processes. Much like a Chief Risk Officer, but from a talent perspective, the CHRO should engage in long-range scenario planning considering the impact of various talent risks and the likelihood of their occurring. They can then be prepared to create the right mix of talent development, external talent acquisition, and global workforce opportunities to overcome talent constraints and deliver on company strategy. They will also have the foresight to know when that mix should be altered or when it is time to pause and let the change take hold. And they must be prepared well in advance to make those decisions. Says Paulo Pisano, SVP of Talent for Pearson plc and former global head of HR for Pearson International, “The challenge for CHROs is to detach themselves from the ER-like urgent box to keep the focus on longer-term trends and future proofing the business. But because CEOs often end up relying too heavily on CHROs to deal with urgent issues, an effective CHRO will have to play the role of educator and negotiator, in a very assertive manner, in order to maintain a balance between immediate firefighting and future-proofing the company. ” Success in this world of rapid flux often depends on the ability to look for talent from non-traditional sources in different geographies, industries, experiences. Or it could mean simply finding off-the-radar people with untapped potential people who possess just plain fundamental smarts. But in every case, this talent will possess the critical ability to adapt. For example, we have recently seen an executive from a hardware company brought in to run a key business in a financial services company, a general manager in a food commodities business taking a leadership development role in an apparel company, and a head of strategy put into a CIO role. Similarly, CHROs are often being sourced from non-traditional areas, including line roles, IT, marketing, sales, and strategy. This expanded strategic scope of the CHRO role has increasingly meant more interaction with the board. In the past, board presentations around talent strategy from CHROs dealt primarily with CEO succession and executive compensation. Today, however, farseeing boards recognize the talent risks and opportunities that lie ahead. They want to be assured that opportunities are being leveraged and risks are being systematically and objectively managed, especially succession needs and risks throughout the top levels of their companies. They also want to know how talent is being factored into key business decisions and any potential impact on shareholder value. In fact, boards at several major companies maintain distinct human resource or talent risk committees to ensure keen oversight of these issues. If the business side of the CHRO role, then, is primarily about staying ahead of change in the external world, the talent side of the role is about managing change internally in the organization, its people, and HR itself. Heidrick & Struggles 5Talent transformer Talent manager Business-led talent strategist Order taker TRADITIONALLY TODAY Cross-functional business understanding, with a P&L orientation Functional focus Anticipates business and talent threats and opportunities Responded to external trends Talent risk manager Talent steward Expands leadership development to create agile leaders and workforce who can handle continuous change Focused leadership development on skills and scope Technology innovator Technology user Practices diversity and inclusion Promoted diversity Marketer and visible communicator, internally and externally integrating the corporate brand with purpose and values Surveyor of employee engagement Drives high performance in a multi-generational, globally diverse employee population where flexibility and adaptability are easier for some than others Helped maintain monolithic culture CEOs and boards today expect CHROs to possess broad business acumen and to transform traditional HR practices into powerful competitive advantages. The common thread in these new expectations? Change. Anticipating it, managing it, developing capabilities, and positioning the organization to stay ahead of it. GREAT EXPECTATIONS THE CHANGING RESPONSIBILITIES OF THE CHRO 6 Transforming the Future The CHRO as Chief Change OfficerTalent transformer Talent manager Business-led talent strategist Order taker TRADITIONALLY TODAY Cross-functional business understanding, with a P&L orientation Functional focus Anticipates business and talent threats and opportunities Responded to external trends Talent risk manager Talent steward Expands leadership development to create agile leaders and workforce who can handle continuous change Focused leadership development on skills and scope Technology innovator Technology user Practices diversity and inclusion Promoted diversity Marketer and visible communicator, internally and externally integrating the corporate brand with purpose and values Surveyor of employee engagement Drives high performance in a multi-generational, globally diverse employee population where flexibility and adaptability are easier for some than others Helped maintain monolithic culture Heidrick & Struggles 7