The CEO–CHRO Partnership

For years, human capital was abundant. But today, human capital has become scarce and is a source of competitive advantage, —and it’s only going to get even more challenging here on.

On one hand we have short-term labour shortages and while on the other, long term labor trends are not encouraging either. The recent Microsoft 2021 work trend index as well as the report by conference board validates the persistent talent challenges. There are widespread challenges in attracting and retaining workers and now more than ever, CEOs must prioritize human capital strategies over anything else.

It goes without saying that successful HR functions are strategic: they play a vital role in key business decisions and directly manage or impact many business outcomes. In fact, in today’s talent-crunched environment CEOs are increasingly looking for the CHRO to play a more critical role in defining as well as driving business strategies. In Most companies, one would find rigor around financial aspects but as they say, numbers do not drive business, people do. In this context, relationship between CEO and CHRO is one of the most important, if not the most important.

The Talent Paradigm

The CEO- CHRO relationship or partnership has evolved over the years, becoming more strategic and vital in last few Years. Given the nature of variables, the partnership is a dynamic one and not a static one. It keeps evolving and changing basis internal and external factors. Most recently, with pandemic getting added to the equation and ongoing talent crunch, it has further spurred this relationship to evolve in different ways.

CHROs now play a very strategic role in the organizations they serve. Businesses grow or fail based on the quality of their people; hence the human resource executive role is one of the most strategic in the company. When it comes to finding the right people, the right strategies are essential, and the CEO and CHRO are perhaps the two leaders best poised to take charge of that strategy.

People Advisor

CHROs who work well with CEOs have a lasting impact on the organization. The role of new age CHROs continues to evolve as rapidly as the organisations they serve. Today they wear multiple hats: Strategic partner. Culture builder. Counsel to the CEO. Analytics visionary. Chief engagement officer. D&I activist. Brand ambassador.

Essentially, CHROs today are more than functional experts, they must be able to generate business value to forge meaningful partnership with the CEO.

A Practical Strategist Studies show that most effective partnerships between CEOs and CHROs happen when they align on a common vision and business strategy and when the CHRO participates in both development as well as implementation of the same. As CHRO, one can play a crucial role in implementing the company’s strategy and promoting it with employees, something which is crucial for any strategy to succeed.

However, more than that, as partners on the common vision, CHRO is often in a vital position to offer a practical perspective, which can bring the right balance needed for execution. While visionary leadership is a hallmark of many successful CEOs, its equally important to be in tune with ground reality when it comes to resources and capabilities. CHROs can work with CEOs in seeing how realistically they can help achieve this vision.

Have a perspective, most importantly- share it. One of the most common challenges among CEOs is the very limited group of people to whom they can depend on for objective or unbiased opinions.

As CHRO, one should be one of those people—but to do that, one must have an opinion as well as the confidence to share it and provide alternate views or perspectives, at times, even challenging the CEO’s opinion. Its important to note, being unbiased doesn’t mean neutral, sometimes even on matters which may not be under CHRO’s direct purview. Openness on important issues, different worldviews and ground pulse can create opportunities to become a valued adviser to the CEO on a wide variety of topics or business areas.

Given that CHRO is expected to provide organizational input in addition to personal and behavioural feedback, it makes the relationship between CEO and CHRO a uniquely sensitive one. There could be potential differences or disagreements, which is quite natural. However, for any successful CEO-CHRO partnership to thrive, resilience, as well as mutual respect, is the key to succeed.

A Coach and A Captain

War for talent will continue to intensify and CHROs are key drivers to ensure the right environment is in place to maximize employee motivation, it is safe to say companies that do not have strong Human Resources function, will face serious business and cultural problems. In this context, it is imperative for CEOs to treat their HR executives as equal partners. The relationship between a CEO and CHRO is really like that between a coach and captain now, in a cricketing parlance. A successful CHRO supports his/her CEO by serving as a coach, mentor and sounding board through all key decisions, more so through the difficult ones. CHROs in this equation, need to position themselves as true partners and credible challengers, pivotal to the success of the business.

Connecting the dots

In today’s digital world, CHRO’s ability to effectively hold a mirror to the CEO will depend on her ability to be a curator, someone who can connect the dots and predict patterns quickly, while keeping both latency of data and recency in picture.

The challenge for the CEO is to ensure this is a creative tension as they say, not a dysfunctional one. Competence earns respect, and in turn, garners collaboration and synergy.

And finally, great CEO-CHRO partnerships get strengthened when both play the distinct roles that the organization requires them to at times, communicating the whys of tough decisions down the line and seamlessly percolating the organizational vision to key stakeholders. It is this which ultimately builds that chemistry and success. As cricketer M.S. Dhoni, explained in his way: “It is important to build good partnerships rather than score centuries. Once you have those partnerships, you will also get centuries”.

Trust and Respect for Change Enablement

Trust and mutual respect are key in any great CEO–CHRO relationship—the ability to be curious, to listen to the other person, to show humility and consider a different perspective and be open and respect each other’s viewpoints to find the best solution, and then to stand together in partnership.

The speed of change is so fast, the role CEO – CHRO relationship plays has really become an enabler in organizations for driving continuous change. In fact, it’s no longer about change management, but now it’s about continuous change enablement and change agility. This can only happen when the partnership is anchored in mutual trust and respect.

In the end, time after time we have seen, companies with a strong relationship between CHRO and the CEO have a better handle on their culture, which is what defines success for any organization in today’s world.

(The above article has been authored by Dr. Kiran Bala, CHRO of SG Analytics- Global Insights and Analytics company specially for BW People Publication)