Over the last ten years, the role of CEOs has changed to become a much broader and all-encompassing position than solely managing an organisation and its people. The new expanded role of CEOs is even more pronounced in the new talent era. CEOs are the top talent at the top of the organisation, and to a great extent the success or failure of CEOs drive organisational performance or conversely, organisational underperformance. CEOs are either makers or breakers of talent. They can let talent flourish in their organisations, or they can destroy talent. On the other hand, Chief Human Resource Officers (CHROs) have replaced traditional HR Directors as fully-fledged board members delivering significant business value to organisations as they drive success in the current and future workplace.
Against this backdrop, in this article I revisit the role of the CEO and the CHRO in the modern talent-driven economy. While the previous century was dominated by the CEO-CFO relationship, it is my view that given the new era in which human capital drives business performance, there is a paradigm shift in focusing now on a new relationship: The CEO-CHRO relationship.
With the development of South Africa’s first Leadership Standard in September 2017, we are presented with a unique opportunity for CEOs and CHROs to not only leverage their relationship in achieving business goals by optimising human capital, but also to have national impact when they will drive sound leadership practice based on the leadership standard in South African workplaces, and indeed nationally. In addition, we need to recognise that given the fast-paced business world as well as the changing external environment, new roles of CEOs and CHROs have emerged. I will firstly outline these roles, and then conclude the article with a call for action in taking the CEO-CHRO-relationship to a new level of significant business and stakeholder impact towards the 2020 workplace.
NEW ROLES OF CEOs
The traditional role we know is that of Chief Executive Officer, but this role has evolved in recent times, so much so that a new multi-skilled CEO is needed in the modern dynamic work environment. Today “CEO” also stands for a number of new expanded roles as published in the talent management platform Talent Talks:
- Chief Ethics Officer: With new corporate governance requirements and efforts to reduce fraud and corruption, the CEO needs to be the chief ethics champion in an organisation;
- Chief Environmental Officer: The increased focus on sustainability requires a shift from the profit motive as sole purpose of business, to the triple bottom-line in which preserving the environment becomes a top management responsibility;
- Chief Engagement Officer: Despite the fact that most companies now have HR Managers, good CEOs have assumed the role of Chief Engagement Officer, i.e. to play an active role in engaging and motivating talented employees towards improved performance, in addition to engaging with external stakeholders;
- Chief Equality Officer: CEOs have to create a culture in which differences are accepted and valued, thereby creating diverse organisations based on the principle of equality, in particular racial and gender equality;
- Chief Electronic Officer: Given the rapid growth in technology and notwithstanding the presence of CIOs, our CEOs are now also the chief electronic officers of their companies – opening doors for increased technology investment and utilisation of technology, including social media based on a clear digital business strategy for the business;
- Chief Excellence Officer: One of the most critical roles of CEOs is to ensure that the company performs, and a commitment to driving and achieving excellence is thus a core competency of all CEOs;
- Chief Entity Officer: Irrespective of the type of organisation – public, private, or non-profit, the CEO is the Chief Entity Officer, and that means within the spirit of good corporate governance that the CEO has to ensure that the entity is well governed and managed according to sound governance principles, practices and requirements to the satisfaction of the Board and other stakeholders;
- Chief Equipment Officer: As stewards of the company’s resources and facilities, CEOs need to ensure that all the resources of the company are well maintained and utilised, and as stewards they are therefore the Chief Equipment Officers of their companies;
- Chief Enterprise Officer: CEOs as the top managers of a company is the head of the enterprise, and thus should ensure that the company is well managed and continuously innovate to grow and prosper;
- Chief Evaluation Officer: Ultimately the CEO needs to ask the right questions from managers and check whether the business is achieving its objectives and will hence monitor and evaluate the company in its totality.
In the light of the above new roles of CEOs, it is evident that CEOs need to play a more balanced role in organisations today. Depending on the size of the organisation, directors and managers are appointed to manage some of these roles, but ultimately in the spirit of good governance, and accepting responsibility and accountability, the buck stops with the CEO. Balancing and performing in these roles will contribute significantly to good leadership, management and governance, and hence create more socially responsible and sustainable companies.
The reality is that while CEOs in the past were appointed based on one aspect only, i.e. financial performance, the modern CEO will be required to navigate these ten roles simultaneously. Neglecting any of them at any given time may be the downfall of a CEO. This was already proved when the BP CEO lost his job due to the oil spill in the ocean, and more recently the Volkswagen CEO resigning as a result of the gas emissions scandal, thereby failing their duties as “Chief Environmental Officers” as outlined above.
The key message in this article is balanced performance in all CEO roles. This implies that good or even outstanding performance in one or more roles may not be good enough, if other roles are neglected in the process. Moreover, appointing strong functional directors in areas such as IT, HR, supply chain, environment, finance, operations is essential to mitigate the risk of under-performance in any of these ten roles. In the new talent-driven economy, the role of CEOs is multi-faceted. We need the best talented CEOs to manage talent-driven organisations in a balanced way. The best companies will have the most talented CEOs – top talent leaders who can successfully navigate the ten expanded roles of CEOs. Also, CEOs will now really depend on strong CHROs, not only to survive, but also in leveraging human capital to prosper in the new modern workplace.
NEW ROLES OF CHROs
Now let’s turn our attention to CHROs. Moving from HR Directors to CHROs gives the Head of HR C-suite status. That means that the CHRO is now the Chief of HR, like the CEO is the Chief of the Business, the COO the Chief of Operations and the CFO the Chief of Finance. As we outlined the new CEO roles above, it is now time to refocus the role of the CHRO. These roles are as follows:
- Chief Human Risk Officer: The CHRO needs to be proactive in identifying all HR risks that could make it difficult for the business to achieve its objectives, such as absenteeism, labour turnover, skills gaps, etc and then develop plans to mitigate these risks.
- Chief Human Relations Officer: As the best skilled person in human relations in the organisation, the CHRO must take responsibility for developing sound human relations throughout the organisation, including coaching managers to improve their people skills. This will create a better climate for sound employment relations and productivity.
- Chief Human Recruitment Officer: The CHRO must ensure that the right people are attracted and appointed to achieve the goals of the organisation.
- Chief Human Retention Officer: Once staff are appointed, the CHRO should ensure that there are plans and programmes in place to develop and retain staff.
- Chief Human Recognition Officer: CHROs must work with CEOs and other line managers in ensuring that staff gets recognised for their achievements by means of individual, team and organisational recognition programmes.
- Chief Human Rewards Officer: CHROs must ensure that staff are appropriately rewarded for their work, hence sound reward and remuneration should be in place to reward employees.
- Chief Health Resources Officer: Looking after the health and wellness of all employees, the CHRO should ensure that good health, safety and wellness programmes and resources are in place.
- Chief Hierarchy and Roles Officer: The CHRO is the top specialist in organisation design in the company and therefore needs to ensure that the organisation is correctly designed and all roles clearly defined to achieve its business strategy.
- Chief Human Response Officer: The CHRO is in touch with people and act as the conscience of the organisation. Should anything go wrong in the company, the CHRO needs to respond in an appropriate manner, by consolidating the response of employees, e.g. after an accident, strike, loss of a major business deal etc.
- Chief Human Realignment Officer: Sometimes people go in different directions and during bad times the chances are good that it becomes more difficult to focus employees and managers on the execution of strategy. Continuous realignment of people strategy and HR strategy to overall business strategy is key to ensure that all employees work towards the same goals.
From the above ten roles of the CHRO it is evident that while traditional HR roles such as recruitment and employment relations will always remain part of the responsibilities of the CHRO, certain new roles such as a custodian of HR risks has emerged in recent times. CEOs often have sleepless nights about people issues, and the CHRO needs to be the steward of HR risks to satisfy the CEO that employees will be able to ensure that business goals are achieved. Ultimately, the CHRO plays an HR Governance role on behalf of the CEO by overseeing that the right decisions are made about people in ensuring that the best talent is available and ready to achieve business goals.
A CALL FOR ACTION: ELEVATING THE CEO-CHRO RELATIONSHIP FOR BUSINESS GROWTH
Understanding the ten roles of the CEO and the CHRO ensures that both parties are ready to elevate their relationship to a new level of strategic significance. The CHRO must focus specifically on alleviating the stress of the CEO in new areas that may be uncomfortable for most CEOs such as ethics, the environment, technology and employee engagement. Here the CHRO needs to step up in assisting the CEO to cope with these new demands of the modern work and business environment. In certain cases such as environmental impact, the CHRO will be asked to build organisational capability in environmental competence, by for example employing specialists who can deal with environmental governance and risk. Another example is technology, where the CHRO needs to ensure that the CEO is enabled to drive a digital business strategy by employing high level technology and digital business specialists, and enabling other managers to adapt accordingly. However, this will require a high level of digital acumen from the CHRO, thus stepping up in technology competence will be a key development area for CHROs.
In essence, the organisation of the future needs to operate in the triple context of people, planet and profits, and this requires a major refocus and in many cases rebuilding of organisational capability that must be led by the CEO as the top leader in the company. The CHRO must reach out to the CEO and position him/herself as the right-hand of the CEO. While the CEO is the leader of the talent management strategy in the future workplace, the CHRO is the main facilitator of the talent strategy. Hence, the CHRO needs to provide the expertise in assisting the CEO and other C-level executives in ensuring that the company moves forward with the best available talent in achieving the optimum level of productivity and innovation. This means that the CHRO needs to shift thinking, approaches and practices from the perspective of simply “managing the HR office” to rather reposition the CHRO role to enable the CEO and Board of the company to achieve business goals by leveraging the human capital of the business. However, the CHRO needs to be strong in numbers and business acumen in assisting the CEO in driving business results.
The CHRO should take the responsibility for initiating and building a good relationship with the CEO. Focusing on meeting the needs of the CEO, will position the CHRO as a value-adding C-level executive meeting and exceeding the needs of the CEO as the head of the organisation. Enabling the CEO to be successful as the talent leader of the business, will ensure that the CHRO becomes one of the key executives in the business and put the company on the path of sustainable success in growing people, sustaining the planet and making profits for the business.
While we want to encourage CEOs and CHROs to continue with their internal relationship building as outlined above, the national leadership standard developed by SABPP in association with Talent Talks on 14 September 2017, provides a further opportunity to multiply the impact of the CEO-CHRO relationship at a national level. By working side by side in developing the leadership standard for all South African leaders in advancing sound leadership across sectors, CEOs and CHROs have positioned themselves as national leaders prioritising leadership as a key imperative for business success. Not only will leaders learn from one another, they will also replicate successes, learn to deal with common challenges, and grow consistency in leadership practice, while enlarging the future pool of leaders for organisations and the country as a whole.
I therefore invite CEOs, CHROs and any other managers to join us on the Leadership Standards Journey – a platform converting a leadership conversation into a clear leadership standard focusing on raising the bar for leadership in South Africa.
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Marius Meyer is CEO of the SA Board for People Practices (SABPP), the HR professional and quality assurance body in South Africa. He is also an editorial panel member for Talent Talks and Vice-chairperson of the Talent Advisory Board of the University of South Africa. An earlier version of this article was published in People and Management Magazine in India. More information about the Leadership Standard journey is available on www.talenttalks.net and www.sabpp.co.za