HR in the Boardroom

The HR Professional's Guide to Earning a Place in the C-Suite

W. Wright

• Publisher: Palgrave Macmillan
• Year: 2015
• ISBN:
  9781137450913
• Topic: Business
• Subtopic: Human Resource Management
• Index: Business

This unique guide explores how senior HR executives can build strong working relationships with the CEO, other members of the executive team, and the board of directors. With case studies and interviewswith HR professionals from a range of industries and locations, this is truly the first book of its kind.

chapter 1

What CEOs Really Think about Most HR People and Why

Why start this book with a look at the relationship of HR with CEOs? The reason is very simple. The key to an HR professional earning, and keeping, “a seat at the table”—that venerated and almost mythic location in the C-Suite—is heavily dependent upon the relationship with the CEO. The board of directors, the other members of the executive team, and the employees in the organization will all look at the CEO and HR relationship to determine the value placed on the function.

Understanding the perceptions—and biases—that many CEOs have about HR is a very important first step for any HR professional who wants to increase the probability of earning a place in the C-Suite. In theory, there may be instances when an HR professional gains entry to the C-Suite, and a seat at the table, without the endorsement or sponsorship of the CEO. However, those instances are probably exceedingly rare. In reality, it is much more likely that the CEO is a gatekeeper who has significant influence in determining if an HR professional, or any other executive, will reach the C-Suite level in the organization.

Almost everyone has an opinion about HR. CEOs are no exception. And like most people, the opinion formed by a CEO about anything or anyone, including HR, is usually an interesting combination of personal experience, the CEO’s intellectual analysis of information and data, and the CEO’s internal set of emotional processes. Sometimes, folklore may even play a part in this opinion formulation process. What CEOs think of most HR people, that is, what prompts their opinion, is probably no different. It is likely a combination of their personal experience with HR, what they may read and think about HR people, and the emotional filters that may affect how they feel about HR.

Though it makes sense to start with the CEO and HR relationship, delving into what CEOs really think about most HR people and why requires a willingness to deal with some unpleasant observations and data about the human resources function. It also requires treading into the murky waters of what drives the attitudes and mindset of the typical CEO. Since it is a lot easier to deal with what CEOs think of most HR people we will start there before we attempt to tackle the why a little later in this chapter.

What Many CEOs Feel about HR

In recent years, CEOs have become much more skilled at expressing the importance of people and the value placed on the HR function. It is probably a safe wager that almost all CEOs at some point in their tenure have stated, or will state, that “the employees of the company are its most important asset,” or words to that effect. Global competition, the proliferation of technology, and the importance of a talented workforce, means that for most companies this statement is true. Intellectually, CEOs know it is almost impossible to gain a competitive advantage without having the right people in an organization in the right place making the right contribution to the success of the enterprise.

There are many CEOs and organizations who demonstrate that they wrestle with the complexity of human resource management as the best way to make their companies more successful. One would be hard pressed to find an organization of substantial size that does not have a senior HR professional, sometimes with the title chief human resources officer (CHRO), whose job is to make sure the company recruits, retains, and rewards the best people needed to enable the organization to accomplish its mission and meet its business goals and objectives. Though some CEOs speak more positively about HR and some organizations have elevated its stature, what do many CEOs really think about the function?

What do CEOs say about HR in surveys?

Fortunately, there is no need for speculation when attempting to determine what CEOs think about HR. Over the years, it seems as if a new industry has developed that is devoted to exploring through surveys both the positive and negative pronouncements of CEOs about HR through surveys. Consulting firms, academics, and HR professional organizations have all looked at, and opined on, the state of the CEO and HR relationship based on surveys they have conducted. Some of these surveys have been longitudinal studies where data has been collected over a number of years. The Society for Human Resource Management (SHRM) in the United States, the Economist Intelligence Unit in collaboration with the technology giants Oracle and IBM, and the Chartered Institute of Personnel Development (CIPD) in the United Kingdom have all conducted surveys in the past few years in which CEOs have shared their opinions about HR.

As would be expected, the surveys of CEOs do highlight that people issues continue to be high on the senior leadership agenda. In general, CEOs acknowledge that HR’s role in recruitment and placement of talent, and better management of human resources, is important in gaining a competitive advantage. The surveys point out that CEOs have a more favorable opinion of the importance of HR and what the function does. It is hard to argue against the contention of many HR professionals that the function has taken on new significance in many organizations and is now more valued than ever before. Most CEOs also think of HR as a key player when it comes to succession planning, compensation and benefits or reward systems, employee communications, and organization change. CEOs will speak of the trusted advisor and confidante role that some senior HR professionals fill. The surveys reveal that many CEOs have strong personal relationships with their senior HR professional and consider this person someone with integrity and good interpersonal skills. Frankly, the importance of these HR roles probably should have been talked about more favorably by more CEOs many years ago. However, for many of the CEOs polled in surveys something is still missing when it comes to HR.

Some of the CEOs indicate that they still have not seen a clear and direct connection between what HR does and increased profitability or business growth. The surveys have another consistent theme—many CEOs have a less than optimum opinion of the business ability and business understanding of HR professionals. Unfortunately, this appears to be a global assessment. The broad reach of many of the firms and academics conducting the surveys has yielded data generated from the Americas, Europe, and Asia. The data also appears to be consistent across industries. As we now move toward the end of the second decade of the 21st century, the attitude of a sizeable number of CEOs about HR is reminiscent of the attitudes expressed by CEOs in the middle of the last century.

many CEOs have a less than optimum opinion of the business ability and business understanding of HR professionals

The CIPD survey

Instead of considering the general characterizations of HR from a number of surveys, let’s look at some specifics from one. The relatively recent survey report by CIPD published in early 2013¹ is a good place to start. It gives us insight into what business leaders think about HR and its contribution to business performance. More importantly, the CIPD survey also asked HR their opinion about the contribution HR makes to the business. As a result, we can “compare and contrast” the assessment of HR’s contribution to business performance by business leaders with what members of the HR profession had to say about themselves. The CIPD surveyed 369 business leaders and 107 senior HR professionals to obtain “insight and expert commentary about HR’s current and future contribution to business performance.” The survey did not seek the opinions of a business leader and an HR leader from the same organization.

Let’s deal with the good news from the survey first. Business leaders and HR respondents appeared to be in synch with each other regarding the top business priorities—cost management, organization agility, market growth, productivity, and increased customer focus. The survey also showed that business leaders and HR appear to “lose sleep over the same things.” In other words, HR leaders and business leaders seem to agree on the top five challenges facing most businesses—right skills and talent, economic uncertainty, delivering on priorities with a limited budget, managing cost, and leadership capability.

HR and business strategy

Things became interesting when the survey touched on HR’s contribution to business strategy. The survey asked the business leaders this question:

To what extent are senior HR people in your organization involved in business strategy?

Table 1.1 contains the responses from the HR leaders and business leaders:

Table 1.1 HR involvement in business strategy

Source: CIPD HR Outlook: A variety of leaders perspectives, Winter 2012–2013, with the permission of Chartered Institute of Personnel and Development, London (www.cipd.co.uk)

In the introduction to this book, I recounted my presentation at a conference more than 20 years ago where I spoke about the “disconnect” between HR and CEOs regarding HR’s contribution to the business. Not surprisingly, the caption in the CIPD’s report about the findings contained in Table 1.1 was “we are not always connected.” In the words of a famous American baseball player well known for malapropisms, reading the CIPD survey data was “déjà vu all over again” for me.

Understandably, the CIPD tries to explain the data in the most favorable light. However, it is difficult to ignore several of the implications of the responses. Let’s start with the obvious ones. HR’s opinion of its involvement in setting business strategy is definitely inflated when compared to what business leaders think. Sixty-two percent of the HR leaders thought they were integral to setting business strategy. In contrast, 29 percent of business leaders thought HR was integral. A significant number of business leaders say HR has no involvement at all in business strategy or don’t know. In other words, the business leaders surveyed doubted any real contribution from HR to business strategy. The business leaders surveyed did give HR slightly more credit for implementing rather than devising strategy business strategy, and if anything this is how they perceive HR. Unfortunately, HR people picked up the reputation of being good at implementation years ago and it appears to still be true.

Understandably, the contribution to business strategy issue seems to be very important to CEOs. Granted, we will often hear the term “HR strategy” expressed by HR professionals as a key output of the function. Often, HR strategy refers to what HR has come up with to match the function’s understanding of what needs to be done from a people standpoint to help the business meet its goals and objectives. In my experience, the process of developing an HR strategy has not always been done in close coordination with the leaders of the business. In many cases, HR strategy actually means the strategy to implement and administer the HR policies and practices thought needed to help the business (sometimes whether the business leaders want the policies or not). Many HR professionals consider this a strategic contribution and may have it in mind when they give what are obviously overly positive responses to enquiries about HR’s strategic partnership role with the business. Unfortunately, the CEO and other senior executives often have something entirely different in mind when asked about HR’s contribution to business strategy.

HR’s contribution to the business

What did business leaders think about HR’s contribution to the business? Table 1.2 summarizes the responses of business leaders when asked to agree or disagree with statements about HR’s contribution to the business. This picture also isn’t particularly pretty.

The first statement business leaders were asked to agree or disagree with was:

Table 1.2 HR’s contribution to the business

Source: CIPD HR Outlook: A variety of leaders perspectives, Winter 2012–2013, with the permission of Chartered Institute of Personnel and Development, London (www.cipd.co.uk)

HR combines commercial and HR expertise

Forty percent of the business leaders surveyed disagreed with the statement. Another 39 percent of the business leaders had no opinion. Things did not get any better when the business leaders were asked whether HR was able to help the organization become more flexible and agile—only 27 percent of business leaders agreed. I found the response by 52 percent of the business leaders that HR prioritizes what matters to HR over wider organization issues particularly troubling.

Unfortunately, business leaders reiterate in the CIPD survey the reputation that HR has tried to shake for years. Granted, I am making a broad generalization but, in my experience, most CEOs don’t think of HR people as business people. Few HR people have reached the status of business peer in the minds of CEOs and other senior executives. When I have been able to get CEOs to tell me what they really think of most HR people they often speak of HR inhabiting its own special world within their respective companies.

It is easy to understand why a CEO may have that opinion. Many HR professionals have spent the bulk of their careers in the HR world and have become fluent in the nuanced jargon of HR. Ask some of these HR people to explain the financial concepts of the time value of money, internal rate of return, or discounted cash flow, and their eyes may glaze over. Even those CEOs who indicate HR has become more of a key player in the C-Suite make it clear there is a lot of work that needs to be done before most HR professionals are considered to possess the business savvy equal to that of other executives in the C-Suite, if one reads between the lines of their polite survey responses.

What about the HR Strategic Partnership?

With people so critical to the success of an enterprise, it would logically follow that the CEO—the person charged with making sure that the enterprise reaches its goals and is successful—and the senior HR professional would have a close and effective business relationship. Many think of this as “HR’s strategic partnership” with the business. However, despite the increased prominence and recognition now afforded HR, there are business leaders who contend that HR still has a long way to go before being considered a true strategic business partner and a driver of business success. Frankly, after years of talk about HR gaining a seat at the table, meaning entry to the C-Suite and presumably participation in the most critical decisions affecting the enterprise, many CEOs continue to indicate that the role of strategic business partner has yet to be realized.

HR’s uphill struggle

The effective leveragi...

Table of contents

• Cover
• Title
• Contents
• List of Figures and Tables
• Acknowledgement
• Introduction
• 1 What CEOs Really Think about Most HR People and Why
• 2 How to Earn a Seat at the Executive Table
• 3 You Have a Seat at the Table—Now What?
• 4 Know the Business Front to Back
• 5 Helping the Executive Team with Its 4 Rs—Recruit, Reward, Retain, and Retire Talent
• 6 Succession Planning—How to Be an Honest Talent Broker
• 7 Coaching the CEO and the Executive Team
• 8 Pros and Cons of Being the CEO’s “Trusted Advisor”
• 9 Navigating Executive Team Wars
• 10 The Board, the C-Suite, and HR
• Conclusion
• Notes
• Index