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      The Impact of the Chief Human Resource Officer Role on Private Equity Portfolio Companies

      The role of the chief human resource officer has taken on more responsibility within private equity portfolio companies in the past decade. The role is no longer simply responsible for regular human resource functions. It is now also regarded as a strategic business partner to company leadership and private equity partners. 

      What Does a CHRO Do?

      The role of a CHRO is to attract and develop talent to the portfolio company while also developing dynamic company leaders. Talent management is a specific skill every CHRO must have in order to build successful teams. By identify missing skillsets within various departments, a CHRO can recruit the best candidate to fill an empty position. 

      In addition to hiring and developing talent, the CHRO is also responsible for retaining talent. Keeping employees engaged and devoted to their work is no easy task. The CHRO must create a dynamic and engaging environment so employees feel challenged and valued in their positions. Talent retention also involves enhancing company culture, which is another responsibility of the CHRO. A CHRO will assess a company’s mission, vision, and goals then work to ensure these company values are being properly demonstrated at work. If any aspect of the company culture doesn’t work, the CHRO is quick to address the problem and implement new strategies to create a more productive and engaging environment. 

      Why a CHRO Is Valuable to PE Portfolio Companies

      A company’s ability to attract, develop, and maintain top talent often determines its overall success. High turnover makes it difficult to succeed because instead of improving the business, resources are constantly being used to hire and train new talent. With the right CHRO, company turnover will be reduced and employee satisfaction will rise. 

      A CHRO also knows how to attract top talent to private equity portfolio companies. By improving company culture, fostering opportunities for growth, and engaging with employees on a regular basis, the CHRO creates an ideal place to work. Employee satisfaction not only improves employee retention rates but also signals to other talented individuals that your company is an ideal place to work. With an improved company image, attracting top talent becomes even easier to achieve. 

      CHROs aren’t just focused on talent acquisition, either. This role also serves as an advisor to the CEO and PE firm board members. Since the CHRO is responsible for all aspects of human relations, they need to be aware of trends that can impact the workplace. For example, movements like the MeToo Movement and Black Lives Matter created new expectations in the workplace. It’s the responsibility of the CHRO to acknowledge these trends and employee expectations and then propose new policies and actions the company can take to reassure employees. By staying abreast of evolving trends in the media, the CHRO can confidently advise the CEO and board on how to properly handle delicate situations. 

      A chief human resources officer clearly needs to be good with people, but what else makes a great CHRO? There are three main CHRO qualities many people overlook when hiring for the position that will take the officer from good to great. 

      What Makes a Great CHRO?

      1. Business Understanding & Focus

      A CHRO should serve as a bridge between human resource goals and business goals. By understanding the various aspects of the business from marketing and sales to operations and finance, a CHRO strategies ways to help meet the organization’s goals. 

      2. International Experience

      The workplace is constantly becoming more global. What this means is companies have an increasingly diverse workforce and they’re often interacting with international partners. Navigating various cultural and language differences is a challenge, but an exceptional CHRO will have the international experience necessary to skillfully manage an increasingly diverse workforce. 

      3. Adaptability

      Workplace culture is always evolving and employee expectations shift regularly. A CHRO must be able to adapt to these ever-changing expectations and needs. By staying agile, a great CHRO can easily spot growing trends and proactively make HR adjustments to meet new demands. 

      Conclusion 

      Human resources are vital to the success of a company, especially private equity portfolio companies. Investors want to protect their investment and see the value of the company increase, but the first step to improve any business is to start with the people. You can’t expect to see rapid business growth if you don’t have the right talent in place. This is why a great CHRO is a necessity for any PE portfolio company. A CHRO will increase company talent, retain current talent, and strategically monitor human relations to ensure company dynamics are all smoothly working together to promote the company’s best interests. 

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