Written by Thomas Paik, Human Resources, Diversity and Inclusion Practice Leader
The CHRO role has been traditionally limited to hiring for open positions, designing compensation and benefits packages, and ensuring compliance of the company with federal and state hiring regulations. Until now, a CHRO’s responsibility for an organization has not been proactive but reactive — to decisions made by other executive leaders.
Many leadership executives are beginning to realize the benefits of empowering their CHROs to have a more direct role in the organization and positively impact its success. Here are a few ways that expanding the role of a CHRO can lead to better opportunities and growth within a business.
Analytics, when used effectively, has proved to be the lifeblood of some companies. The finance department’s regular analytics (tracking revenue changes, late collections, and cash flow) is imperative for business decisions. Marketing uses analytics to track sales, advertising effectiveness, and customer satisfaction.
Human resources has lagged in its use of analytics, but various indicators could be used there to monitor employee success.
Productivity metrics can track how effective an employee is at meeting goals. Retention and employee turnover metrics can provide insight into employee happiness. If analytics indicate a problem with employee retention, efforts can be made to find out why.
Using analytics to track employee performance is an essential way CHROs can provide executive leaders with vital information about the state of some of their most important assets — employees.
One of the worst business decisions a company can make is not allowing its leadership team to understand other aspects of the business. If the CMO is involved only in marketing activities and the CHRO is sidelined to human resources, a lack of knowledge of the overall industry can develop.
The most effective leadership teams are constantly exposed to the organization’s business decisions. Even if their team doesn’t perform regular activities that affect the decision, they are aware of it. Simple awareness can positively impact the company, as other departments may have insight into potential outcomes that a decision may have.
For example, if the product department is experiencing challenges in meeting production requirements, resolving the issues within the department itself may not be as effective as accepting assistance from other business units.
If there is a lack of skills in the production department, a CHRO can pinpoint the issue and either implement training or hire new employees who can ensure production quotas are met.
In the past, the CEO was known as the chief decision-maker for the organization. However, in the 1980s, that began to change. Companies began to realize the impact a strong CFO could bring to the decision-making table. Their knowledge of allocation, company finances, and budgeting proved necessary for developing stronger relations with the investment team and board of directors.
Similarly, the CHRO has a lot of value to add to organizations that recognize the need for a strong working team leader. Harvard Business Review recommends that organizations develop a working partnership between the CEO, CFO, and CHRO known as a G3.
The goal of the G3 should be to establish the full strategic vision for the company, including its operations, finances, and people planning.
To be effective, the G3 would meet regularly to discuss the immediate and future goals for the company. The CEO would provide the vision, the CFO would make the financial allocations necessary to pay for the vision, and the CHRO would be tasked with establishing the right team to achieve the vision.
As a core member of management, the CHRO would be elevated to a position in the organization that was proactive and part of the inner executive circle, playing a pivotal role in ensuring that the company has the people and tools to make the vision reality.
A CHRO has the background and human resources knowledge to understand the critical skills needed for employees to perform at their best. While they may not know the ins and outs of every task an employee is responsible for, they should know the educational requirements and work experience necessary to find the most suitable candidates.
When the strategy for the future is established, a CHRO can determine what roles must be added to the organization and what positions must be realigned to fit the company’s needs. If reskilling and retooling are necessary, they can implement the appropriate training required so people are ready to take on tasks they will be responsible for.
A CHRO is uniquely positioned to understand when an employee may not be the right fit for a role. While a manager will know when the employee doesn’t have the technical skills necessary to succeed, a CHRO can recognize when leadership skills and communication abilities aren’t there.
Upon reflection, a CHRO can identify when an employee or manager made a misstep that led to a serious mistake for the company.
CHROs can also encourage communication among various departments. When individual department managers make decisions for the whole organization without consulting other teams, problems can ensue.
An effective CHRO can nimbly protect the organization from future issues by ensuring all relevant management members discuss the potential impact of a decision before it is made.
A CHRO has a lot of value to add to a company’s success. Rather than limiting the role of a CHRO to back-end office administration tasks, the company should uplift its CHRO to be a crucial member of the leadership team.
The company can benefit from enhanced success by giving the CHRO responsibility for overseeing employees, managers, and communication between departments.
In addition to being a champion for the organization’s people, the CHRO should also have a hand in overseeing the strategic vision for the company. Finding people with the skills and knowledge necessary to achieve the plan provides the underpinnings of future effectiveness.
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