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A large firm had successfully closed a series of acquisitions. Good news, or so it seemed. While everything looked great on paper, the company hadn’t anticipated the personnel challenges related to its new technology and transformation agenda —especially as it related to the firm’s culture. Board members fretted over how to deal with this dilemma when in swooped an unlikely hero with plenty of next-step advice: the CHRO.
The role of HR on boards has been on the uptick ever since the pandemic. ISS ESG reported that between 2020 and 2022, the percentage of directorship roles with HR experience increased from 11.3% to 19.4% across all S&P 1500 companies. The Great Resignation underscored the critical role of CHROs in securing and retaining talent. But even more than that, the CHRO of today must serve as an alter ego to the CEO in delivering for the business.
A Korn Ferry study shows that CHRO traits align most closely to a CEO’s when comparing C-suite competencies by role. They must be someone who can identify where talent pipelines are weak or strong to help bridge the gap between strategy and outcomes. Whereas emotional quotient or EQ was the hallmark of a CHRO, modern HR bosses are expected to stand confidently on what is referred to as a three-legged stool: EQ, IQ and business strategy. One term we at Korn Ferry use to describe this new breed of boardroom champion is the CHRO+.
Many boards have long managed without CHROs at the table. And firms can certainly do great harm by appointing the wrong person — someone who is a reactive CHRO as opposed to being a proactive, strategic change agent. But the needs of the current moment have created a void, and increased emphasis on issues like ESG and diversity and inclusion, demanding a dedicated leader at the top of the organization. Many boards still don’t understand that building a diverse pipeline is an undertaking that could take decades to properly execute, and it doesn’t stand a chance without the right person to plan and oversee it.
Compensation committees are another area that could benefit from this type of CHRO role. Usually, they are a group of board members tasked with determining executive pay, but are too often siloed from the process of assessing talent and execution. In reality, as Korn Ferry vice chairman Dennis Carey has said, these three elements are interlinked. They’re so interlinked, in fact, that Korn Ferry vice chairman Robert Hallagan has argued that compensation committees should be changed to “Leadership and Talent Committees” to reflect the expanded scope they require. The CHRO+ would lead the charge in this area.
Going back to the boardroom story above, it turns out that the CHRO was also a director on that board—who had beaten out a CEO for her spot. It’s important to note that she also had prior experience in M&A and legal. In other words, she was the epitome of a CHRO+ — someone who isn’t just looking at their lane but scanning holistically across an organization and beyond their day-to-day accountabilities to be a real enterprise leader and strategic partner to the CEO and the executive team.
If you would like to speak further with one of our experts on the evolution of the CHRO role, contact us here.
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