Critical Challenges Leaders and Organizations are Facing
In this section, we will explore the following questions:
- What are the key challenges that CEOs face?
- What are the critical roles CHROs play within an organization and how do they spend their time?
- What do CHROs believe they should be focused on? What are the perceptions of CEOs and CFOs of the CHRO role and the HR function within their organizations?
Although we will be focusing on leadership positions for this discussion, the findings are equally relevant for entry-level, mid-level and senior-level HR practitioners.
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Businesses face many challenges in their efforts to be successful. From the perspective of a CEO, rank the following challenges in descending order based on their influence of corporate success.
- Corporate Brand and Reputation
- Customer Relations
- Human Capital
- Operational Excellence
Adjust each bar on this chart so that they represent the percentage of time that you think CHROs spend on each activity type. No activity is higher than 30%.
HR Function Leader
How involved is the Chief Human Resources Officer (CHRO) in strategic planning in your organization?
How much do CEOs want the CHRO to be in involved in strategic planning?
The Conference Board, a global, independent business membership and research association, conducts an annual global survey of CEOs and board chairs. Let's take a look at a few findings from the 2014 survey.
But before we do that I want to toss out a question to you.
The number one challenge identified by CEOs is human capital followed by customer relationships, innovation, operational excellence, and corporate brand and reputation. The report states that there is a clear recognition among CEOs that human capital is the engine of the enterprise.
Another key finding of the report is that human capital is an enterprise-wide driver. And in addition to being a top-ranked challenge globally, human capital is closely linked to the next three top challenges, customer relationships, innovation, and operational excellence. That is - a talented, engaged, and properly motivated workforce is critical to all three of those things, which lead to organizational success. The report also indicates that corporate brand and reputation are challenges where success depends on the actions of people.
If these are the key challenges identified by CEOs, what role does HR play in addressing these issues? According to the 2012 Cornell Center for Advanced Human Resources Studies Chief HR Officer Survey, the critical roles that CHROs play relative to helping executive leadership teams become more effective are:
- Strategic Advisor to Executive Team
- Counselor/Confidant/Coach to Executive Team
- Liaison to Board of Directors
- Talent Architect
- Leader of HR function
- Workforce Sensor
- Representative of the firm
The Talent Architect//Strategist role involves developing leaders and organizational capabilities and directly relates to the challenge of developing agile, resilient, creative, and innovative organizational leaders in a workforce.
In 2010, IBM conducted a global survey of more than 700 HR executives. When asked what CHROs should be focused on, HR executives that CHROs should be focused on cultivating creative leaders. Creative leaders, according to the study, have a flair for thinking about opportunities and challenges. This includes mobilizing for speed and flexibility, providing fast and adaptive workplace solutions to meet the requirements of a quickly changing marketplace and capitalizing on collective intelligence. According to the report, capitalizing on collective intelligence involves tapping into the broad base of institutional knowledge to connect people to each other and to information both internally and externally.
If these are the critical roles played and recommended areas of focus for the heads of HR, then how do CHROs actually spend their time? According to a Cornell University study, this is a snap shot of how chief HR officers spend their time. Based on this data, what observations would you make? A key takeaway for me is that it appears that about 51% of the chief HR officer's time is spent on non-strategic activities.
I would argue, as other scholars and practitioners have, that the future of the HR profession will be linked to how well we as a profession and as individual practitioners are able to demonstrate that we understand the challenges that our organizations and leaders are facing and that we are recognized by members of the C-suite as trusted advisors, value-added thought leaders, solution providers, and enablers of organizational growth and success.
In short, the chief HR officer of an organization needs to be viewed as an integral member of the executive leadership team and an integral component of the growth chain of the organization.
To be effective, the chief HR officer of an organization needs to have the trust, faith, and confidence of the Executive Leadership Team.
Arguably, the two most important members of the executive leadership team for the chief HR officer are the Chief Executive Officer and the Chief Finance Officer.
The views and opinions of these individuals can either enhance or dampen the effectiveness of the chief HR officer and the HR function within the organization. Furthermore, it has been argued that the CFO and the CHRO along with the CEO are the only people who have an overview of the entire organization and the leadership capacity within it.
What do CEOs and CFOs think about the chief HR officer and the HR function within their organizations? More specifically, what do they expect, and how well are we living up to their expectations? Let's take a look.
In 2012, the Economist conducted a global survey of CEOs. The report titled, "CEO Perspectives, How HR Can Take a Bigger Role in Driving Growth" provided important data and findings. One key finding is that according to CEOs there was a disparity between what CEOs perceive versus what they want concerning the involvement of the CHRO in strategic planning.
When CEOs were asked how involved is the head of HR in strategic planning in your organization 55% of respondents indicated that the head of HR was a key player and 21% indicated that the head of HR was not at all involved.
When asked how involved do you want the head of HR in strategic planning in your organization, 70% of respondents indicated that they wanted the head of HR to be a key player, and 16% indicated not at all. In the report one scholar indicated that HR leaders have a narrow HR agenda and do not understand the business well enough. Specifically that HR leaders are too focused on the minutia, too negative. They need to retain a balance between the detail of their HR knowledge and a broader commercial approach. I would argue that we need to be business people first and HR practitioners second.
This data raises some interesting questions. If CEOs want the head of HR to be a key player in strategic planning, what is preventing this from occurring? What do CHROs need to do to close the gap between CEO perceptions and CEO expectations? We'll get to that in a bit.
When asked in what areas does HR do a good job, these are the areas that CEOs identified. Are there any surprises here for you? I found it surprising that only 50% of respondents indicated that HR does a good job developing key talent. As the key talent architect strategist for our organizations, shouldn't developing key talent be a core competency?
Of course it should be. If not us, then who? This is a way to add value. We can promote and enable organizational growth and success in the marketplace through our workforce planning function. We can make sure that we have the right people with the right competencies in the right places at the right times. We need to step up.
Speaking of the right people, how do we get them? You can't just yell at your people be adaptive, be resilient, be innovative. Ideally you want to find the right people with the right qualities, and encourage the kind of behaviors you seek. Recognize, reward, pay, and promote these competencies. Everyone isn't gifted in the same way and that's important to recognize. But hopefully all of your employees are gifted in some way, and you want to help them maximize their potential. Let them shine in their strength areas.
But don't stop there! We also need leaders who demonstrate these competencies, those of agility, resilience, creativity, and innovation. You don't want a boring leadership team made up of people who are unwilling to change or take risk coupled with a creative, innovative workforce. That's a recipe for disaster. If you don't demonstrate these competencies at the leadership level and at the workforce level, your organization is going to be in trouble.Hide Transcript
Key Concepts from this Video:
Human Capital, Talent Architect, Cultivating Creative Leaders, Collective Intelligence, CEO Perspectives, The Right People