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What Your HR Chief Isn’t Telling You

As your company navigates change and positions for growth in new markets, you simply can’t afford an HR function that’s reactive, risk-averse or both. The CHRO needs to be sitting at your right hand and ready to take strategic vision and practically implement it.

When was the last time one of your key business objectives rested on your Human Resources function’s capacity to quickly change course, innovate, and team with key line leaders as an equal partner to improve business performance?

What was the last calculated risk that HR took to help the business achieve its strategic goals?

Do you remember when HR seriously cautioned about the enterprise risks associated with a new business strategy?

And when you need to find your next Chief Human Resources Officer, will you defer to candidates who’ve made HR a career? Will you seek leaders willing to push you and the traditional boundaries of what is still widely considered a cost center versus a real source of competitive advantage?

Connecting HR with business performance

Your answers to these questions will reveal a lot about where your business is going and what it’s really capable of achieving in the year ahead. As an advisor to CEOs, I can attest from experience that knowing what you’re working with will also give you the baseline rationale to challenge, empower and/or overhaul HR and avoid unpleasant surprises.

In today’s business climate, you simply can’t afford an HR function that’s reactive, risk-averse, or worse yet, both. Nor can you afford the frustration and significant opportunity costs that come with an underperforming HR function, or one that isn’t taken seriously by the rest of your management team.

The very best, most strategic of CHROs sit at the right hand of the CEOs of most of America’s most admired companies. They have helped build the kind of enterprise cultures that provide innumerable levers for the CEO to inspire, direct, measure and reward outstanding performance in good times and in bad. The truth is, you can draw a straight line from your CHRO’s business acumen and agility and that of his or her HR function to your organization’s ability to maneuver quickly and adeptly to avoid missteps or seize opportunities. What really matters is their capacity to blend strategic vision with a bias to action, not reaction.

What’s important now

Today, world-class CHROs are focused on business needs and challenges that are at least one step ahead of business strategy. What your CHRO is telling you now about the following priorities is paramount:

  • That, to get beyond a historical overdependence on externally recruited management talent, the enterprise is focusing on leadership development to improve executive fit with your culture, to reduce costs, and to reduce the risk (and huge but often hidden costs) of bad executive hires
  • That the time to focus on management retention is now. Rather than waiting for key executives to depart unexpectedly, the CHRO is proactively assessing retention risks, developing a plan to address them and asking you, as the CEO, to make decisions now about who is indispensible
  • That there’s no time like the present to review your compensation practices, which savvy CHROs know actually invoke more art and judgment than science and dispassionate calculation. It’s again time to align salaries and performance incentive elements with the external market for highly competitive management roles
  • That a potentially long overdue conversation about CEO succession must be addressed before a lack of forethought and planning, or, in a worst-case scenario, your incapacity to lead for any reason, forces a rushed judgment or precludes your board from framing your successor’s key competencies and ‘intangibles’
  • And finally, that the purposeful up-skilling of workforce capabilities, proactive succession mapping exercises aimed at addressing gaps or potential upgrades of your management bench, and allocations of human capital – each as an investment in business strategy –  collectively enable your HR team to fuel profit centers through effective talent management

Potential growth-inhibitors

If your CHRO isn’t already making these priorities for your business, take heed. What may be equally telling, especially as the competition for top executive talent continues to escalate, is what your CHRO isn’t telling you or may feel reticent addressing with you and the rest of the management team. These may include:

  • “Our HR budget isn’t going to get us to where we want our business to be by year-end.”
  • “The inconsistency of our management recruiting may be a consequence of an ineffective on-boarding process.”
  • “We simply don’t have the resources or management access to be real business partners.”
  • “HR hasn’t taken, nor has it been granted, the authority to measure and improve decentralized, discretionary management spends such as executive headhunting, and for this reason, we really don’t know how much executive staffing is actually costing us.”

If your business demands something more than an HR administrator, you have to raise expectations of your CHRO but also give him or her the room they need to diagnose the people issues that may be holding your enterprise back and the potential of looking at leaders as investment vehicles rather than overhead costs. If your CHRO isn’t as focused as other executive team members on key business drivers and opportunities, it may be time to make a change.

After all, when it comes to driving and enabling HR leadership, if you’re not part of the solution, you’re part of the problem. Your potential is only as promising as your people.

About Joe McCool

Former BusinessWeek columnist Joseph Daniel McCool advises Chief Executives and their direct reports on how to maximize executive recruiting and management succession impact to improve business performance as principal of The McCool Group. He is the author of Deciding Who Leads, recognized globally as “one of the best business books of 2008,” and has been quoted frequently over the past decade in The Wall Street Journal. Reach him at Joe@TheMcCoolGroup.com.