Summary of HBR article People Before Strategy: A New Role for the CHRO
Feb 07, 2022
This 2015 HBR Article
People Before Strategy: A New Role for the CHRO was written ahead of its time AND Now I think it’s time to share this again with all CEOs.
This article states a lot of hard truths that have not changed much since 2015 and need to be circulated again. The authors have some great recommendations based on their own experiences BUT, I do have one contrarian point of view. And that is CEOs, you don’t have 3 years to get this CHRO partnership right. I think you know I am right.
Please share with your CEO friends!
Knowing CEOs typically skim, here’s my skim “cut and paste” exerpts for busy execs...
“CEOs know that they depend on their company’s human resources to achieve success. Businesses don’t create value; people do. ……
CEOs ... rank HR as only the eighth or ninth most important function in a company ...
CEOs might complain that their CHROs are too bogged down in administrative tasks or that they don’t understand the business. But let’s be clear: It is up to the CEO to elevate HR and to bridge any gaps that prevent the CHRO from becoming a strategic partner.
…Rather than being seen as a supporting player brought in to implement decisions that have already been made, the CHRO will have a central part in corporate decision making…
…A CFO’s job is partly defined by the investment community, the board, outside auditors, and regulators. Not so for the CHRO role—that’s defined solely by the CEO. The chief executive must have a clear view of the tremendous contribution the CHRO could be making …
To start redefining the job, the CEO should confer with his or her team and key board members, …—what should an exemplary CHRO do?
Here are three activities we think are critical: predicting outcomes, diagnosing problems, and prescribing actions on the people side that will add value to the business. Some of these things may seem like the usual charter for a CHRO, but they are largely missing in practice, to the disappointment of most CEOs…
What not to do.
… the CHRO’s new contract should define what she is not required to do. This helps provide focus and free time so that she can engage at a higher level. For example, the transactional and administrative work of HR,...
The CHRO’s fit.
… keeping with recasting HR as a value creator rather than a cost center, performance should be measured by outputs that are more closely linked to revenue, profit margin, brand recognition, or market share. …
To make the CHRO a true partner, the CEO should create a triumvirate at the top of the corporation that includes both the CFO and the CHRO. Forming such a team is the single best way to link financial numbers with the people who produce them.
...It is common practice to plan where the company needs to be in three years and to decide what new projects to fund and where to invest capital. Often missing from that process is exploration of the people questions: Will we have employees with the right skills, training, and temperament to achieve the targets? Will our people have the flexibility to adapt to changing circumstances? In most strategic planning, there is zero consideration of the critical players in the organization—or those working for competitors.
Discussion of people should come before discussion of strategy.
The Transition to the New HR
Any CEO who is sold on the idea that people are the ultimate source of sustainable competitive differentiation must take the rejuvenation and elevation of the HR function very seriously. … But none of this will happen unless the CEO personally embraces the challenge, makes a … commitment, and starts executing."
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