- Among your leaders, CHROs are the least likely to become the next CEO
- Few CEOs gain experience in the people part of the organization
- Quit cutting CEOs from the same cloth, hire differently
Take a look around your executive table and think about who the next CEO will be.
Will it be the financial leader? The sales and marketing person? The general counsel or the operations director?
The leader least likely to become the next CEO of the company is the one person your company might just need to take the reins -- the CHRO.
Because of business trends, such as tangible assets dropping in market value, a company's purpose, culture, and people have become primary assets. All of which laces HR leaders right in the middle of the action.
Yet, unlike their peers, CHROs and HR directors are rarely groomed for business leadership.
And they often aren't given business experience like other executives -- where they move around to diverse departments -- they instead stay positioned to support the leaders around them.
On the opposite end of the spectrum, despite the critical need for excellent people-leaders in the C-suite, few leaders are afforded experiential learning in human resources. Few CEOs gain experience in the people part of the organization.
This is concerning because when leaders spend their careers without devoting any time in HR, they may not establish expertise for why they should -- or how to -- value the people (employee and customer) part of the business.
Leading people should not be a reward; it should be a responsibility that requires talent and training. And that training must include expertise in the most important part of any organization -- its people.
Leaders typically (and not always to their fault) don't invest in things they don't value. This can result in:
- poor execution of strategy due to less engaged workforces
- terrible managers due to outdated practices of management
- troubling company culture and employee behavior due to a lack of respect from the top down
- overnight loss of customers due to careless decisions that disrupt trust
Instead, CEOs who put a focus on their company's people and purpose can avoid these pitfalls and build a brand identity that stands apart. (Read how Schlumberger, the multibillion-dollar global oilfield services company, puts an emphasis on HR to develop their leaders.)
They can create the companies that win the war for talented workers and new customers -- and, in turn, profit.
Here's why HR leaders may be positioned to take on the CEO role more today than ever before:
1. They can increase human capital returns during a merger and acquisition.
The problem for CEOs:
Mergers and acquisitions are on the rise, and human capital becomes even more complicated during this process. Leaders need their people to continue at full speed -- and even accelerate -- to make the M&A successful.
Often during M&As, the numbers look good but, after a short time, workplace cultures begin to clash, the company's purpose becomes diluted, and employees experience change fatigue -- and all of this starts to affect the customer experience.
This failure to manage and motivate employees is one of the reasons that, as Harvard Business Review consistently reports, 70% to 90% of all acquisitions fail to realize their intended benefits.
This is a great area of opportunity for leaders because only 21% of people (in any given organization) believe their performance is managed in a way that motivates them to do outstanding work.
It's not surprising that most companies struggle in this area when you consider that 82% of managers don't have the right kind of talent to manage people with true excellence.
Or, look at it this way, leaders put processes in place that place people in management roles where they don't have the talent to succeed -- this is true of more than eight out of 10 managers.
The opportunity for HR leaders:
Companies clearly need to change the way they hire, promote, and develop managers, and there is no one within the company more equipped to replace the broken practice of management than the people who've invested their careers in recruiting and supporting managers.
Managers with the right talent for the role increase employee engagement and performance simply by being a natural at it.
But they can achieve even more when they're given the right training and tools to do so. They can create a culture of accountability and development by shifting from boss to coach and by leading great conversations with their teams.
Only 23% of people feel like they get meaningful feedback from their manager. Only 30% of people are involved in their own goal setting.
It is really difficult for individuals to hit their goals when just one in three are involved in setting those goals, and three in five aren't getting meaningful feedback about how they are doing.
It is hard for managers to have those conversations if leaders don't help them prioritize it.
Leaders need to set managers up for success -- and when those manager-employee conversations start happening, it will create an engaging and high-performing company culture.
2. They can conquer agility by creating a culture of psychological safety.
The problem for CEOs:
Organization's need to move fast (become more agile) and keep up with technology to create cutting-edge experiences for their customers.
But most companies haven't successfully redesigned their key players and organizational structure to support the pace that's needed today.
So, the corporate world has turned into a landscape of too few people wearing too many hats without the necessary resources, leading to mediocre performance on everything, rather than superior performance on a few things.
The most talented superstars in the workforce crave the opportunity and autonomy to do superior work, and they will leave a company that lets them run around without a purpose and without the opportunity to do their best work.
The opportunity for HR leaders:
This need for speed that drives today's market can only be obtained with faster decision-making. The days of one or two people within an organization making all of a company's decisions are over.
Only one in five European employees are satisfied with the speed of decision-making in their company.
Success in the world of agility relies on teams having the capability to make decisions on their own -- that they are allowed to try and fail within specific guidelines and are then given a chance to learn from those failures in order to later succeed.
Only one in four employees in Europe strongly agree their company creates an environment where they can try, fail and learn from their mistakes.
The lack of autonomy to try, fail, learn and improve is an innovation killer.
Many teams are not willing to make key decisions because they fear the consequences of failure. They play it too safe, while their leaders wish people would bring new ideas and try new things.
The emotional environments that create psychological safety have been proven to foster greater agility.
However, most CEOs have been raised on financial or marketing techniques and are often not experts in emotional and behavioral techniques that are essential if they want their companies to move faster.
The ability to organize a company and necessary people to form these faster teams can only be done by those most familiar with an organization's talent and the principles of behavioral economics -- often the CHRO.
3. They can help their company build trust internally and externally.
The problem for CEOs:
Just one in three employees in Gallup's global database strongly agree that they trust the leadership of their organization.
When employees don't trust leadership, they also don't plan to stay at their organization as long as people who say they do have trust -- and they have little interest in making a new strategy work or creating new customer initiatives. They don't give leaders the benefit of the doubt.
Worldwide, two-thirds of adults say corruption is widespread in business.
Stories of corporate misconduct are still rampant and spread quickly. Building trust (reducing breaches) is more important than ever to business sustainability and the integrity of a company's brand.
Whether it involves sexual harassment or business ethics, the misconduct always points back to the leadership of a CEO.
The opportunity for HR leaders:
Internally: Leaders can't build trust with every employee on their own -- they need a network within their organization. They can build trust by creating a common culture and investing in the people who have the biggest influence over the majority of employees -- their managers.
Externally: Even if a CEO did not commit the crime, they were responsible for the company culture that allowed the actions to occur. There may be little a CEO has control over when it comes to an individual's actions, but if they don't try, they won't prevent future actions at all.
Having a leader who doesn't need reminding that something like the #MeToo movement is real, it matters, and it needs to be addressed, is a baseline for leadership today -- HR leaders understand this.
HR is perfectly positioned to build trust by building a strong foundation of values and behaviors -- not just processes and profits.
Hire Your CEOs Differently -- Don't Cut Them From the Same Cloth
Most CEOs have been cut from the same cloth. But what would happen if they came from a different cloth?
A cloth that gave them people experience and not just process, project management and financial experience.
The people who lead today's organizations need to be more than just a financial genius or a sales and marketing guru. They need to be someone who gets how to run a business with their people and because of their people, rather than at the expense of people.
One simple solution is to give CHROs business experience and give business leaders CHRO experience.
Then you have leaders with significant people-leading and people-developing experience who are set up to become future CEOs.
Leading people should not be a reward; it should be a responsibility that requires talent and training.
And that training must include expertise in the most important part of any organization -- its people.
Whether you are currently looking for a new CEO, preparing for the future or interested in the knowledge CHROs can bring to an organization, Gallup has some resources that can help:
- Create a winning succession plan with Gallup and make the right hiring, promotion and development decisions.
- Read Gallup's perspective on the employee experience and learn how HR directors help define the employee life cycle -- making them a perfect CEO candidate.
- Gain insight into the knowledge of CHROs and better understand the depth of their expertise by reading our CHRO Conversations.