‘Bringing in a higher powered, more strategic Chief People Officer is one of the most transforming things a CEO could do’

This month, Patrick Hynes, the global leader for Spencer Stuart’s leadership advisory services and Deborah Warburton, who leads Spencer Stuart’s human resources practice, discuss the growth in prominence of Chief People Officers…

How can a high-profile Chief People Officer or similar role improve upon how HR matters were managed within organisations previously?

Patrick: Well, I guess it’s worth thinking about the journey that this function has gone on. The HR function was seen as an administrative function that would support the business with recruitment, pay, and a few other things.

Nowadays it is viewed as a mission critical function. There’s a lot of support for how the competitive advantage of any business is not gained through strategy or financial engineering. It’s through leadership, talent and culture, and those are the domain of a Chief People Officer.

The difference between a strategic business-oriented Chief People Officer and the previous setup is night and day. So the former will be a true business partner to the board and the executive team, and they’re capable of raising the game on everything from purpose, culture, leadership development to employee wellbeing.

We use the term leadership catalyst because that’s what a great Chief People Officer is doing. So depending on where an organization is, bringing in a higher powered, more strategic Chief People Officer is one of the most transformative things that a CEO could do.

Deborah: The pace of change in the external environment has increased dramatically. That’s created this need for somebody who’s a business executive who can think right across the organization and has a strategic viewpoint about future capabilities that are required, and lead for what’s required today. Boards and external stakeholders have become much more interested in all things people, leadership and culture and that raises the stakes and visibility of this role.

What do you think is driving the rapid growth in demand for CPO/CHROs among businesses?

Deborah: We’re all familiar now with VUCA – volatile, uncertain, complex, or ambiguous situations. That volatility has been really amplified in recent years by COVID and by the war in Ukraine.

Digital transformation, the adoption of digital ways of working: that shift was already underway, but it’s certainly been sped up. This means that all companies are being disrupted. Companies are needing to work out what the future of work looks like, how to make hybrid models work, how to work with multi-generational workforces and apply segmented talent strategies that work for all.

All of these things are driving more complexity and a more rapid pace of change and are all connected to leadership and culture. That requires a heavyweight who is forward-thinking and is able to be a trusted advisor to the leadership team and really translate that strategic thinking into a long-term people agenda.

Patrick: You could argue that around the nineties, the chief financial officer went from being an accountant to a real strategic partner of the CEO and the board. Then as we moved into the millennium, the chief technology officer went from the back-office to being mission critical. I think there’s a similar theme here where the right Chief People Officer can bestow such advantages and people are realising that. The demand for the very best talent is extremely high.

What measures and culture does an organisation need to have in place before appointing a CPO/CHRO, or enhancing the responsibilities of an existing postholder, and how can these officers measure and then change the culture of an organization, reaching each division, department, and team?

Patrick: There’s a couple of things there. There’s what do you do before the person comes on board, and then how do you shape culture when they’re there? I would say it would be wrong to think about what culture do we need in place before we hire a new CHRO. Culture is very critical. It comes up as a top three theme in every interview we do with a CEO.

The CEO in any organization always needs to be thinking about what culture they need to deliver the strategy. The CHRO plays a really important role in that, but they’re not the only stakeholder.

You would bring the CPO on board and then say, where are we and how can you accelerate that change? What conditions would you put in place? You have to make sure that the CPO is set up for success. Probably the most important one – which is obvious for many organizations, not so obvious for others – is they have to directly report to the CEO and must have a voice at the top table. You still will find some organizations where they report to a COO or a CFO and those organizations, I would argue, are not set up for success.

Now the next thing is when they come to an organization, how do you drive culture change? So working out where you are today, but critically, where do you need to go to support the strategy?

Then driving culture change is fascinating. It’s a range of everything from CEO communication, down to who gets fired, promoted, and rewarded. What a CEO chooses to talk about and put their energy into influences culture. They might start with financial results, or innovation and new products.

You’re not going to change culture in one communication or one meeting, but they all have subtle impacts on culture.

The other thing we would say is the executive leadership team is critical, but there’s a group just below them of anywhere from 50 to 500 people. We might call it the extended leadership team and they’re critical. They’re the group we often see where culture change either gets accelerated or stops.

The best Chief People Officers, though, will be the quarterback to drive this.

Should CPO/CHROs also have responsibility for external teams of suppliers, especially those that are more closely integrated into the organization, and how do you see CPO/CHROs integrating the involvement of internal and external stakeholders?

Deborah: It is really clear that these roles are now incredibly complex. Therefore it’s unlikely that they’re ever going to have all of the capabilities they need in-house. That means that they do need to work with a range of external providers and suppliers. Where that works best is where they work with a smaller number of partners who can provide a wide range of services over a long period of time which means they can be even more effective and add more value over time.

Ideally the external stakeholders are pretty integrated with their own in-house teams and see each other as close colleagues.

How important are executive coaching and team-focused assessments to the work of a CPO/CHRO – incorporating the views of internal (e.g., employees, leaders) and external stakeholders (e.g., customers and suppliers)?

Patrick: The simple answer is very important, but I think there’s a couple of dimensions to this question. There’s individual and team orientation, and there’s assessment and coaching.

I think they’re all super critical. There isn’t a world-class organization I know that won’t use state-of-the-art assessment tools to assess their individuals mainly with a view to development and succession. Particularly as you get to the top, what you are assessing for gets more complex and nuanced. It’s not just about capabilities and experience.

In terms of assessing individuals, coaching them is one part of the toolkit of development. But coaching has grown in importance for really good reasons as it helps executives really think deeply and structure their thoughts.

The team-based thing would be equally important. I mentioned culture is always a top three topic for a CEO. How their top team is performing is also in that top three.

What you use as input is important. So, employee engagement surveys, voice of the client, the board, they all go into it.

I think that the CHRO will be this catalyst that will help shine the light on where we as an executive team are and where can we go next, whether it’s good to great, great to exceptional.

Deborah: I think it’s important to make the point that not all executive coaching is effective. So it’s important that it’s well managed and outcomes are tracked.