In our work as a leading talent advisory business, Norman Broadbent’s recent interactions with CEOs, CFOs and CHROs have highlighted the theme of collaboration across the Board. In particular, we have had many conversations around how these three individuals – often with highly contrasting backgrounds and priorities – can work together to rethink strategic options, allocate investment and accelerate implementation all to the benefit of the organisation. Success is partly about team dynamics. It is also about a change in mindset, and how the CEO, CFO and HRD view their leadership contributions, both separately and together.
“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.” Ram Charan | World-renowned business advisor, author, and speaker.
Norman Broadbent’s HR Practice, working alongside many senior CHROs, is also keen to explore what progressive organisations are now doing to achieve better collaboration at a senior level; how the HR function is evolving; and if there is a positive shift in the essential connectivity between Finance and HR.
The COVID-19 pandemic has helped highlight the essential function HR performs within companies. It’s time for HR to make the same leap that the finance function has made in recent decades and become a true partner to the CEO. Just as the CFO helps the CEO lead the business by raising and allocating financial resources, the CHRO should help the CEO by building and assigning talent, especially key people, and future leaders.
Some CEOs might complain that their CHRO’s are more focused on day-to-day activities and administrative tasks and therefore lack the ‘big picture’ perspective that is so essential at this level. This is the reason why CHRO’s don’t play as much of a role when it comes to board presence or succession planning into the CEO. However, it is up to the CEO to elevate HR and to bridge any gaps that prevent the CHRO from becoming a strategic partner. After all, it was CEOs who boosted the finance function beyond simple accounting.
Elevating HR requires redefining the job descriptions for the Chief Human Resources Officer, supporting and enabling them to delegate certain tasks. This elevation will support in the creation of a ‘Golden Triangle’ comprising of the CEO, the CFO, and the CHRO, resulting in an HR function which offers as much value as its financial counterpart. Rather than being seen as a supporting player brought in to implement decisions that have already been made, the CHRO will play a central role in corporate decision making.
<h3>The benefits of the ‘Golden Triangle’</h3>
A CFO’s job is partly defined by the investment community, the board, external auditors, and regulators, while the role for the CHRO is often mostly defined by the CEO. The CEO must have a clear understanding of the tremendous contribution the CHRO could be making to build an expectation that the CHRO can then step up into.
Below we outline 3 key areas where a true ‘Golden Triangle’ can add value, leveraging the CHRO’s unique talents alongside the CEO and CFO: 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 often missing in practice.
<h3>Predicting outcomes </h3>
An organisation’s performance depends largely on the fit between people and jobs, so naturally the CHRO team can be a key business partner in supporting the acquisition and development of top talent. Embracing the assessment of candidates helps to ensure they are a match, as well as supporting the hiring, onboarding/integration and ongoing development of that individual.
The CHRO should also be able to make meaningful predictions about the competition. They are usually very well networked and often gain invaluable insight about competitors and the ways in which their organisation is structured along with key changes they are making. Intelligence about competitors is often available through head-hunters, employees hired from other companies, suppliers, or customers’ customers. All this market intelligence – right down to basic snippets, such as “X competitor has hired a new CFO with a strong transformation background,” – enables the Golden Triangle to make accurate predictions of outcomes.
<h3>Diagnosing problems </h3>
The CHRO is often uniquely well positioned to pinpoint precisely why an organisation might not be performing well or meeting its goals. CEOs must learn to seek such analysis from their CHROs instead of defaulting to consultants.
Most problems at their most fundamental basis are people problems. The CHRO should work with the CEO and CFO to examine the causes of misses, because even with external factors (such as COVID) contributing to problems or failures, there is always the question: how did the leader react and how fast were they to react to change relative to the competition? This is where the CHRO can support critical distinction between a leader’s misstep and the external circumstances. In addition, problems, challenges, and missteps all provide vital insights into an individuals’ motivations and preferences, which can support the CHRO when it comes to development and succession planning.
The CHRO is also best placed to diagnose how the various teams are working, whether they are operating as effective business partners, and if they have strong collaboration and innovation.
<h3>Capital </h3>
Money is often considered the ‘critical point’ and usually considered to be about as far away from the CHRO’s remit as you can get. But companies should be similarly committed to their human capital, and CHROs should be prepared to recommend actions that will unlock or create value. Talent development is a key part of business growth, helping retain talent, improve employee engagement, and create clear succession planning. Additionally, CHRO have insight into the high potential talent in the business. They can support the mobility of talent, form one business to another to ignite growth in a new market or bringing in someone from the outside to develop capability new skillsets. Often these measures will reflect back and save money, as top talent is retained, rather than having to be expensively replaced.
These are just a selection of the many benefits of harnessing the ‘golden triangle’, bringing together a unit of quite disparate individuals to create something stronger than the sum of its parts. Every CEO has the potential to harness the strength that such a bond can create, with benefits both for the business and for the individual development of both the CFO and the CHRO, by exposing them to other areas of the business. This relationship won’t always develop overnight, and their may be some bumpy patches along the way, but the benefits are clear. It all starts with creating new expectations for the CHRO, and building better ways to blend business and people acumen should follow.
If you would like to discuss the points raised in this article, the wider market and/or any people challenges or plans you may have for the future, please do not hesitate to contact Lyle Stewart in confidence via lyle.stewart@normanbroadbent.com