Why CEO and CHRO bonding is essential
By | Hema Ravichandar |Strategic HR Advisor
The relationship between top executives is like the one between cricket team coaches and captains
Great relationships between chief executive officers (CEOs) and chief financial officers (CFOs) have always been lauded. Think Indra Nooyi, chairman and CEO of PepsiCo, to Hugh Johnston, vice-chairman and CFO of PepsiCo, and her famous comment, “Hugh and I can finish each other’s statements.”
Management thought leaders like Prof. Ram Charan have also highlighted the role of the golden triad of CEO, CFO and CHRO (chief human resources officer) in successful organizations. But what about the bonding between the duo, i.e. CEO-CHRO? Think hard and you will find examples of some that worked really well or are even, as we read, working well. And what actually gets this relationship ticking is interesting. Especially in today’s context: With the Companies Act, 2013, and the key role that the board has to play in the human capital development of C-suite executives, this relationship assumes greater importance and comes into sharper focus.
So what does it take to have a great CHRO and CEO relationship? The relationship between a CEO and CHRO is really like that between a coach and captain. Not in the football sense, but in the cricketing sense. “A successful CHRO supports his/her CEO by serving as a coach, mentor and sounding board through difficult decisions,” says a report from Executive Monitor, “The Rise Of The CHRO”, released by global executive search firm Boyden in October.
The CHRO is expected to advise the CEO on human capital strategies to achieve the highest levels of performance in the organization and tap into the potential of key employees, in the process ensuring the CEO has the best bouquet of talent to choose from. While doing this, the successful CHRO may remain on the sidelines, but his/her presence and support to the CEO should be subtly pervasive in the organization.
The success mantra
If such a relationship is to succeed, there has to be a strong element of trust in each other’s intentions, and respect for each other’s judgement. It is only then that CHROs can, as the Executive Monitor report says, “position themselves as partners and constructive challengers” and help CEOs build a high-performing and cohesive executive leadership team, pivotal to the success of the business. In fact, so important is this element of trust that “…a change of CEO will, as statistics prove, often prompt a change in the CHRO”, Lisa Gerhardt says in the report. Gerhardt is the global leader of Boyden’s consumer and retail and human resources practices and partner, Boyden New York and Boyden UK. “This is much more common than in any other function with a new CEO appointment, either internal or external. The need for a trusted partner who will act as a confidant as well as the conscience of the business gives a new CEO impetus to choose his/her own HR leader,” she adds.
Trust, in turn, is a result of both respect and credibility. Respect has to be earned, and for that it is imperative for the HR leader to have a superior understanding of the big picture and the organizational mandate. She must possess strong domain knowledge of human capital management concepts and practice and overlay these with both business and industry knowledge. This understanding is so critical that in many cases today, especially where human capital is the key resource—think services, IT/IT-enabled services, consulting, financial services—the choice that the CEO makes for his/her partner CHRO is often someone from “line” who brings with him/her this crucial understanding of business.
Credibility, of course, comes from track record. When a CEO turns around and hands over the responsibility to see through the next set of actions in any initiative or hard-won battle, against competition, against the board and even regulatory agencies, she should have the complete and implicit faith that the CHRO will do it without dropping the ball. The great success stories of CEOs and CHROs that I have seen have been built on this implicit faith and unshakeable belief that the job will get done without follow-up. In one legendary example that I have heard, the CEO had only to identify a key player that he wanted on his team and he could consider it done. The HR head invariably managed to reel in the resource.
Not dropping the ball also involves the ability to influence and manage key stakeholders in getting crucial decisions through. For this, the CHRO has to build strong links to key board members, peer business leaders, decision-making units within the employee union where applicable, and even individuals/institutions external to the organization (police, consular services, etc.). But such relationship building also needs managerial bandwidth and time. A CHRO constantly harried with the day-to-day running of the department will find this hard. So, this networking across spheres means having the ability to delegate further in the CHRO organization to next-line members—equally talented—without constantly having to watch the proverbial ball.
Connecting the dots
In today’s digital world, with its focus on speed, and magnification of any news through social and mobile channels, the CHRO’s ability to effectively hold a mirror to the CEO will also depend on her ability to be an information curator, someone who can connect the dots and predict patterns quickly. However, given that the resources we are dealing with here are people, it is important also to balance the latency of data with the recency of events, to get the true picture.
The relationship that the CHRO forges with the CFO is also a key element in making him/her more effective, and the triadic relationship of the three (CEO, CHRO and CFO), powerful. Inherently, the CFO and the CHRO, both protecting the organization’s interests, represent distinct stakeholders in the ecosystem, and it is but natural that tension could prevail between them and their respective functions. The challenge for the CEO is to ensure this is a creative tension, not a dysfunctional one, requiring them or their team to watch their backs. Competence earns respect, and respect, in turn, garners collaboration and synergy.
And finally, great CEO-CHRO partnerships get cemented when they play the distinct roles that the organization requires them to at times—bad cop to the CEO’s good cop, communicating the whys of tough decisions down the line, charismatically painting the organizational vision to key stakeholders. It is this which ultimately builds that elusive success factor, chemistry, without which all else would come to naught.
As cricketer M.S. Dhoni, one of the most effective leaders of our time and the former captain of the Indian cricket team, explained in his own distinctive way: “It is important to build good partnerships rather than score centuries. Once you have those partnerships, you will also get centuries.”
First published in http://www.livemint.com
Hema Ravichandar is a strategic human resources consultant. She serves as an independent director and an advisory board member for several organizations. She was formerly the global head of HR for Infosys Ltd.