For modern knowledge-based organisations, it is talent and not capital and raw materials that have become the most important asset and the key to competitive advantage. This elevation of the talent agenda means that the personal traits and leadership styles of the best HR Directors are increasingly converging with those of their CEOs. Unquestionably, the HR experience is growing more valuable.
This article originally appeared in the July edition of The HR Director magazine.
In 2014, research by Dave Ulrich, Professor at the University of Michigan’s Ross School of Business, found that executives who had run an HR function at some stage in their career such as General Motors CEO, Mary Barra, and ex-Xerox CEO, Anne Mulcahy had a particularly desirable mix of the technical and people skills effective CEOs need. Moreover, while very few HRDs attain FTSE or Fortune-500 CEO positions, there are many good examples of them succeeding in divisional CEO and MD positions or taking on business leadership for a region. Any HRD with an eye on such a role must be able to demonstrate real financial nous. They have to be on top of the numbers and show a good grasp of KPIs and measurable outcomes. An understanding of human capital analytics and the impact of these on the bottom line is increasingly important to drive business performance. Predictive analytics are crucial to prepare for future challenges.
RemCo Experience Can Hold The Key To Boardroom Appointments
More often than not HR directors tend to be appointed to a board position based on their remuneration committee (RemCo) experience. This can provide a good leg-up to the board and act as a bridging position for other board roles in future. RemCo experience also means that they will have needed to develop strong influencing skills in often challenging situations with highly demanding RemCo Chairs, and will be able to influence often tough and unpopular decisions. For aspiring HRDs with an eye on the board, it can be helpful to be able to talk about the challenges of working in a business that didn’t initially understand the value of HR, or where the HRD was able to notch up some hard fought wins and illustrate helping to drive the transformation of the business through a talent management strategy.
Another option for HRDs who want a CEO role is to take the lessons they have learned from a larger organisation to a senior role in a smaller one and use this as a springboard for the future.
Broader Functional Experience Is Necessary
To gain the mix of financial, P&L and operational experience they need, any HRD with board ambitions ideally needs to spend time in other functional roles. They can also take on other responsibilities, such as communications, while still in the HR role.
MBAs Are Desirable
An MBA can also broaden their business orientation and is increasingly sought after. The importance of talent management is where HRDs can particularly demonstrate their value. Some of the best strategic thinkers in HR these days take a ‘design thinking’ approach, one which is focused on the goal of reaching a higher level of business performance by improving the employee journey in all its aspects. They also understand the importance of ‘co-creation’ – assuming that internal key stakeholders will have many of the answers already – a powerful concept in a modern organisational context.
Culture Is Your Ace Card
HRDs obviously have a distinct advantage when it comes to understanding how to develop talent in the business, ensuring that there is a culture in place which supports and nurtures this as well as an understanding of whether or not talent will be available for new markets, service and product areas and whether the organisation’s strategy is sufficient for it to maintain it competitive advantage.
‘Culture eats strategy for breakfast’ is a phrase we have all heard and there is a large element of validity to it. As the custodian of culture, HR has a huge amount to offer in the boardroom to keep this real.
Soft Skills Aid Board Collaboration
HRDs can also use their listening and coaching skills to help the board as a whole to operate more effectively. This ability to hold up the mirror and have difficult conversations, coupled with (usually) an above-average level of emotional intelligence can enhance and facilitate effective decision-making and help a CEO with an HR background to win the trust of their fellow board members. They also need to keep up with the latest innovations and thinking, both in their own sectors as well as outside their direct areas of expertise.
Overall, we don’t really see enough evidence of a true external perspective from HR professionals to ensure that they have a good understanding of potentially disruptive market dynamics. It’s more than just being strategic.
