Chief HR officers can be quite effective as CEOs too, when given the chance

Cindy Yang, Bob Bellano and Fernando Zavala

Organisations are arguably more people-centric than they have ever been in history. Company culture and employee wellbeing is a fundamental tenet of company health.
Challenges such as inflation, economic uncertainty and the pandemic presented a medley of challenges to organisations, not least the ones that involved the employee base – health and safety standards, hybrid work, and employee engagement, to name a few.
Research indicates that whilst inflationary pressures and economic uncertainty point to employees’ renewed concerns about financial compensation, other concerns – such as work-life balance, and ethical alignment with the organisation they work for – are still front and centre to the work-related choices people are making. All of these elements, playing out through the heartbeat of organisations, are the core responsibility and remit of the CHRO (Chief Human Resources Officer) or CPO (Chief People Officer). Advances in people analytics, and the dire need to drive attraction and retention, along with diversity, equity and inclusion, make this role an absolutely critical component of the C-suite.
There is no concrete data on which functional areas the CEOs were in prior to them becoming a CEO, and how that has changed over time. As recently as 10 years ago, an organisational HR head very often reported to COOs or even CFOs.
The HR function has rapidly transitioned from a mostly administrative role to a central strategic one, and has often become tied to executive committees, as well as a trusted advisor to CEOs in major corporations. Some major brands now have former HR leaders as CEOs: General Motors (Mary Barra) and Chanel (Leena Nair) are just two examples.
It’s to be expected that top-tier CHROs and CPOs feel they have the requisite skill-sets to lead organisations as CEOs. They understand the employee mindset, and have a strategic comprehension of how to build a conducive environment that enables passions to take tangible shape into products, services, efficiencies, and client satisfaction. There are four ‘must-haves’ for CHROs and CPOs to be considered for CEOs. These suggestions have been selected as useful for all industries and organisations, although there would also be additional action points required in certain industries.
Accountability for a P&L
A key component to both consideration and success as a CEO is demonstrative responsibility for a P&L. Almost always, CEO candidates will know how businesses run from running a business. They will have a deep understanding of business models: how the business makes money, how it garners a profit, and how it sustains that profitability over time.
CHROs and CPOs don’t traditionally have this skillset. They can gain this experience by taking on additional responsibilities such as leading a business unit, or serving on the company’s executive committee.
Developing a deep understanding of the company’s business strategy and financials is paramount. Additional competencies can also be gained through executive training and development, such as an MBA or other postgraduate finance degree.
Multi-faceted executive experience
Many leaders are exceptional at what they do, but are siloed in their skills, expertise and outlook. CHROs and CPOs looking to become CEOs need to have a considerable level of multi-faceted executive experience throughout their careers, which showcases an individuals’ mettle and ability to think beyond traditional departmental boundaries.
Those with cross-functional experience and/or international exposure will be favored for CEO consideration. CHROs and CPOs who have led other functional departments, such as sales, operations, or finance, is ideal.
Even if a portion of an additional departments responsibilities have been under your purview, this will be incredibly advantageous. Additionally, managing teams and aligning strategy across different geographies and cultures will be seen as extremely relevant to any potential CEO appointment.
Big picture vision
Long-term, strategic thinking is an essential ingredient for CEO success.
As leaders, they have an ability to envision the business, and make short-term decisions that benefit the organisation over longer timeframes.
Part of this decision making comes from top-tier experience, and part of it comes from having an intimate knowledge of the company’s competitive stature in the marketplace, and a vision for what can be achieved.
For CHROs and CPOs, it’s important to establish your own informed and considered vision for the organisation, and how you will lead as CEO. Communicate this clearly and effectively.
To establish this vision, actively seek out learning opportunities within the business.
Participation as an active member of the Board of Directors is ideal, which will enable access to big picture strategic challenges and opportunities, as well as provide insights around the priorities of other functional leaders (the CFO, COO, etc.).
Develop a thorough understanding of your key industry trends and emerging technologies. A digital-centric mindset to solving challenges is beneficial.
An effectively supercharged network
Navigating complex challenges and driving business growth is the hallmark of CEOs, yet they are only as good as the network they have around them. Having the support of not only the senior executive team, but the broader management structure, and the employee base, is an imperative for success.
The focus on company culture means that successful CEOs have to foster positive, collaborative and transparent working environments.
CHROs and CPOs usually excel at this must-have, and tend to have more experience in this than CFOs or COOs. They are, as their title implies, ‘people people’: they usually have very well-established company networks, with stakeholders, the board of directors, other executives, and of course employees.
Establishing even stronger strategic ties, both internally and externally (think: investors, government, media) is prudent.