Putting People First

Meet the game changers having real influence on business strategy
Traditionally HR was seen as back-office function, dealing mainly with administrative tasks such as reviews, disciplinary action and benefit plans. In the last decade a shift in attitude and approach has introduced heads of HR to the boardroom and the top table with an appropriately termed job title – CHRO (Chief Human Resources Officer). Some of the skills needed include focusing on higher-level leadership abilities and strategy implementation skills, therefore the role is becoming much more of a game changer. The CHRO has gained importance as the person who enables the business strategy alongside the other ‘C’ roles. Effectively responding to current challenges such as Brexit, an increasingly complex regulatory and governance landscape, and the prospect of increased workforce automation and AI, is a function of the CHRO and a measure of their ability. KPMG spoke to different FTSE 100 companies to answer the question: what makes a CHRO successful – now and in the future?

Experienced women at the forefront
In the five years to 2016, the proportion of female CHROs in the FTSE 100 has risen from 44% to 56%. Given the strong pool of female talent in the HR profession and the renewed focus on gender diversity in senior leadership roles, this is not a surprise. The proportion of FTSE 100 companies with an HR professional in charge of HR rose from 69% to 80%, demonstrating relevant experience is vital in the current climate. An American study published by the Harvard Business Review highlighted two examples of prominent CEOs who had developmental stints in HR earlier in their careers. Mary Barra, the CEO of General Motors, served as the carmaker’s vice president of HR for 18 months, and Anne Mulcahy, Xerox’s CEO from 2001 to 2009, ran that company’s HR operations for several years in the early 1990s. It’s no coincidence that both are women: according to the researchers’ data, 42% of high-performing CHROs are female — more than double the share in the CMO position, the next highest (16%).*

From the outside in
According to the report, more FTSE 100 companies are looking externally for their next CHRO. In 2011, half of CHROs were hired, rather than promoted from within their organisation. In 2016, this had increased to 56%. In a similar vein, the proportion with experience outside of their current sector has also increased, from 70% to 82%. Both trends suggest that CEOs and Chairs are looking at the CHRO role as a catalyst for change, occupied by an enabler with varied knowledge. Where almost 10% of current FTSE 100 CEOs have spent their career in the same company, and therefore the same industry, today’s CHRO should have the breadth of experience necessary to tackle various people issues.

The future of the CHRO
The needs of our work force are changing and businesses are evolving in unchartered territory. Thinking about how to create more value through better management and organisation of people, talent and culture will become a major differentiator. As for all areas of business, technology will have an ever-increasing role within human resources. CHROs are going to have to be confident in dealing with every aspect of this to take the centre stage.

“According to recent research, more FTSE 100 companies are looking externally for their next CHRO. In 2011, half of CHROs were hired, rather than promoted from within their organisation”

Read KPMG’s report at kpmg.com/uk/en/home/insights
*Harvard Business Review

This article was originally featured in The Informer. To read the full magazine, please click here.