Dr Subhash Chandar is an accomplished & award-winning HR expert, currently serving as the Global CHRO of Laminaar Aviation Infotech Group.
getty
In the corporate world, the chief human resources officer (CHRO) role is crucial for managing the organization's human capital and shaping its culture. However, historically, HR professionals have been less likely to ascend to the chief executive officer (CEO) position as compared to other C-suite executives. This trend has sparked debates and discussions about the suitability of CHROs for the CEO role. In this article, we will explore the reasons behind this trend and analyze the challenges and opportunities that HR professionals face in their quest for the CEO position.
Key Reasons Why CHROs Are Dropped Out Of The Race
1. Skill Set Perception And Stereotyping
One of the primary reasons why CHROs may not be seen as ideal candidates for the CEO role is the perception of their skill set. HR is often viewed as being associated with processes, such as recruitment, performance management, total rewards, organization structuring, etc., or associated with soft skills, such as strategic HR planning, people management, team building, etc. These skills are undoubtedly essential for a company's success, but they may not be seen as directly related to the strategic and financial decision-making typically required of CEOs.
CEOs are traditionally expected to possess a broader range of skills, including financial acumen, business intelligence and strategic planning with a revenue-driven mindset. The perception of HR professionals as lacking in these areas may lead to stereotyping and exclusion from consideration for the top leadership position.
2. Limited P&L Experience
Another factor contributing to the limited representation of CHROs as CEOs is their lack of profit and loss (P&L) experience. P&L responsibility involves managing the financial performance of a business unit or division and making decisions that impact revenue generation, cost management and overall profitability. This is a key skill that adds high value as a CEO candidate since it demonstrates one’s ability to drive business growth and navigate challenging financial environments.
While some CHROs may have exposure to financial aspects of HR, such as budget management, they often lack direct P&L experience. This can be a significant barrier when boards and committees seek candidates with a proven track record of financial leadership.
3. Limited Exposure To External Stakeholders
CEOs play a critical role in representing the company to external stakeholders, including investors, customers, partners and regulatory bodies. They must possess exceptional communication and relationship-building skills to gain the trust of these stakeholders and promote the company's interests effectively.
CHROs, on the other hand, often focus on internal stakeholders, including employees and the executive team. While they may occasionally interact with external partners, their exposure to external stakeholders may be limited compared to other C-suite executives, making them less visible and connected to the external business environment.
4. Strategic Leadership Versus Operational Focus
The roles of CHRO and CEO demand different leadership orientations. CHROs are typically responsible for strategic decisions and policies involving people, implementing HR policies and ensuring the organization's overall human resources productivity. This operational focus is crucial for effective HR management, but the CEO role requires a more strategic and visionary outlook.
CEOs set the company's long-term direction, develop and execute business strategies, and drive innovation and growth. The transition from an operational mindset to a strategic one may be challenging for some HR professionals, especially if they have spent their careers focused on tactical HR functions.
5. Succession Planning And Organizational Culture
While picking a new CEO, traditionally, the boards and committees prioritize candidates who have demonstrated successful leadership experiences within the organization. This emphasis on internal succession planning can create a cycle where CEOs are predominantly chosen from traditional paths like finance, operations or sales, rather than from HR.
Additionally, some stakeholders may believe that CHROs may be too deeply ingrained in the company's existing culture to be objective leaders of change, especially if they have been instrumental in shaping the current culture and practices.
What can be done?
While there are challenges to CHROs ascending to the CEO role, there are also opportunities and solutions that can address these concerns. Here are a few tips for CHROs looking to become CEOs.
• Proactively seek opportunities to diversify your skill sets beyond HR. Engaging in cross-functional projects, pursuing executive education in finance or strategy and taking on broader operational roles can help demonstrate a well-rounded leadership ability.
• Enhance your business acumen by exposure to external stakeholders, including investors and customers, by participating in investor relations activities, attending industry conferences and engaging in networking opportunities.
• Align HR initiatives with strategic objectives and measure their impact on key performance indicators to illustrate your ability to drive bottom-line results. This would be a great opportunity to demonstrate your P&L abilities.
• Make a conscious effort to focus on high-level strategic initiatives within your role, such as proactively managing the talent framework, fostering organization culture, etc., and align such initiatives with the company's long-term goals.
Conclusion
While the path from CHRO to CEO may be less common, it is not an insurmountable challenge. By addressing the perceptions of their skills, gaining business exposure and embracing strategic leadership, HR professionals can position themselves as credible and capable candidates for the CEO role.
Ultimately, the key lies in demonstrating a clear understanding of the business's financial drivers and revenue strategies, the ability to communicate effectively with external stakeholders and the vision to lead the organization into the future. As the role of the CHRO continues to evolve, so too can the opportunities for HR professionals to break the barriers and rise to the highest echelons of corporate leadership.
Forbes Human Resources Council is an invitation-only organization for HR executives across all industries. Do I qualify?
