The HR function has been undergoing a metamorphosis for the past few years, but the most recent stages of the transformation have been difficult. With securing a seat at the table, CHROs are now expected to contribute in driving the business strategy as well as demonstrate critical thinking and decision-making to the business. But are today’s CHROs equipped to take on this challenge?
Through a recent study, Developing the Next Generation of CHROs in Southeast Asia, we discovered 5 key capabilities required for the role:
1. Leading Up
CHROs still have to answer to the CEO and the Board, and 70% of the CHROs surveyed report to the CEO and nearly all meet with the Board of Directors quarterly. However, it goes without saying that CHROs do not exclusively follow orders from the CEO and the Board. The CHRO is an important activist for the people of the organisation and must push back against business decisions that undermine employee behaviours and organisational values.
2. Leading Across
The CHRO is often a mediator and sounding board, acting as a coach and sparring partner for other C-Suite positions. In fact, many are called upon to offer advice on the performance of other CXOs and recommendations on organisational fit.
In our survey, we found that Southeast Asia-based CHROs interact with the other C-suite positions at least once a week. When asked about the CHROs’ key relationships, the Chief Financial Officer came second, right after the CEO. After the Chief Operations Officer and Board of Directors, the Chief Technology Officer rounds up the top five, which highlights the importance of technology in the HR function.
3. Leading the Function
CHROs must drive their own function and prioritise certain HR programmes over others. From our survey, most CHROs chose to focus on these programmes:
Performance management (71%)
Selected as the top-ranked programme among CHROs surveyed, this shows that the discussion and reinvention of performance management is not going away.
Critical roles, skills, and talent pools (65%)
The war for talent continues, especially for highly skilled or specialised roles, and this is reflected in this function being ranked so highly.
High potential identification and development (62%)
Combined with critical skills, we again see how important high potential, high skilled workers are to the ongoing efforts of CHROs.
4. Leading Self
CHROs do not get to such a coveted position without an endless drive for self-improvement. To develop themselves, many Southeast Asia-based CHROs engage in training or coaching (58%), networking groups (39%), and external development via a programme or training outside of the organisation.
However, Southeast Asia-based CHROs are still looking to improve their leadership capabilities. 52% of them ranked “governance and decision-making” as an important technical competency, but rated themselves only 3.2 out of 5—which aligns with the importance of interacting with CEOs, the Board, and other CXOs.
When it comes to behavioural competencies, 88% of CHROs identified “thinking strategically” as an important competency, but only rated themselves a 3.1 out of 5. This demonstrates that while CHROs have had a metaphorical seat at the table for a few years, many are still developing their strategic capabilities.
5. Leading Externally
Although CHROs focus their time setting and executing the people strategy within the firm, they are still a representative for the employees of an organisation. Therefore, they interact with external stakeholders frequently—in fact, we found that CHROs interact with customers every day. Other important external audiences include academics and students, who can act as a strong pipeline for the firm.
To develop skills and stay current on market trends, Southeast Asia-based CHROs are also often involved in an HR leadership network. For example, more than half participate in industry-specific or subject matter-related networks.
What emerging capabilities must CHROs and aspiring CHROs have?
- Drive data- and analytics-based decision making. With the emergence of technology, SaaS-based HRMS platforms, and internal social networking software, HR leaders are more equipped than ever with employee data to help make the best decisions.
- Be the architect and assessor of organisational culture. CHROs are in a unique position where they can align HR processes and programmes to incentivise change and dis-incentivise the status quo—thus ‘architecting’ the shift.
- Proactively map organisational capabilities to the future strategy. CHROs must anticipate new sets of capabilities the organisation is likely to require—by translating the business strategy into strategic future capabilities, assessing the gap between existing capabilities and the ones needed, and developing a two-to-three year plan to bridge the gaps.
- Play the role of an internal and external talent scout. CHROs need to build the critical ability to spot pools of talent the organisation can access, and enable cultural alignment in the organisation by ensuring new recruits align with the behaviours the firm wants to develop.
- Leverage technology to enable HR transformation. The CHRO must work with his/her HR team to keep roles within the HR team relevant. By leveraging analytics and technology, HR generalists and business partners can morph into HR consultants.
- Apply critical thinking to HR trends and data. While emerging trends or skills may be important for aspiring CHROs, they are also important for others striving to be effective HR leaders within their organisations. CHROs need to apply critical thinking skills by looking through the lens of the business strategy and understand when—and when not—to leverage ‘leading practices’.
Start a conversation with us
Need help developing the next generation of CHROs in your organisation, or enhancing your own capabilities to become a strategic business partner? Get in touch with us.