Why Companies Are Looking Outside HR For Their Next CHRO

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Aug 6, 2018

Ah, the coveted role of Chief People Officer (CPO), the pinnacle of success for a career human resources professional! For most HR leaders, the traditional path to the top has been fairly linear: evolving as a specialist, generalist, or business partner before moving into the desired #1 slot. But that path is becoming less common, as some of the largest companies have hired outsiders for that top CPO role, leap-frogging over even the most expert of HR leaders.

For much of its existence in organizations, human resources has been focused more on administrative and compliance-oriented tasks; however, strategic partnership in the function has become increasingly important for companies. Now, CEOs and business leaders are also looking for even more breadth in their CPOs. While HR has already seen its share of leaders coming out of the finance and legal departments (administration and compliance) for many years, in our practice we see an emerging trend toward hiring or promoting “Non-Traditional Human Resources” (NTHR) leaders into head of HR roles. These NTHR leaders in many cases come from other operating units including marketing, sales, operations and even IT. I recently heard of a scientific executive with a PhD who was just promoted to Chief People Officer from VP of Research & Development!

Reasons for this trend are myriad, as businesses are discovering it’s a successful strategy for value creation. Here are some of the reasons why:

Leveraging the company’s greatest asset — In companies that truly understand people are at the center of generating and sustaining maximum ROI, NTHR leaders often know how to best leverage human capital and can translate business strategy into action through people.

Demonstrating a strategic outlook — NTHR leaders are closely aligned to the holistic needs of the business, not just risk mitigation or administration. They are committed to long-term results, goals, performance, profits and losses.

Bringing a fresh/creative perspective — Leveraging their unique experiences, NTHR leaders can identify efficiencies and find new ways of structuring the company and its programs. NTHR leaders might bring a more comprehensive understanding of the external market/customers, products/services, or other operational and business models.

Adapting to the ever-evolving market — NTHR leaders are able to flex and flow with the fast-paced changes inside and outside of organizations. They are able to serve as “utility players” and solve business problems.

Cultivating a deeper partnership — The CEO, C-suite and board are aware that finding, utilizing, maximizing, and retaining the best human capital is a top challenge. NTHR leaders bring credibility and trust as both human capital experts and business experts, and this creates an environment of collaboration and an alignment of mission/vision/goals across senior teams.

Expressing a growth mindset — NTHR leaders solve problems by applying non-HR or novel HR approaches, focusing on growth and potential. NTHR leaders can facilitate creativity, authenticity and an expression of talent across the organization, harnessing the potential of its people.

Viewing HR as its own “business” — NTHR leaders have an ability to run an HR department as its own internal business, not just as a support function. NTHR leaders can provide cohesive, strategic leadership and oversight for technical HR experts in the group.

Sometimes the appointment of NTHR leaders into HR roles is only designed as a short-term stint in an executive’s rotation on the path to CEO (think Mary Barra of General Motors); however, the desire for executives to pivot from almost any function into HR is indicative of the widening trend of companies recognizing the importance of people and their value to the success of the business.

What you need to do

So what’s a career HR leader to do in order to stay competitive for the CPO job? Consider rounding out your skillset:

Seek out “rotations” of your own outside of HR — Embrace opportunities to take on different roles, especially positions that give you more operational experience and/or profit & loss management. Get as close as you can to the revenues, not just the expenses.

Gain more exposure to the business — Familiarize yourself at a deep level with the financials and all of their implications. Become an expert in the products/services, customers, sales and go-to-market strategies, and spend time with any other relevant internal function critical to the business. Get a product demonstration, go on a sales call, or sit in the call center.

Attend meetings across function — Participate in strategy discussions and strategic decision-making processes outside of the HR department. Understand what drives the business and all of the “whys”.

Demonstrate your ability to think big and adapt to change — Capitalize on opportunities to show just how innovative, creative, flexible, and strategic you can be. Take appropriate risks and find ways to encourage others, and your team, to do the same.

With this mindset, you might not only land the CPO role… It might just be the next stop in your journey to CEO!