Many current chief human resource officers (CHROs) have professional backgrounds outside of HR. A recent study by Aon, which captured insights from 45 CHROs at leading global organizations, revealed that more than half are not career HR professionals. Of these, approximately a third had no background in HR prior to assuming their current CHRO position.
In particular, a movement has been afoot to absorb HR into the finance function. CFOs and CHROs are responsible for financial capital and human capital respectively, and are expected to present a common agenda. Writing for CFO magazine (article no longer available), David McCann has asserted that “Finance should run HR” and suggested that “HR is not strategically minded or in some cases even business-oriented.”
Ram Charan, a leading organizational consultant writing in The Harvard Business Review, suggested that the CHRO position should be eliminated, that compensation and benefits should report to the CFO, and that activities aimed at improving an organization’s people capabilities should work under the CEO and be led by “high potentials from finance or operations with strong people skills.”
This trend of finance or other functions controlling the CHRO position began during and in the immediate aftermath of the Great Recession. The question now is, will it continue?
That’s unlikely – at least according to some next-generation executive search experts. From their perspective, the pendulum already is beginning a swing back toward career human resources professionals dominating the CHRO ranks of the near future.
There are exceptional CHROs now with communications, accounting and finance backgrounds – but this will not become the norm. More than ever, managing talent means understanding multiple social and cultural factors, while also ensuring that employees are aligned with an organization’s business goals. The depth and breadth of ability required to achieve this on a consistent basis simply won’t belong to someone who has not spent years honing their skills in various human resources positions.
Certainly, sideways functional moves are common, even favored, within some companies related to senior executive development. But, no two roles are exactly alike, and developing an understanding of the supply chain or grasping the nuances of customer interaction are quite different from assuming responsibility for management of human capital and all related planning.
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To succeed early in their careers, finance and accounting executives must be naturally analytical and cultivate an unwavering return-on-investment focus as they develop strategy. But human resources requires a different set of skills, with an emphasis on empathy and the capacity to strategically maximize each employee’s talent, whatever their role in the workforce. While a dose of science is necessary, there’s also psychology, creativity, and even – at least among the profession’s elite — some intuition. Along with natural inclination, these abilities cannot be developed to an expert level except through years of experience within the human resources sector.
A move between functions may be appropriate for the chief operating officer or chief marketing officer, but it is not something advisable for the CHRO. It just is not a natural path, and it isn’t in the best interests of the organization or the individual professional. HR leaders coming up through the ranks these days are more commercially minded, not just tuned into talent management but business strategy as well.