Closing The Trust Gap Between CEO & CHRO

Recent research shows that CEOs’ top 2 business concerns are talent-based. This means the 2020s could be the decade of the CHRO. But there’s one massive wildcard.

Can CHROs shake off HR’s long-held partner/service mindset—once and for all—and own an influencer mentality? How can a CEO know if they have the right person in the role?

And how can they determine if their own behaviours and habits are holding HR back … or propelling them forward?

Arielle Executive asked HR thought leader, Tim Sackett, to weigh in on those issues.

Tim is a Board Member of the Association of Talent Acquisition Professionals (ATAP), President of HRU Technical Resources, a prolific contributor to a number of HR industry blogs and the author of The Talent Fix.

(Related: Ultimate Guide To Human Capital Management).

Arielle: Tim, thanks so much for joining me. I’m looking forward to hearing your thoughts on where the CHRO / CEO relationship is headed.

TS: Great to be here.

Arielle: I wanted to start with a recent study by EY, the Conference Board and DDI World. Are you familiar with it?

TS: I am. The results were good news / bad news for CHROs everywhere.

Arielle: Exactly, and the top two concerns of CEOs in 2018 are spot-on to our conversation today. Namely, developing leaders for the future and attracting/retaining the right talent. Here’s the bad news: the same study shows that most CEOs doubt their HR organisation can deliver. This hits on that infamous gap in reputation and trust between the CEO and CHRO.

TS: Absolutely.

Arielle: So, here’s something funny. That factoid reminded me of another interview you did in 2014. You used a scene from the American version of the Office to depict the CEO’s current view of HR. Do you remember the one?

TS: Oh yeah! It’s Michael Scott speaking, and it goes something like this…

(Both laughing).

Arielle: Of course, Toby was no CHRO. And Michael Scott was no CEO. But 4 years later, it still begs the question—in an ideal corporate scenario, what should the relationship between the CEO and CHRO be like?

TS: I love this question because I think I’ve seen this work in real life in the best way possible. You know those big holiday dinners, with the big table—Dad on one end, Mom on the other.

Traditionally, we always saw Dad as the leader, but Mom was really the one running the show. In this case, who’s the CEO and who is the CHRO?

Tough question, right!? The answer is … it depends.

But in the end, it really doesn’t matter because, in the best families, Mom and Dad work together as a unit. Some days Dad was the leader, some days it was Mom.

In my view, the best CEO/CHRO relationship works like this: Mom and Dad, at the holiday table.

(Related Article: The Future Of Work In Australia).

Arielle: That’s a relatable analogy, especially since “non-traditional CHRO” is such a buzzword now. And it’s so easy for the essence to get lost. So, let me ask … how is a non-traditional CHRO different from the CHROs of the past (traditional)?

TS: I hear you … I’m not a fan of buzzwords either. So let’s not overcomplicate this. Non-traditional CHROs are more business-focused, and they act as a true business leader. Just as the CFO, COO, CIO act.

It’s not just about running a great function. It’s broader, i.e. how does my functional area help drive the business? And … how can my functional area help drive the other business areas?

Arielle: I recently read about Zabeen Hirji, who was CHRO at the Royal Bank of Canada through 2017. She’s been known to say that her role is to push the envelope with the C-Suite. If her ideas aren’t being turned down, she feels she’s not pushing hard enough. One example she shared was the use of internal social media to pulse-check employee engagement. The entire C-Suite was opposed to it, but employees loved it. What’s your take on the risk aspect of the CHRO role given that it is traditionally all about ensuring corporate compliance?

TS: My take is that it is not HR’s job to eliminate risk in the organisation.

It’s HR’s job to advise on risk, and then find out from the CEO what level of risk they’re comfortable with. Once this is in place, you know what parameters you’ll be allowed to push—and how hard.

(Related: What Is A Genuine Redundancy?)

Arielle: Great segue to my next question. How can a CHRO gain the trust of a CEO who doesn’t fully comprehend the benefits of a strong HR leader?

TS: Here’s the CHRO’s point of entry: Being a CEO is a lonely job, and most need a CHRO to be their sole trusted advisor. This advisor role gives the CHRO something no other C-Suite leader has access to.

Because bottom line, a CEO believes their CHRO has the legal requirement not to share anything the CEO shares with them. Most CEOs think HR is like legal. We, of course, aren’t.

But as CHRO, you can use this to your advantage—for good, not bad! Once you become that trusted advisor, you need to understand the power of that responsibility.

(Related: How To Write A CEO Resume).

Arielle: When we last spoke, you said you’re seeing a trend toward CHROs who have no background in HR. What are the pluses and minuses of a scenario like this, and what businesses might this work best for?

TS: This can work in any business. Being a great CHRO has nothing to do with actually knowing HR. Is it helpful? Sure, but it’s not required.

Being a great CHRO is more about understanding what the business needs from HR and then ensuring you have the right people in place to make that happen. That’s why we see great leaders from other functional areas coming into the CHRO role and doing very well.

It’s not about functional expertise. It’s simply about being a great leader.

Arielle: This next question speaks to your background in Talent Acquisition (TA). As you’ve likely gleaned, I’ve been researching CHROs with non-HR backgrounds. It seems that many of them had to be practically begged by the CEO to accept the job. This is largely due to HR’s stigma as a non-strategic service provider. It can seem like a career killer on the surface. How might a CEO persuade a non-HR executive to take the job? What kind of impact does the role offer with the right CEO partnership?

TS: When you think about it, businesses succeed or fail based on the quality of their people.

So, a smart CEO would sell the role as (potentially) the most strategic one in the C-Suite. This means the recruiting conversation should be pretty easy if one key element is in place.

The CEO has to view the CHRO as a core person on their leadership team and bring them into their circle of trust.

If that trust and respect is in place, most leaders would easily accept a role in HR and enjoy the challenge.

(Related: Employee Recognition Programs That Work).

Arielle: Let’s talk about another non-traditional CHRO for a couple of minutes, if that’s okay.

TS: Sure.

Arielle: I’m intrigued by Jacqueline Reses, former private equity investor, who is now both Capital Lead and CHRO at Square. Are you familiar with her?

TS: Definitely.

Arielle: She believes that most HR professionals think in terms of activities (let’s create a leadership program) versus business outcomes before they design a solution. Two things strike me about Reses. The first is her admission that her own ability to innovate new HR products has to be carried out by a team of seasoned HR professionals. What are your thoughts on striking the right balance between that outsider big-picture perspective and nuts and bolts HR expertise?

TS: It’s the exact same challenge that every leader in every function of a business faces. No different.

We need to do the functional business of HR, the day-to-day tasks, and we have to push the envelope and be strategic. Just like operations, sales, marketing, accounting, etc.

In HR we aren’t unique snowflakes. So, a strong CHRO should focus their entire team—whatever their background is—on creating solutions that drive the needs of their business.

Arielle: Okay, here’s the other thing about Reses. On her LinkedIn profile, she lists her title as People Lead (CHRO). You’ve mentioned to me previously that many companies are splitting the people/talent responsibilities out from general HR leadership. Say more about that trend and how you see it playing out in your work. What is generally the hierarchy between CEO/CHRO and CPO in your observations?

TS: So, I’m seeing two things happen. One is a trend of CHROs coming in with much more TA background. When this happens, they assume both the CHRO and CPO title.

But an executive who does this has high-level recruiting or core HR knowledge.

The other thing I’m seeing is organisations that are splitting HR and TA into two different functions. In that case, there are two distinct leaders—a CHRO and CPO. And both of them report to the CEO. It’s really no different from having both a CMO and a Chief Sales Officer.

Of course, it’s up to the CEO to determine whether or not talent is a critical strategic, competitive differentiator they must have.

Arielle: Got it. I’d like to shift gears and discuss some core HR focus areas. I’d love your take on how a CHRO/ CEO / CPO should play together in these spaces. Ready to dive in?

TS: Ready.

Arielle: Let’s start with the red-hot topic of AI / Robotics / Automation. Elon Musk shared a new documentary for free streaming very recently called “Do you trust this computer?” Have you seen it?

TS: Not yet. I guess I’ll have to pay for it. (Laughs).

Arielle: In my humble opinion, the film was intended to freak people out about AI.

TS: Shocker!

Arielle: Exactly. In the documentary, all of the AI Silicon Valley experts (and a few Stanford surgeons who are using robots for complex operations) claim that a world in which humans are augmented by robots and technology is no longer just fodder for the future. It’s here now. What role should the CHRO play in quelling any fears in the workforce about what, for some, is a dystopian outcome?

TS: Well, as a CHRO I definitely wouldn’t quell these fears. This is reality. Automation and efficiency have been a reality for centuries, so this isn’t new. This is just the next level.

Will jobs go away? Yes. Will the work we do evolve? Yes.

So let’s focus on the skill sets we need to build for the future, and focus on re-skilling our workforce as needed.

It’s not about fear. It’s about sharing reality in a way that lets your people know…here’s what the future will bring, and here is where you’ll fit. And if you decide you want that role, here’s how we’ll help you get there.

Arielle: Talent Acquisition is one area of HR where automation is already playing a big role. Any major pitfalls a CHRO or CPO should look out for? Any red flags for a CEO?

TS: I think we’ll see the biggest changes in this area over the next few years. Right now, automation can hire hourly workers way better than human recruiters. Any kind of lower-level mass hiring can be done by A.I. and I.A. better than humans.

The machines can work 24/7, have limited bias, and can do it for pennies on the dollar as compared to humans.

If an organisation’s CHRO is not testing this, as a CEO I would ask myself—do I really have the right person running my HR shop?

Arielle: You just mentioned the challenge of re-skilling a workforce. Recently the National Australia Bank (NAB) announced it was laying off 18% of its workforce while it’s making a profit, with a plan to hire new talent with technical skills. How will a CEO know if the CHRO has the right plan to blend automation with innately human skills? Any tips?

TS: I’m a giant fan of A/B testing in HR and TA constantly. As a CEO, I would want my CHRO to be coming to me with results of tests we have in motion, along with new tests we’re planning for the future.

If they’re not talking about how they’re testing technology in the HR and TA tech stack, it’s a huge indicator to me that my CHRO is stuck in the past.

Arielle: In your experience, when is it appropriate to follow NAB’s lead and just cut bait, let existing talent go and bring in new people with the latest tech skills?

TS: If the current talent is fighting against learning new skills and new ways of doing things, it’s time to make a change. I don’t advocate change for the sake of change.

But we live in a high-velocity world, so a CEO today needs workers and teams who are engaged in strategies that will prepare us for the future, not just maintain the status quo.

Arielle: Related to that, let’s talk about developing leaders for the future. This was #1 of the top 10 things CEOs are worried about in 2018, even above cyber-security. And this is obviously related to AI/automation and re- or up-skilling. What trends are you seeing here?

TS: I’m seeing less of a focus on formal education/degree programs, and more of a focus on micro-learning programs that allow people to skill up quickly in super-targeted ways to support the business faster.

Arielle: How involved should a CEO be in leadership development?

TS: If they say it’s the #1 issue they’re worried about, I’d say they better be pretty hands on!

What great CEOs know is that it’s not about hiring all great talent. This will never happen.

It’s about hiring and developing a really small number of employees who have the ability, capability and desire to be great leaders.

So, great leadership development is about finding that small number of people in your organisation, not trying to develop everyone.

Arielle: What warning signs should alert a CEO that their CHRO is out of touch with where their business is headed?

TS: Every CEO will have different triggers for this conclusion. If I were a CEO, I’d look at how my CHRO spends most of their time. If my CHRO is constantly focused on putting out current fires and what’s happening today, I’ve got a problem.

Most likely, this means they haven’t surrounded themselves with great talent that can handle the day-to-day work on their own — which is what frees a CHRO up to propel the business forward.

Arielle: Okay, last broad HR topic. And one that you’re passionate about – attracting and retaining top talent. This is #2 on the list of top CEO concerns for 2018. What kind of collaboration is needed amongst the entire C-Suite to pull this off?

TS: A ton! First, the C-Suite needs to ask themselves one question. And that question is: “Who owns recruitment in our company?” If the answer is HR, TA, the CHRO, etc., they’ve already failed. None of those people ever make one selection decision to fill openings.

All those decisions are made by hiring managers and that is who needs to own recruitment in the organisation.

But … that direction must come from the C-Suite. If all of TA gets hit by a bus tomorrow, the organisation will still hire. Those hiring managers will find a way, if they own it.

Once the hiring managers own recruitment, then TA can truly do some great things to support them. Without this ownership, TA will only be a punching bag for hiring managers looking for an excuse.

Arielle: We spoke earlier about the trend toward the CPO role. If that is an ideal future state, what advice do you have for a CEO/CHRO team who doesn’t have a CPO … other than get a CPO?

TS: The CEO and CHRO must understand whether or not they truly have a team in place that can attract and acquire talent. Most organisations don’t.

So, if they don’t, this has to be a top priority over almost anything else in the organisation because if you can’t hire the talent you need, you’re dead in the water.

What I find is most CHROs without TA background have no idea if their team is capable.

But after about a thirty-second conversation with the CEO and some key leaders from non-HR functions you can tell whether or not the HR team has this capability or not.

Arielle: I find it ironic that so many CEOs are complaining that their CHROs are overly task-driven and tactical. Because if you feel this way, and you’re the CEO — isn’t it up to you to change it?

TS: As a leader, CEO, you are 100% responsible for a CHRO who doesn’t get it. This is your core team.

This team will make you, or break you. If your CFO was bad at finance, you would fire them in a second. If your CHRO is bad at leading the function, they should be fired as well.

I don’t have much faith that a CEO will develop a CHRO to the extent that’s needed. You’re talking about an adult learner in a C-Suite position. If they don’t get it, they don’t get it. We are way beyond development at this point.

Arielle: Okay Tim, last question. What should HR “own” from a strategic perspective?

TS: Whatever needs to be owned for the business to succeed. That might be traditional HR and TA things; it might be something totally outside of HR and TA.

Great CHROs fill the void that is needed by the organisation to be successful. They fill the void that no one else is willing to step up and take.

Arielle: Tim, thank you again for taking the time to speak with us. As always, it’s been insightful and fun to catch up with you.

TS: Thanks for the opportunity to share my views on where HR is headed. Here’s hoping 2018 is the year of the CHRO.

Arielle: Cheers.