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Human Resources

Fostering the fittest

Why the Chief Human Resources Officer holds the key to sustainable talent management

  • January 2017

In times of fierce competition for the best and brightest, the Chief Human Resources Officer, or CHRO, has a key role to play in the development of talent. It is their job to ensure that the rise of high potentials is not sabotaged by the egotism of individual managers – a challenge that calls for communication skills of the highest order.

Not long ago, human resources departments were commonly portrayed as antiquated and opaque subsystems with plodding bureaucratic structures. Their mission? Maintain the status quo. Let others shape the future. But a brisk wind of change has been blowing through HR offices around the world. With the business environment becoming increasingly global and growing in complexity, human resource managers today need to move with the times – or stay one step ahead – if they are going to make a relevant contribution.

The Chief Human Resources Officer is a case in point. The chairman or CEO may be able to rapidly develop or change a strategy, launch new products and services, trigger new production processes, or order a refocusing on core strengths. But without suitable, qualified employees to implement them, their ideas will remain pure theory. The CHRO sets an appropriate pace for the HR team, managing the company’s human capital proactively and in line with the corporate strategy, and providing essential support in reaching the corporate objectives.

Having long seen themselves as business partners to corporate management, top HR executives are a forward-thinking breed with an outlook that extends beyond the walls of their department.

HR’s role is not to do executives’ jobs for them, but to enable them to do their own jobs. At the same time, of course, HR managers – and theCHRO in particular – have multiple challenges of their own to meet. They must keep one eye on corporate growth targets even when times are tough. As globalization advances, they must work with an increasingly diverse and heterogeneous workforce. And they need to be alive to the new approaches to recruitment and HR development that are being driven by demographic change in industrialized nations. A new generation of managers and employees is imposing its own high standards of work-life balance and career opportunities and expects to benefit from new workplace models and greater flexibility. Keeping up with these expectations calls for effective and efficient HR processes.

HR thoroughbred or business professional?

This raises the question of what skill sets the CHRO must possess in order to best meet the multitude of challenges they will encounter in their profession. There are two schools of thought. The first prefers the thoroughbred HR professional who effortlessly masters the core administrative responsibilities of the personnel department. Other companies, by contrast, prefer to select their CHROs from a pool of executives who have not spent their careers in human resources, but who have, for instance, successfully headed up a corporate division. In the end, the type of candidate preferred will depend on the industry and the current situation of the organization. Companies whose services strongly depend on front-line contact between employees and customers, such as consulting firms, may be best served by a CHRO who entered HR through the side door. A traditional, highly regulated industrial enterprise, on the other hand, could be better advised to select an out-and-out HR professional. The ideal candidate, of course, would combine the best of both worlds – human resources and business. After all, the ability to shift between different perspectives can only foster the open-mindedness that a good CHRO needs today.

Although confronted with a variety of responsibilities, many CHROs have identified one clear priority for HR in the coming years: talent management. In surveys of top HR executives of large corporations, over half of the respondents named international, integrated talent management as their primary goal. In medium-sized companies, the heads of human resources take a similar view. In a study conducted in cooperation with a German university, the majority of participating HR directors said that identifying and developing talent was the greatest challenge they face. Some three-quarters of the 323 medium-sized companies surveyed indicated that recruiting qualified employees would be HR’s top priority in the next three to five years. The most urgent needs identified by participants in the study were increasing employer attractiveness on the job market, using more effective recruitment channels, and improving the selection process as a whole.

But it is not enough to attract high potentials to the company; the main challenge is optimizing their professional development once they have been hired. Talent management starts by analyzing potential in order to select participants, extends to designing the relevant development programs, and includes career planning for rising talents, using attractive prospects to retain them.

Here the CHRO plays a key role at the interface between corporate management, divisional and departmental management, and the talents themselves. The CHRO and their team need to engage in intense dialogue with the specialist departments in particular. Because even though the supreme importance of potential (and top management potential in particular) for long-term corporate strategy is undisputed, when it comes to evaluating potential there is still great uncertainty about the right ways and means. Until recently, for example, there was no such thing as a conclusive, precise, and objective methodology for assessing potential. While this problem has now been solved (see p. 42), once the high potentials have been identified there is still room for improvement in the way they are handled in their day-to-day jobs, which is often at odds with the company’s objectives.

Talent management as an integrated function

In the past, organizational experts often observed a shifting of HR responsibilities onto the shoulders of the direct supervisors. This was in part due to the weakness of some HR departments, but also to the decentralization favored by many companies for so long and, perhaps even more importantly, by the desire to make business leaders feel responsible for the development of their teams. Effective talent management only works, however, when the organization embraces it as an integrated function, with the managers of divisions and departments working hand in hand with the CHRO. The head of HR needs to have a firm hold on all the different strands. With their team, they must ensure that potential is identified throughout the organization in accordance with a uniform and transparent standard. HR specialists have to know where identified high potentials work in the organization and be able to play a part in their ongoing development in coordination with corporate management.

One of the CHRO’s primary responsibilities is ensuring that HR drives home the importance of developing potential to the divisional and departmental managers – the immediate supervisors of the rising talents. And when working with these managers, the CHRO should combat a widely held misconception: that prior experience and current performance offer sufficient information about the potential of a possible future star. What an employee has achieved in the past, what experience they have gained, what hurdles they have overcome, and how their performance currently compares to that of their colleagues gives only a partial picture of what they will be able to achieve in future roles. “Have they…?” and “Do they…?” are doubtless relevant questions in a discussion of employee potential – but “Can they…?” and “What if…?” are even more important. It is also essential that potential be identified and evaluated using the same methodology throughout the organization. This way it meets objective criteria and does not depend on personal relationships or the subjective impressions of individual managers.

With the support of the executive board, the CHRO and their team must create and foster the necessary awareness among all managers, not only for assessing potential, but also for driving it forward. Failing to create a shared mindset harbors several dangers.

The first one is that managers will put the wrong employees on the fast track – while the true talents, left without adequate challenges or interesting tasks, either wither on the vine or walk out in frustration. In more than 60 percent of cases in which employees leave a company, problems with their immediate supervisor are the primary cause.

Today one edict should be part of the prime directive of every HR department: The talent belongs to the company.

The second one is that talents are kept hidden. Today one edict should be part of the prime directive of every HR department: The talent belongs to the company. Talent must be available to the entire corporation, not just to the direct supervisor, one department, or a single division. Although it is only natural for heads of department to want to retain their most talented employees, personal or departmental selfishness is not only misplaced when it comes to high potentials, but also counterproductive. It brings with it the danger of misallocating talent resources. Because a manager cannot or will not “let go,” employees are kept in a department or team where they are not able to develop to their full potential for the benefit of the company.

A third danger and a common source of frustration is a failure to follow through on the development of potential. The manager assigns an employee the status of “rising talent,” and then nothing happens. With this flash in the pan, the supervisor has done more damage than if the idea had never been raised in the first place. By symbolically anointing the employee as a high potential, they raised hopes that are then dashed – hopes of a higher salary, an exciting project or an overseas assignment. At some point this frustrated talent will probably quit and, in the worst case, go on to have a shining career with the company’s strongest competitor, as well as damaging the employer branding.

So it is essential that the right mindset is shared by all leaders and managers, and the right approaches are applied with the right mindset across the organization. This is not a “tick the box” exercise. And if, despite all of this, the above types of danger are identified, the CHRO must skillfully deploy the full arsenal of processes and tools, sounding out possible deficits in the supervisor’s talent development, speaking to them, and working with them and the employee to find a better solution. A well-moderated communication process involving all concerned is a must, calling for strong interpersonal skills and influencing skills on the part of the CHRO, along with outstanding communication capabilities. This may be laborious and time-consuming, but it is an important investment in talent and therefore in the company’s future.

Communication skills even more critical for Generation Y

However, HR specialists need to apply their communication skills even before the actual evaluation of potential takes place. The expectations of the highly networked members of Generation Y in particular are posing new challenges for human resources. The HR director of a large, international automotive corporation recently reported that a question for his staff was posted on Facebook at 8 p.m. – and the next morning at seven, there was an angry follow-up asking why no one had responded. The target of this criticism reacted immediately and set up a shift system to answer particularly urgent Twitter and Facebook posts 24/7. As this example shows, the much-sought-after high potentials of Generation Y expect prospective employers to play by their rules – and employers are adapting their behavior accordingly.

A poorly conducted job interview will probably end with the candidate venting their frustration on Twitter as soon as they exit the building. If it is widely re-tweeted, it can have negative effects on the employer brand of the company in question. The same goes for employers who only focus on developing potential during economic good times and neglect their rising talents in a downturn. This does lasting damage to the company’s reputation and makes it difficult to score points with high potentials when the economy picks up speed again. Not only that, but restructuring-related tasks offer promising talents ideal opportunities to prove themselves in a team and showcase their particular skills.

The digital natives of Generation Y, the young talents who grew up with smartphones, computers, and the internet, pose another set of specific challenges for HR managers. Never has a rising generation been so varied in its expectations, wishes, and goals. This was demonstrated recently by the results of a survey published by Egon Zehnder. No pattern could be identified, no uniform picture drawn from the highly individualistic responses.

Going forward, it will be the CHRO’s job to correctly weigh the diverse expectations of young talents and assess the changing rules of the game in an increasingly hard-fought market. Then they must use this input to forge a strategy for developing and managing potential, integrating it seamlessly in the overall corporate strategy, and at the same time harmonizing it with the organization’s goals. Even with the best team, however, the CHRO cannot master this challenge in isolation – it calls for a shared people vision and direction with the C-Level team, along with an agreed roadmap and common understanding across all managerial layers in the organization. No mean task.

About the Authors

Isabelle Langlois-Loris joined Egon Zehnder in 1999. She is based in Brussels and leads the global Human Resources Practice. She focuses on the Consumer and Financial Services sectors.

Special thanks go to co-author Stefan Ries, formerly with Egon Zehnder (2011-2014).

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