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2022 in review

The best and worst of times to be a CHRO
December 2022

As I headed out to meet a chief human resources officer (CHRO) for a pre-Christmas lunch last week, I was thinking about where we were this time last year and what the pandemic has meant for the role of the CHRO.

My lunch guest wasn’t the first to share that it has been the toughest of years, telling me that “my portfolio keeps expanding, it now includes ESG”. The complexity, the pressure and the pace has been fierce. “The CEO wants to discuss why our transformation has slowed”, “the chairman keeps checking that I am not thinking of leaving” and “I have an investor call this afternoon that I need to prepare for”, are typical of what I hear from stretched, stressed HR leaders.

They certainly wouldn’t recognise the old characterisation that ‘HR is still searching for a seat at the table’, and neither do I. Quite the opposite. This role has never been in higher demand, or more complex, broad, or visible both inside organisations and externally.

This began pre-Covid, on top of already shifting expectations about the workplace/future of work and the most “VUCA” (volatile, uncertain, complex and ambiguous) external environment ever known. It was amplified by the crisis, which forced organisations to think about the human part of Human Resources as never before.

Through all of this, the issues that seem to matter most to boards and CEOs are leadership, talent, culture, DE&I and ESG. Business strategy is, of course, vitally important, but without the right culture, leadership and talent solutions, the smartest strategy is unlikely to be successfully delivered. These are all inter-connected people-related issues. It is no surprise then that the past three years have seen a huge spike in demand for CHROs with more first timers being appointed in 2022 than in previous years.

Being in the privileged position of spending a lot of my working hours with CHROs and the CEOs who are trying to hire them, I know that it is a rare leader who isn’t grappling with what the future of work means for their organisation, how to navigate through continued disruption, and how to build more diverse and ever more high-performing teams whilst at the same time ensuring that employees remain fully engaged — a constant conundrum.

So, here’s my take on 2022, a period shaped by ongoing geopolitical and economic uncertainties, but one where interconnection, inclusion and the impact of the CHRO have all loomed large.

I recently gathered together for a two-day meeting with some longstanding colleagues who I hadn’t seen face to face since 2019; I was underprepared for just how powerful it would be to see my colleagues in the flesh. The energy, creativity and positive spirit generated surprised me with its intensity and gave a very personal insight into the dilemma faced by CHROs in trying to define the optimum balance of in-person and virtual working for their organisations.

I am a huge supporter of the hybrid model and firmly believe it is here to stay. Many organisations feel they haven’t got it right yet. Reconciling the inequity perceived by those whose roles mean they can’t work remotely, understanding the relative advantages in productivity, harnessing the benefits of geographical neutrality, building engagement and collaboration are some of the challenges that we are all struggling with.

There is, however, a consistent view amongst senior leaders that the prize is worth pursuing and (perhaps a bit of optimism) that ever more sophisticated practical and cultural solutions will be found.

With the war for talent fiercer than ever, the winners will be the companies that understand and deliver what matters most to their people: things like good relationships with colleagues and managers, work-life balance and development/progression. Whichever survey you review, you will never see financial compensation, authoritarian leadership and ‘Five days in-office’ as the most sought-after factors. Leading with empathy, being flexible on where work is done and creating a compelling learning ecosystem are all key priorities to thrive in the new normal.

Another key insight for me came during our CHRO Roundtable series (now in its third year), which Bastian Wilhelm and I co-host with the wonderful People and Organisation team at BCG, where we bring together CHROs from the UK and Europe to discuss a range of strategy, leadership and culture related issues.

The group recognised that that we are living amidst unprecedented levels of interlinked uncertainties, from geopolitics to COVID-19, climate, cyber-issues and people-specific concerns such as talent attraction and retention. The discussion was framed around how it might be possible to turn this wholly unpredictable environment into an advantage.

With the help of BCG’s Alan Iny, we discussed how winning organisations have worked out how to build uncertainty advantage into their business model. The key is decision making using a broader range of insights plus inputs that competitors might lack access to. Investment in resilience in the face of both unpredictable “Black Swan” and more obvious but often ignored “Gray Rhino” events is critical. So, too, are mechanisms that overcome management’s natural bias to forgo or delay potentially game-changing moves. From a CHRO, and many CEOs’, point of view all paths seem to converge back at culture, leadership and talent.

While the business case for diverse teams and organisations is now widely accepted and great strides are being made in DE&I across the business landscape, and beyond, the focus is still largely on representation and less on building inclusive teams and cultures. I was struck by an interview one of my colleagues recently conducted with Francis Frei, Harvard Business School Professor and author of Unleashed, who was talking about the relationship between trust, diversity and team performance.

Francis made the point that if diverse teams aren’t managed actively for inclusion, they can underperform homogenous ones. However, if you create conditions of trust that allow diverse team members to bring their unique perspectives and experiences to the table, you can expand the amount of knowledge your team can access, which can create an unbeatable advantage.

She described an inclusive team as one where members aren’t “welcomed in spite of their difference”, but “cherished because of their uniqueness”. As leaders strive to gain performance advantage through building more diverse teams, I would encourage them to focus more on leadership (and especially CHRO) candidates’ ability to create trust and inclusion than on the visible diversity they embody.

All of this points to leadership. If leadership is what makes the difference, then the CHRO is the natural one to lead the charge, as they have been doing both structurally as part of their day job and, perhaps even more critically, as CEO adviser and individual and team effectiveness coach for Executive Committees.

Over the last three years I have encountered “war stories” of dedicated professionals managing an unprecedented variety of ambiguous and unexpected challenges. In the main, they dealt with these with incredible courage, empathy, and outstanding leadership — giving me a wonderful tapestry of leadership case studies in innovation, influencing, agility and calm delivery throughout.

Boards and executive leadership teams have looked to their CHRO to find solutions to what has been a very human crisis, or crises. Through our roundtable discussions with CHROs, our briefings, reference calls and catch ups with CEOs and other leaders and board members, it is really clear that many CHROs have been pivotal to steering their companies through difficult times.

Through their constructive challenge, wise counsel, performance focus and role as the conscience of the organisation, the best CHROs have had an outsized impact on results by catalysing leaders to be better, stronger, more authentic and more collaborative.

Overall, as I look back at the year, I think that the historic debate about the relevance of HR and the noughties obsession with ‘seat at the table’ is now moot. We are entering a very exciting time where great CHROs are increasingly valued and are having a strategic impact, at least on the most successful organisations — the best of times to be a CHRO.

At the same time, much like public health officials such as Chris Whitty in the UK and Anthony Fauci in the US becoming celebrities, dealing with the pandemic and its aftermath put CHROs in the eye of the storm, with many feeling that they were carrying the full weight of an organisation on their shoulders — the worst and most difficult of times. It is a testament to their resilience that they are generally able to tell their stories with smiles on their faces.

Looking forward, I predict that we will see increasingly clear examples of where the CHRO’s role as leadership catalyst and culture champion will become a defining characteristic of great companies in the future. At Spencer Stuart, we are delving deeper into this in the coming year, so watch this space!