Imagine getting an $18 million wake-up call—that's the kind of impact we're talking about here. This isn't just about numbers; it's about a seismic shift in how we understand and leverage HR in our businesses.
Chief Human Resources Officers (CHRO) / Chief People Officers (CPO) have gained attention as businesses dealt with the pandemic, social movements, hybrid/return to work, economic challenges, the rise of AI, reskilling the workforce and the constant pace of change in the modern environment. The common thread is “PEOPLE.” How we work with and engage with our workforce.
Large enterprises may have robust strategic Human Resources practices and understand the role of CHRO/CPOs . However, in the US only 0.5% of companies employ 500+ employees (https://paradoxesinc.com/resources/us-business-patterns/). The rise in CHRO/CPOs influence is spreading as businesses are increasingly focus on dealing with Human Capital Management.
The Evolution of HR: From Old School to New School
Old School of thought
Transactional Focus: Think payroll, discipline, hiring, firing—the basics.
Support Role: HR used to be the backstage crew, making sure the show runs but never getting a line.
New School of transformation
Strategic Partner: Now, HR is part of the main cast, understanding the plot, and improvising and using AI & data insights to help shape the entire story.
Advisor Role: HR is whispering in the CEO’s ear, contributing to decisions that reshape the storyline of the business.
Why do you care about this paradigm shift? Thinking your CHRO/CPO is an HR Administrator is like thinking your Chief Financial Officer is an Accountant.
Employee Engagement: It's More Than Just a Buzzword
If you do an online search, you can find a ton of research supporting correlation to the bottom line.
Economic Impact: Disengaged employees are costing the global economy a staggering $8.8 trillion. Yes, trillion. Gallop
Profitability: Companies that get engagement right are seeing a 23% boost in profitability. Gallop
Revenue Growth: Imagine growing your revenues by 682% over 11 years just by enhancing performance cultures. Forbes
Human Capital Turnover:
Financial Costs: We're talking about a $1 trillion leak in U.S. businesses (U.S. Bureau of Labor Statistics).
Breakdown of Costs: It's not just about the money; it's about the missed opportunities and the what-ifs.
Replacement Costs: Replacing a top-tier employee isn't just expensive; it's a 200% salary-sized hole in your budget.
As you can see, not paying attention or a lack of people strategy can impact your top and bottom line. AI is here, with its low barrier of entry, which means many companies including your competitors will automate. What’s going to be your edge? People are the differentiators.
The CHRO/CPO in the Transforming Landscape
What expertise and skills can you expect from a high performing people leader?
Business Acumen: They navigate the business landscape like seasoned captains. They're not just at the table; they're helping set the table, understanding every dish being served. They understand how we make money, the margins and what is keeping each department up at night.
Proactive Change Agent: They're not waiting for change; they're driving it and designing it toward the future vision, - pedal to the metal.
Trusted Advisor: Not just executing on the plan—they're coaching and partnering with the team. They are part of the “Circle of Trust”.
How are CHRO/CPOs creating value and contributing to the business? Here are a few ways they are changing the story.
Strategic Cultural Influencer: They're not just part of the culture; they're crafting and reenforcing it. McKinsey research shows that 70% of business transformations fail, and 70% of those failures are due to culture-related issues. (https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-organization-blog/culture-4-keys-to-why-it-matters)
Data-Driven Insights: They're not fortune tellers, but they're using AI and data like a crystal ball to guide strategic decisions. Data isn't just numbers; it's the paint we use to highlight gaps and opportunities for sustainable growth.
Succession & Leadership Development Designer: More than just a seat at the table, they're the CEO’s right hand. They're not just hiring; they're building legacies. CHRO/CPO are organizing not only for today’s needs and growing people, and the abilities needed for the future.
Talent Management Guru: They're not only filling positions; they're sculpting a powerhouse. CHRO/CPO is the music conductor working to get the right people in the right place at the right time.
Employee Value Proposition: They help companies with the value exchange. What the company offers in return for employees’ time and effort. CHRO/CPO’s shape the employee’s journey through their life cycle influencing engagement, appreciation, and trust.
Bottom Line Impact: They're not just saving pennies; they're making dollars. They are part of value creation.
Human Capital isn't just about hiring and firing anymore. It's about strategic partnership and driving business transformation. For C-suite leaders and board members, embracing this shift isn't just smart; it's essential for thriving in today's fast-paced business environment.
So, what's your next move? Start by taking a good, hard look at your current team. Where do you stand? More importantly, where do you want to be a year from now, and beyond? Do you have the people with the skills and ability to get you there? This isn't just a check-in; it's a strategic pivot. Let's get proactive about shaping the future of your organization. Ready, set, transform!
Authored in collaboration by:
Helena Ferrari, GPHR, GPR Fractional Chief People Officer & Business Advisor www.thehrrx.com https://www.linkedin.com/in/helenaferrari/
Thoai Ha, MBA, SPHR, Chief People Officer & Board of Director
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