Study: CHROs Are Crucial Allies For the CEO — and, Potential Successors

The Korn Ferry Institute recently released a report that looks at the leadership traits of “best-in-class” executives, and the important relationship between Chief Executive Officers and Chief Human Resource Officers.

The report CEOs and CHROs: Crucial Allies and Potential Successors (authored by Dave Ulrich and Ellie Filler) confirms that for C-suite roles technical skills are just a fraction of what makes for successful leadership, and that executives in the top 10 percent of pay for their function tend to have leadership styles that motivate employees, develop future leaders, and create appropriate cultures.

Competence areas for best-in-class leaders

The workplace today is shifting to place greater value and more intently evaluate leaders on such areas as how they treat people, foster the right work environment, and encourage future leaders.

As Korn Ferry’s report asserts, this type of evaluation is warranted because “well-managed talent, leadership, and culture are what enable sustainable customer, operational, and financial results.”

After analysis, Korn Ferry found that across functions, best-in-class leaders have greater levels of emotional awareness and competence in six key areas:

  1. Tolerance of ambiguity;
  2. Empathy;
  3. Confidence;
  4. Composure;
  5. Energy;
  6. Adaptability.

These best-in-class leaders are “change champions” who are comfortable not having all the answers as well as being around a diverse group of people, enabling them to see from perspectives different than their own. They are empathetic towards others and quick to read a room, have the confidence to take risks and make decisions, remain composed in high-pressure situations, are energetic and enthusiastic, and are adaptable and easily able to accommodate others methods.

Why CHRO’s are a great CEO ally

Korn Ferry emphasizes the importance of CEOs having allies that will tell them more than “what they already know” and allow them to leverage deep insights on culture, leadership, and talent.

Chief HR Officers are uniquely positioned to fill this “ally” role because in many organizations, a great deal of expertise on the importance of leadership, culture, and integration is concentrated in HR. CEOs are increasingly seeking broader insight from their CHROs. This touches on the expanding or redefined role of HR in today’s workplace.

In recent years, HR has moved away from being solely an administrative function that defined terms and conditions of work. HR practices now often help to implement strategy at the organization level, and as organizations seek to match their brands with their organizational culture, CHROs find themselves in an expanded role uniquely suited to support their top executives.

After looking at research from the University of Michigan’s Ross School of Business and the RBL Group, Korn Ferry study determined that high performing CHROs master six competency domains that are also essential to CEO success:

  • Strategic positioner;
  • Credible activist;
  • Capability Builder;
  • Change Champion;
  • HR innovator and integrator;
  • Technology (information) proponent.

Aligning choices “that create value”

These HR professionals “go beyond knowing the business to helping CEOs focus strategic direction and align choices that create value for investors and customers and respond to changing external conditions.”

They are able to build trusting relationships with key stakeholders like customers and investors, initiate and sustain change, recognize the importance of culture and foster theirs, innovate and integrate HR and people practices, and use workforce analytics and technology to enhance HR practices and make informed decisions.

Over the last several decades, Korn Ferry has profiled leadership styles of thousands of senior executives, including CEOs, Chief HR Officers, Chief Financial Officers, Chief Marketing Officers, and Chief Information Officers. Their assessments gauge how much importance an individual places on 14 attributes that have been sorted into three categories:

  1. Leadership style;
  2. Thinking style; and,
  3. Emotional competencies.

CEOs and CHROs are “cut from the same cloth”

While the graphs below show that most best-in-class executives have a similar leadership profile, it’s clear that CEOs and CHROs are very much “cut from the same cloth.”

nov-25-2014-2-thinking-styles

nov-25-2014-1-leadership-stylesnov-25-2014-3-emotional-competenciesWhen Korn Ferry calculated the Euclidean Distance from the profile of the best-in-class CEO (in which a lower number indicates more similarity), they found that overall, best-in-class CHROs (distance .735) are closer to CEOs across 14 traits than are CFOs (.82), CMOs (1.039), and CIOs (1.031).

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The similarity in profiles between CEOs and CHROs helps to support the earlier explanations as to why CEOs may turn to CHROs as a main strategy ally and leadership/talent coach. Korn Ferry proposes, too, that as we continue to see these more rounded and fluid HR roles, CEO successors may come from HR in addition to more traditional areas like finance, marketing, operations and IT.

Offering a unique skills set

As CEOs increasingly manage organizational challenges as well as customers, products, and financial concerns, Chief HR Officers may offer unique skills as a successor that others do not. Already we see that CHROs match CEOs’ leadership profiles as well or more than any other executive:

nov-25-2014-score-difference-by-executive

The Korn Ferry study points out that, of course, CHROs will not be considered for succession without experience in business operations. With this foundation though, top Chief HR Officers could excel as Chief Executive Officers, bringing specific desired attributes such as: deep insights about their organization, high self-awareness, excellent people managing skills, and the knowledge of how to serve external stakeholders through internal actions.

In short, don’t be surprised if savvy, best-in-class Gen X CHROs start replacing the aging Baby Boomer CEOs.

This originally appeared on ChinaGorman.com.