Today we introduce a groundbreaking research on the role of the Chief Human Resources Officer.
Coupled with this research we’re launching a new service, CHRO Insights?, to support CHROs and aspiring CHROs around the world.
The Rapid Acceleration of The CHRO Role
The CHRO has become one of the most critical jobs in business. New research by Nick Bloom and Mert Akan at Stanford found that 13% of CHROs are among the top five highest-paid executives in their organizations, a sharp rise from just 0.5% thirty years ago. And the gap between CHRO pay and CEO pay has closed by half.
Why the increase? It’s simple: every major business challenge now centers on people.
Workforce Issues Are Complex
We operate in a global labor shortage (4% unemployment in the US) so hiring is more difficult than ever. AI and new technologies are forcing companies to continuously upskill workers
CEOs are pushing for productivity, forcing organizations to redesign their operating model, flatten hierarchies, and simplify the job architecture. And now that 53% of CEOs believe their company will be gone within ten years, companies are moving people around, redeploying talent, and eliminating routine roles faster than ever. (AI is accelerating this process, read our Superworker research for details.)
Every discipline of talent management is changing. New ideas like skills-based hiring, skills-based pay, AI-driven career pathing, and talent marketplaces are common. In fact every company is rethinking their performance process and evaluating AI tools to aid or replace management. (The US Federal Government’s focus on meritocracy is fueling this push.)
Let’s not forget the cultural debates: DEI is under attack, remote work is now a challenge, and labor unions are flexing their muscle.
And with all that to address, employee engagement is at all time lows, workers demand pay equity, and people are experiencing unprecedented burnout and mental health challenges.
Complex C-Level Responsibilities
Over a year ago we embarked on a massive research project to study the job trajectory of CHROs (methodology below), and found that this job has completely changed.
Once considered a job as “head of HR,” now the CHRO is a business transformation officer. And as the speed of change accelerates (40% of CEOs want operating model transformation) to drive growth), the job has turned into one of “Organizational Strategist,” building innovative HR and management programs, directly supporting business growth.
Many HR Topics To Address
At the same time, HR itself is changing quickly. Today there are 94 major capabilities in our Global HR Capability Model, and the CHRO is responsible for all of them. This means CHROs manage a myriad of programs while they hire and manage the HR team, build the HR Tech Stack, and deliver exceptional employee service.
But as our ongoing discussions with CHROs point out, most of their time is involved in change projects: redesigning the organization, M&A, crises, global expansion, or other business priorities.
And every year there are surprises. In the last decade we’ve experienced two recessions, a pandemic, the uprising of George Floyd, the disruption of AI, and a major right-wing move in Washington.
What Our Research Has Found
As my podcast points out, the research discovered many things. Here are a few:
- CHRO positions are all different and there is very little succession into this role. More than 75% of CHRO appointments come from the outside, indicating a lack of CEO confidence in HR and/or a lack of succession planning for this job. This forces CEOs and boards to depend on headhunters and forces CHROs to change companies frequently.
- As a result of #1, we found CHROs have four major archetypes: Career CHRO (who change companies regularly), Company CHRO (who grow up inside the company), Business CHRO (who are rotated into the job from non-HR roles), and Operations CHRO (who come from legal, finance, or operations background). More than 75% of the 20,000+ CHROs we studied fall into the first category.
- Business CHROs drive the greatest change and impact. As we mapped our 20,000+ CHRO database against our HR maturity model, it’s clear that companies who migrate business leaders into this role mature much faster. This illustrates how the job is now one of invention and change, not only a job of operations. Despite the fact that 70% of CHROs are women, Business CHROs are more likely to be male.
- The job is more multi-dimensional than most realize. The highest performing CHROs have academic backgrounds in psychology, economics, political science, and hard sciences. CHROs with business, finance, and HR degrees actually perform at a lower level, pointing out how complex the cultural and organizational dynamics issues have become.
The Research Methodology
Our CHRO research is grounded on a large database of 20,000+ senior HR leaders we developed with the support of SeekOut, a leading talent intelligence company.
The data set not only includes most current CHROs (in companies with more than 1,000 employees) but also looks at their academic degrees, job history, industry and industry transitions, and overall career path. We then map these companies against our Systemic HR maturity model database to see which CHROs are employed by the most advanced and high performing companies.
We also looked at CHRO patterns matched against company financial performance. This latter analysis points out that the most successful companies have CHROs who are “made for the business,” and tend to have experience in the industry, growth rate, geography, or market segment of the high-performing company.
As part of this ongoing program, we will be maintaining and updating this database regularly and developing new insights and tools over the coming quarters.
Our Offering for You
Today we’re launching this program, which is designed for individual CHROs and others who aspire to this role. We are also launching a major CHRO benchmarking survey, which we encourage you to participate in. Anyone who participates in the survey will get a summary of our latest findings.
We will also be introducing a series of CHRO podcasts with many leading executives coming soon. If you are a senior HR leader and would like to be featured, please reach out to us.
Additional Information
CHRO Insights Research Report
CHRO Insights Benchmarking Survey
CHRO Insights Video (Youtube)
CHRO Insights Program Overview