The big seat at the table
Eugenio: Why don’t more HRDs get to be CEOs?
If HR directors ran our major businesses as CEOs or MDs, would our economy become a strategic, forward-thinking utopia – or a backwater focused on teabags, time and attendance?
In my last column for HRville, I wrote about the challenge of bringing the brightest and the best into the HR profession, asking: ‘Who will lead the new breed? But this month, I’d like to present you with another conundrum.
When you’ve done all you can in the role, what’s the next step for an HR leader?
Traditionally, most high-flying people directors eventually move into portfolio work, non-exec roles, retirement, consultancy, entrepreneurship or move to another HR position.
A bigger company, a new sector or one that can provide a fresh challenge perhaps. I’m very much of the opinion that HR is a transferrable skill and that great people leaders can adapt their style to any industry.
But if people are the greatest assets of a business, then surely it’s the people leaders that make the best managing directors or CEOs?
Perhaps not, if some commentators are to be believed.
Non-runners
I read an article a while back, where commentators debated the ‘exclusive’ position that people leaders hold in businesses. Essentially, it concluded that the reason HR directors have carved themselves a position of trust from the CEO is because the CEO will see them as the only director who won’t take their seat.
And the number of CEOs in the FTSE 100 with a career history in HR comes in at a dismal zero.
While the familiar old excuses, ‘HR isn’t strategic enough’ or ‘HR doesn’t have enough business savvy’, might have been acceptable excuses 20 years ago, I don’t believe this is the case anymore.
Surely there’s an argument that if HRDs don’t reach CEO, MD or even COO level, it has to be because that they simply don’t want to?
Research published by Robert Half International shows financial skills are “key” to becoming a CEO. Its survey of FTSE 100 CEOs found almost half (49%) were former financial directors or have financial backgrounds.
So, if ‘finance is a company’s greatest asset’ at the boardroom table, then HR directors with CEO aspirations need to ask themselves: could they address a group of financial analysts? Could they present figures and reports to the City?
Grasping complexities
In saying that, HR leaders have often been responsible for managing business transformation, which is in itself a key focus of any forward thinking CEO. They understand the complexities of the business right down to the minutiae.
And, as I have mentioned previously in this column, running an HR department is more complex than other departments: it’s like running a business in itself.
As HR evolves and the function attracts an influx of talented young HR careerists who are genuinely interested and adept in business as much as the people stuff, this new breed will move back and forth from line to HR, and thus gain necessary profit and loss experience.
However, it’s vital that HR leaders don’t compromise or take for granted their position as confidant to the CEO, to the business and to its people. In many cases this trust could be the secret to their success.
The recession has certainly sharpened the people focus. HR issues are now firmly seen as business issues and HRDs have taken on a greater sense of urgency.
So while I don’t believe ‘pure HR’ can equip anyone to run a business, if HR people have led divisions and understand the nuts and bolts of business, there is no reason why they cannot bridge the seemingly ‘unbridgeable gap’ between HRD and CEO.
Surely it’s time for some more debate on this issue and I would be keen to hear more thoughts and opinion.
Some HRDs who’ve reaped the benefits:
John Hofmeister, the US HRD at Shell, went on to take over as President of Shell Oil. His role focused on external and government relations rather than acting as an operating authority, but it illustrates how interpersonal skills may be important for some senior executive roles outside HR
Ann Mulcahy at Xerox served as CHRO before becoming CEO. She was not a career HR professional, but she did develop an appreciation for the role HR could play in driving organisational success
Philippe Gas became CEO of Disneyland Paris in September 2008. He joined Disney in 1991 and, between 2006 and 2008, served as EVP HR diversity and inclusion, Walt Disney Parks & Resorts Worldwide
Kevin Green joined the Recruitment and Employment Confederation (REC) as CEO in 2008, after four years as HR director of the Royal Mail. Prior to that, he ran his own consultancy for 12 years and his clients included Unilever, First Choice, Fuji and Orange
Martyn Phillips, CEO of the Welsh Rugby Union, was CEO of B&Q and a non-executive director of the global recruiter Hydrogen. He was operations and HR director at B&Q before taking on the role, and chair of Hydrogen’s remuneration committee
Esther O’Halloran, CEO of HR in Hospitality and former managing director of Paul UK, was HR director at Paul before she was promoted to head up the team
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