Good issue that you have raised Jeevan.
in fact there is no reason why a HR professional should not bceome a CEO provided HR moves away from a narrow functional specialization and take an interest in broader issues in a strategic direction.
It has been a common complaint that HR is not interested or have not received a sufficient grounding on Finanacial skills etc which are essential as a CEO.
Here is an interview Austrlian CEO forum had with Don Matthews, a person from HR who became a CEO which might give some good insights.
Coming up through the HR function to CEO is an unusual career path. What do you believe were the strengths and weaknesses of this background in terms of preparing you for the CEO role?
Don Matthews: It is quite unusual, and, in my case, I did have some non-HR experience as well, but my senior management experience was predominantly in HR roles.
In terms of skills that background provided, I think learning to influence was a very important one. As a service role that doesn’t directly generate revenue, HR is not typically regarded as one of the premier functions within an organisation, so you do need to learn how to effectively influence people to get your arguments heard. This is quite a useful skill for CEOs, who often have to deal with a wide range of stakeholders: employees, customers, owners, suppliers, government and so on.
Coaching is another useful competency you gain via HR. Good HR people are involved in coaching at multiple levels within the organisation – with their boss, their peers, their subordinates, and other people in the wider organisation.
"If anything, being CEO has reinforced how important people issues are..."
As an HR executive you often have to chair, or work on, groups made up of people with multiple agendas to try and achieve change. Collaboration, and generally building the business case for change, are skills you develop as a result. As CEO, too, you often need to engage others around a case for change and oversee the execution of that change, so these skills are also pretty fundamental to a CEO
What about the weaknesses of HR as a preparation for the CEO role?
DM: Clearly HR doesn’t give you the general commercial skills you need to perform as a CEO, as you typically haven’t had that profit and loss responsibility for an overall business. In HR, too, you can see the people strategy as an end in itself, whereas, in reality, the people strategy has to be driven by the overall business strategy. At times an HR executive will spend too much time on the people strategy itself, and not enough on understanding the overall direction and logic of the business as a whole.
Working exclusively in HR, or any other functional discipline for that matter, doesn’t prepare you for the complexities of some of the issues you face as a CEO. As CEO you are dealing with many issues at the same time, all of which typically require you to make a decision on. Many of these decisions require you to look at things across a broad range of functions and from multiple perspectives: how you match assets to different revenue opportunities, how to resource innovation across the organisation, how those resource allocation decisions affect your current and future customer base, and so on. The scope, and the number of variables in the decision, are just so much greater than what you might have experienced in a single functional discipline.
How did you adapt to these different demands, once you became a CEO?
DM: Because you do have to take more decisions across a broader range of issues, and usually under greater time pressure than you experienced as an HR executive, you do need to change your approach. You become a very good listener, as you depend so much on what people are telling you as an input into making the right decision. You become very adept at taking in information, summarising it in your mind, asking the right validating and clarifying questions and giving feedback, so you can then take the right decision.
You also become much more ruthless in how you manage your own time. You might give yourself 30 minutes, say, to deal with a particular issue, then you need to take a decision and move on to the next issue. You simply don’t have the time you had before to sit with particular decisions.
The CEO role is so different, and I think those differences apply regardless of your functional background, be it HR, sales and marketing, operations, or whatever. Everyone has the challenge of growing whatever initial skill set they had, as you are, by definition, building with a far broader set of issues as a CEO: employee, competitive positioning, customer, commercial or whatever. The only people who perhaps don’t have this issue to the same degree are those who have been particularly groomed for the CEO role – that is, they have been purposely rotated through a broad range of roles with an emphasis on general management that has allowed them to acquire the multiple perspectives and skills a CEO requires. Everyone else has to learn it as they go along!
Is that process of ensuring some people in the company do have the experience a CEO role requires, by rotating them through a considered set of job roles, something you have in place in your own organisation?
DM: We do that to some degree now, and it is something we will do more of in the future. We have taken some of our very best people out of their functional roles and rotated them through different areas of the business to ensure we get a good read on their capabilities under pressure and allow them to discover some things about themselves when out of their comfort zone.
That’s an important point, isn’t it, because not everyone wants to leave their comfort zone!
DM: That’s true, but generally the brightest and most ambitious people understand that, if they want to be CEO, they need to go through that learning experience to get a broad understanding of the business. Not everyone, even if they are excellent in their functional role, does want to do that, of course, so it’s not something we would insist upon!
Sometimes there seems to be a trade-off sometimes between the immediate productivity of a business unit or function, and the need to rotate people through particular jobs to build their skill sets.
HR people often seem blissfully unaware of this, but is this something you have become more aware of as a CEO?
DM: There is always a tension between what is right in the long-term, for both the business and the individual, and what could be a downside in the short-term. There are always trade-offs involved, and that is just one of the balances you need to get right as a CEO.
"If HR doesn't have this business understanding, you get a disconnected HR function, with a very program-driven HR approach..."
As a CEO, of course, you often do have control of the timing of these moves, so that is where you can exercise some influence. If there are pressing issues in a particular function or business, for example, you are not going to pull out someone who is the best person for managing that particular problem at that time. A brilliant marketer is probably not going to be shifted half-way through a major re-branding exercise, because they need to gain broader experience in the longer term. However, where this ‘hold’ occurs, we would construct a plan to ensure the next development opportunity is in place. The most frustrating issue for an individual who is regarded as high potential and been informed of that view by the business is when lip service is paid to their development because of their indispensability in a particular role. In almost every case like that you will lose the individual to the external market place
Has your perspective on people issues changed since you have taken on the CEO role, compared to when you were in the HR function?
DM: If anything, being CEO has reinforced how important people issues are. It reinforces how important people are to the success of your own business, and ultimately your own personal success as CEO.
It is absolutely critical that you have clarity around accountabilities and responsibilities in roles, provide clear and ongoing feedback about individual performance in those roles, and identifying and developing opportunities for the top talent in your organisation. It’s not just a CEO or HR executive who needs this, it is required across and down the entire organisation.
None of this is as easy as it sounds, of course.. If, for example, as a senior manager, you have had a team around you for a long time, and have developed a loyalty to them and a desire to see them succeed, giving honest and direct feedback can be quite a challenge. In our organisation, we have a process that ensures every salaried person gets formal feedback every second month, so we do take this issue very seriously.
What are your expectations of your own senior HR manager?
DM: Firstly, I expect them to be a highly competent general counsel about people issues within the organisation, someone I can turn to whenever I need a good source of advice.
I also expect them to have a broad understanding of the business, as their job is to create and implement people strategies that deliver business outcomes, and they can only do that if they have an excellent understanding of the business. If HR doesn’t have this business understanding, you get a disconnected HR function, with a very program-driven HR approach. All the programs and initiatives are there, but they are not really connected to the business. They are far too generic and formulaic to be really useful.
Finding top talent, both within and outside the organisation, is also a key capability of a good HR leader.
Finally, they also need to be, of all the senior management team, the person who provides the most challenging thinking about individuals in particular and in the development of our overall people strategy.
What are the two or three most important things in having a more effective CEO-HR relationship?
DM: There has to be a high level of trust between the CEO and the HR director. At times you are working on significant and very confidential issues, so there needs to be trust and transparency on both sides.
As a CEO you also need to give HR directors very clear objectives, and, once the goals and targets are agreed, be as tough on HR as you would be on any other executive in holding them accountable for delivering results.
You also need to engage your HR function, not just pigeon-hole them around purely ‘people’ issues. You need to get HR involved and make them feel part of the discussions about the broader business. As with any other specialist function, like finance or marketing or anything, if you don’t get them involved they are more likely to see the business purely from their own functional perspective.
Cheers
Prof.Lakshman