One of the clearest signs that a chief human resources officer will be viewed as ineffective is one the CHRO has zero control over: a change in who serves as the CEO.
The quality of the CHRO’s relationship with the CEO is the single most crucial predictor of how a CHRO’s performance will be viewed. Furthermore, research reveals that a leadership transition in the CEO seat led to nearly seven out of 10 CHROs eventually being replaced, according to Rosanna Trasatti, a leadership and effectiveness expert and CEO at Eleva Executive Leadership Advisory. Trasatti spoke to Coins2Day Workplace Innovation Summit attendees in California on Monday.
She noted that one might not think it’s all that unusual for a new CEO to come in and make changes to the senior team. But the findings from a study on CHRO performance factors spanning more than a decade were sobering.
“No other C-suite leader’s perceived performance had anywhere near the same level of dependency on the CEO,” said Trasatti.
The other factor that divides the perceived performance of a high-performing CHRO and an underperformer?
Situations in which a CHRO runs HR functions with cumbersome processes and administrative bottlenecks— “noise and inefficiency,” as Trasatti put it.
“Those CHROs were significantly more likely to be rated ineffective and exited,” she said.
On top of those dynamics, only 11.8% of all C-level roles among S&P 100 companies are held by women. However, among CHROs, a staggering 72% are women.
Essentially, CHROs, many of whom are women, face unique vulnerabilities compared to other C-suite leaders, explained Trasatti. Their success is disproportionately tied to a strong relationship with the CEO and they’re judged on administrative operations. Add the gender dynamics on top—CHROs have to make sure the house is in order and everyone has been fed in order to be seen as effective, just as a baseline.
However, there are ways to overcome the failure risks, said Trasatti. Research showed CHROs can succeed, or continue to be viewed as high performers, by developing business and financial acumen and connecting HR metrics to business outcomes.
Trasatti’s four factors for CHRO success, based on over a decade worth of research:
- Think like an investor. Develop your financial fluency, understand precisely how the CEO wants to create and drive shareholder value and speak specifically about how HR strategies can compel financial results.
- Lead like a CEO. Double down on your commercial acumen and think about the entire business versus individual functions or teams.
- Measure what matters. Build dynamic, data-driven insights that don’t just describe what HR is doing but can also predict outcomes. For instance, don’t just compare and contrast employee engagement scores. Tie the engagement scores to key areas of the business or sales acceleration.
- Lead from the front. The highest-rated CHROs are viewed as agents of change. Think about how your systems can become a mobilizing force to drive or assist in cultural or business iteration.