The Rise of the Chief People Officer

Published On April 20, 2020

In the first in a series on the transformation of the role of the People function, we focus on the rise of the Chief People Officer (CPO), a new form of HR professional sitting alongside the CEO and CFO as a partner and primary force in delivering the business objectives of the enterprise through the lens of human agenda.

This series will demonstrate: how to identify and recession-proof your top talent; how to get to know your people deeply, truly understand what motivates them and measure their value to the organization; how to establish and build trust as a foundation for relationships within the organization; how to retain your top talent and maintain their performance. The ultimate focus is the use of analytics so that the G3 can see the real picture, empirically knowing what is going on in their organization.

The series will also focus on the capabilities available to the People function from new technology; namely the potential to evaluate productivity, work intensity, employee pride in their work and the business, internal and external complaints, and the mental state and motivation of teams and individuals generally.

The CPO, CEO, CFO comprise a trifecta of impact influencers, referred to by some as the “G3”. This is daily manna for Barry Marshall, Nancy Gill and Joy Sybesma who advise some of the most progressive employers who are asking the CPO to manage talent effectively in terms of attraction, motivation, impact, retention and value-measurement.

Historically the “People” function (“HR”) was associated with administrative tasks in the main. But the role is changing fast as the key asset that determines growth and success among corporations becomes scarce and increasingly differentiated – that asset is human talent. Business itself doesn’t create value; talented people do. Talent scarcity impairs growth, which is essential to allow companies to evolve and reinvent themselves in a disruptive environment, as well as to execute a “next generation” growth strategy to sustain existing business and develop new revenue streams.

Competition for the best talent is vibrant and substantial changes in connectivity and mobility have engendered an open-talent economy. This shift begs for a transformation in the People function from administration to strategy, creativity and bottom line business impact. This will drive better business results. In the same way that the CFO has been elevated from the one-dimensional role as a champion of process and control in pure accounting, the imperative for CPOs is to advance growth and improve the competitive position of the corporation through effective talent management.

This development requires a change in the traditional “HR” mindset. It is a pivot beyond the pure operational, regulatory and tactical demands of the role.

The People function needs to shrug off its reputation as a low agility function and become aligned with the objectives of the C-suite, especially the CEO, CFO and COO.

Research by McKinsey and the Conference Board consistently finds that CEOs worldwide see human capital as a top challenge, and yet they rank the People function as only the eighth or ninth most important function in their company. That has to change.

To start redefining the job, the CEO should confer with his management team and board, particularly the board’s talent and compensation committee, and specify what they expect in an ideal CPO.

This change will encourage these executives to see the CPO as a partner who is essential for the C-suite’s plans to deliver commercial success, and bridge any gaps that inhibit the People function from adding the most value it can. Rather than being seen as a supporting player brought in to implement decisions that have already been made, the CPO will have a central part in corporate decision-making and will be properly prepared for that role.

This opportunity will attract new types to the position, who do not have the same profile as the traditional career “HR” person. It will result in sideways moves from those who have succeeded in Marketing or Operations, who are more familiar with commercial models, change management and complex problem-solving.

The new role will require the following attributes: recalibration of the CPO role; extensive use of analytics; embracing the open talent models; curation of the talent experience.

Boards and CEOs are intensifying their demand for effective talent management. The CPO can initiate and craft a talent agenda that is strategic, actionable and measurable.

The increased reliance on analytics may test a function that has historically used qualitative strengths rather than quantitative analytical tools. The new CPO’s investment priorities will be driven by objective, predictive insights. New technology allows exposure of underlying trends and signals that are hard to surface using traditional checks and methods. Analytics are probably most powerful in unearthing the suspicions and trends that are inexplicable by executives or managers. This will help to design, defend and activate a growth-oriented agenda. The right technology can help the CPO to align the core business goals with the talent required to make this happen, and predict if these are realistic and can be achieved. In “People before Strategy – a new role for the CHRO”, Deloitte states that two percent of the people in the business drive 98 percent of the impact.

Nothing overcomes a poor fit. A wide gap between a leader’s talents and the job requirements creates problems for that leader, their manager, peers, and reports. Before severe damage is done, the CPO should take the initiative to identify gaps in behavior or skills, especially among the two percent, and as job requirements change.

A CPO is perhaps best placed to analyze why a unit, company or individual is not performing and to diagnose the problem, especially employing objective analytics to deliver signals and warnings, as well as comparisons across groups or with peers. The interaction of employees with their team and colleagues can be extremely revealing. That is often the first place to look. These investigations can uncover friction and bottlenecks that only independent or senior managers can resolve. Early indications of these dysfunctions can be of huge value. At the same time, this level of analysis can highlight the best performers who energize the business, resolve problems and drive collaboration. Aggressive reallocation of capital to the areas of the business with the greatest opportunity has proven to be an essential tactic in delivering growth.

The likelihood that objectives will be met can also be assessed after analyzing the drivers of performance beyond pure financial metrics. Reward related to value (beyond pure sales, revenue and profit) derived from a talented employee.

The CPO who excels will be able to develop and deploy strategic, relationship, operational and technical People function capabilities at scale. •