If people truly are our “most important asset” and HR is in charge of managing the company’s “human” resources, then doesn’t it stand to reason that the top HR position should merely be a stepping stone to the corner office? It makes perfect sense but why isn’t it happening more often? The only major example that comes to mind is Colleen Barrett. Ring a bell? She served for many years as VP of Administration and Champion of Corporate Culture at Southwest Airlines, eventually leading her to become their president and one of the 50 most powerful business women in America.
Three key reasons for why more chief HR officers aren’t becoming tomorrow’s CEO’s:
- Business leaders have not figured out this simple maxim: the success of your company is directly tied to the quality of the people you have on your team. Far too many companies give only lip service when it comes to making talent acquisition, growth and retention a major strategic thrust. Recruiting is reactive at best, world-class training is not a priority and corporate culture is seen as something soft and touchy-feely. Nothing could be further from the truth. Talent + Culture x Customer Focus = Sustainable Business Success.
- HR is not viewed as a strategic function within the organization. Again, dead wrong, but difficult to change this perception. It is only when the HR manager begins looking 3 to 5 years out and building a talent pipeline for the future needs of the organization, ensuring a steady stream of the highest quality candidates exactly when they’re needed, that the C-level folks will realize what a critical role HR is playing in the growth and success of the business.
- The only way to earn a seat at the table is to understand deeply how the business runs from the ground up. Being a connoisseur of talent is not enough. To call the shots, you have to understand how the game is played. If you are not up to speed on global economic trends, key marketing issues, competitive issues, essential business processes and able to fluently speak the language of business… accounting… you will not earn a seat anywhere at the table.
As Tom Friedman would say, the world is flat and becoming more so every day. We all compete in a global marketplace where distance is nonexistent and everyone is on the same…flat… playing field.
So, what sustainable competitive advantages are most businesses left with? The first is to create a culture of continuous innovation, where every single day, every single employee looks for ways to improve how they do their job for the overall success of the company. The second is to create a culture of extreme customer focus where loyal, engaged, highly satisfied employees focus all their efforts on creating loyal, engaged, highly satisfied customers. And if you agree that these two advantages are true, then the single most important driver of long-term organizational success is… talent. And it’s why I believe that the HR leader is truly the top “people” person in the organization. So, is there any reason in the world they shouldn’t be the top person in the entire organization?
Editors Note: John Spence is a leadership development guru and quite simply, he knocked my socks off when I saw him speak at the HR Florida conference a few months back. I’ve never seen a conference speaker so passionate and insightful – and I kid you not, it was love at first sight. I coerced him into writing this guest post for FOT because the man is brilliant. His latest book is Awesomely Simple and focuses on how to turn ideas into action. Words don’t do the man justice though – find him at a conference or hire him to come speak for you. For real.
This is a really great post, and something I have been thinking about a lot, especially because I just started a Masters program in I/O Psych. The more I learn about the field, the more inspired and excited I am about the potential for change, etc., yet the main thing that keeps popping out at me is Marketing and PR. I think the HR community, and I/O Psych folks need to hire a great PR firm. Until the value is understood to CEOs, CFOs and the general lay-person, this is going to be an uphill battle.
Politely and respectfully, I think the premise about HR being in charge of managing a company’s resource – those which are human, is false and as such doesn’t lend much to the rest of the argument. The operative term with which I take issue is “manage.” In the sense that they manage through things, or enable or assist in the administration of key endeavors or processes, then yes, I agree with some of your post. But, if you were to tell me that they manage (are directly responsible for the performance of) then you’ve committed a fallacy based on semantic ambiguity. In the latter, I’ve only seen them “manage” their own department personnel and projects that relate to things that typically fall within its scope. That’s not to say there aren’t examples of HR folks who’ve been tasked or taken up duties which fall outside of typical HR functions. Not to remove any credence from those who are functioning in this field, but, I don’t think it would go over very well if you asked your benefits manager to start carrying the quota of a sales force or if you instructed your director of global training initiatives to implement a state and local tax strategy.
I share points with you from your last paragraph. But is there any reason (in the world) that they should not be at the top? I suppose there are countless reasons which explain why there aren’t more HR folks sitting at the helm. But that’s not what you were asking. Each member of an HR department is welcome to set his or her own career goals and pursue them any way they see fit. Why don’t more of them set and achieve CEO? Personal interest, perhaps? It’s probably a highly competitive path that demands a lot of sacrifice. Beat me down for suggesting this but, most human resources professionals I’ve encountered just don’t enjoy all the competitive stress.
todd… you know, i’m actually not going to beat you down for suggesting that most HR pros don’t enjoy competitive stress. i would have to agree with you and i’d venture to say that if the profession drew more folks with competitive spirit, it wouldn’t stink as much as it does now. everyday HR pros, probably not going to make it to the top. 2/3 of the chief HR folks out there, probably not going to be CEO. but there’s a small group of uber-talented chief HR pros who i think have potential. the question is though… can they ever leave behind the stink and taint of HR to be seen as credible? there’s a major perception problem with the profession – and that’s probably also feeding into why it’s not drawing folks who like the competitive edge… i’m going to mull on this more. very interesting though.
Todd… you make some interesting points. Perhaps if I replaced “managing” with “leading” the talent development of the firm? I see this as a strategic position – it is NOT about benefits and employee morale surveys – but playing a leading role in setting the future course of the enterprise by understanding and shaping the future talent and talent development needs of the organization. To me a “Strategic HR” professional would not take on a sales quota or handle tax issues… but they should be familiar enough with and understand those issues well enough… to allow them to build the sort of talent acquisition and development programs required to ensure the highest quality sales people and accountants are brought into the firm.
To your last point, I agree completely. Actually very few people in any organization have honest aspirations of becoming the CEO. It is a tough, complex and exceedingly demanding job that pretty much destroys any hope of life balance. Yet I do hear a lot of complaints for HR folks that want to be taken more seriously and “earn a place the CEO’s strategy table” and to me the best (possibly the only) way to make that happen – is to think like a CEO… not an “HR” person.
Great feedback Todd, I truly appreciate your input! John
If you believe a top HR executive should be CEO becuase ‘why not’ you are showing a real lack of understanding when it comes to business.
A lot of what affects a business is happening externally and has nothing to do with how well trained or equipped or incentivised a company’s workforce is. Relationships with suppliers, the behavior of competitors, substitutes to compete with your business or service, regulation and legal constraints on your product/service, changing customer demographics, macroeconomic conditions affecting demand, threat of takeover, the list goes on and on.
What role does HR play in addressing any of these issues? You might say HR can prepare its workforce to be the leading innovator or motivate its salesforce to reach quotas in unfavorable economic climates but so can any other company. It is not a true competitive advantage in the way Google’s search algorithm is or Coca Cola’s brand. Southwest is an exception because its product IS people, their value proposition is ‘we are the friendly airline’. This can only happen in a high-volume, service oriented, commodity-like industry like the airlines.
Given that people (human capital) are not valued as demonstrated by the presence of CIO, CEO, CFO, COO, CTO and no Chief People Officer at the executive table, this absence supports this post. On the other hand, many HR executives are still clueless about how to demonstrate value, their own and how that value ties to the bottom line of the organizational.
These are some really interesting points. I think another hurdle HR leaders need to overcome, is that many lack charisma. I know this is changing, but still many lack that sales presence, that elan, that charm that makes a board representing shareholders feel confident. The CEO is your public face, your chief deal maker, chief schmoozer, those that are successful are often perceived as being bigger than life. Those are not traits that are generally valued or developed with HR.
I think a stop in HR could be a good developmental step for an aspiring CEO. But when it comes to succession planning, that step would need to be an earlier career move, not the last step before CEO. Successful CEOs tend to take a “Z” career path to the top – a series of lateral moves and promotions. The ones who take a “T” path to the top get in trouble because of their overly stove piped perspective and lack of development.
I think if some of the issues John, Jessica, and others point out were fixed the HR profession would attract more of these rising stars, if even for just short stints. And we’d have more CEOs that understood the talent side of things.
Jon, thank you for your thoughtful comments. Actually, I do know quite a bit about business. I have been the CEO of a multi-national company and have spent the past 15 years traveling worldwide to deliver training workshops and coaching to senior managers at more than 300 companies including Microsoft, IBM, GE, Qualcomm, Abbott, State Farm, Verizon… I have also written two books, one on leadership and the other on business strategy. So I have given this topic some serious thought.
You state:
“A lot of what affects a business is happening externally and has nothing to do with how well trained or equipped or incentivized a company’s workforce is. Relationships with suppliers, the behavior of competitors, substitutes to compete with your business or service, regulation and legal constraints on your product/service, changing customer demographics, macroeconomic conditions affecting demand, threat of takeover, the list goes on and on.”
I agree with you completely that a lot of what effects a company is external – but I would argue, quite strongly indeed, that it is PRECISELY how well trained, equipped and incentivized the workforce is that allows a company to be agile and adaptable to rapidly changing market dynamics. Machines do not create relationships with suppliers. Good products do not spontaneously upgrade themselves to address competitive pressures. Regulatory and legal issues are not addressed by location, logistics or throughput. Every issue you have presented can only be overcome through the innovation and dedication of a highly trained and motivated work force.
Let’s use some of my clients as examples: Microsoft is nearly 100% talent driven; GE is a talent machine; IBM is now a giant consulting firm, relying strictly on brainpower + Innovation + value + customer focus; Qualcomm is an engineering company that generates revenues from licensing its intellectual property… in other words, the ideas of their talented people; Abbott is successful only to the degree that they can innovate and develop new drugs… from their incredibly smart researchers…people. Like you, I could go on and on.
Although I believe that innovation and customer focus are the key drives of competitive advantage, you assert:
“It is not a true competitive advantage in the way Google’s search algorithm is or Coca Cola’s brand. Southwest is an exception because its product IS people, their value proposition is ‘we are the friendly airline’.”
Jon, all Google has is people. They don’t “make” anything. They are one of the absolute best examples of what can be accomplished with a highly intelligent, well trained and well incentivized work force. Google is the Googlers. And actually, Southwest’s product is affordable travel – the great people are a competitive advantage in delivering that product.
Yes, I understand that much of what impacts a business is external market forces. And yes, I agree that the HR director should not be CEO just because “why not.” What I am trying to say is that there is no reason why an incredibly talented, dedicated and visionary HR VP should consider the CEO post out of their reach… if they truly wanted it… and earned it.
Jon – thanks for keeping the discussion going, I truly appreciate your comments and point-of-view. Rigorous discussion is always fun!
What a nice and provocative post. Part of the reason for the current situation may be that, with the exception of finance and accounting, CEOs rarely come from support functions. I think you’d be hard pressed to find CEOs who came from IT or engineering, for example.
John,
Thanks for a great article. I think that the reason CEO’s don’t generally come from HR is due to an overall lack of respect for the HR function. Unfortunately, and I say this as a member of the profession, it’s something that we’ve earned. When is the last time you talked to a friend, neighbor, or a person at the airport and they had POSITIVE things to say about the HR department at their company? It rarely happens. HR is generally viewed as a necessary administrative evil.
I made the case at a former employer that if a decision involved people, it involved HR. We simplified our admin tasks as much as possible and made every effort to create “the best possible work environment.” It must have made an impact because our employee satisfaction scores went from being the lowest of our group companies to being in the top 10%. And, over that period, I was given the additional responsibilities for the accounting, environmental, purchasing, and business planning departments. It took time, but HR there became a well respected strategic player.
Amazingly, when I started my own HR consulting firm, I was advised not to use the term “Human Resources” in the name because it would likely turn off potential customers. Since HR consulting is my primary product, I chose to use the name. My new challenge is to turnaround the reputation of HR departments, one company at a time.
John – Great article. This type of advancement is becoming very popular in Las Vegas. There are three examples of HR VPs moving into the CEO role of casinos. Those examples are Renee West (http://employerblog.recruitingnevada.com/2009/08/19/congrats-to-renee-west/), Cindy Kiser Murphey (http://www.lasvegassun.com/news/2008/may/13/jack-sheehan-rise-glass-ceiling-shatterer-cindy-ki/) and Marilyn Winn who worked her way up thru the HR ranks and is now Regional President of Bally’s, Rio & Paris. Las Vegas casinos truly understand the value of people and the importance of the human resource department.
I think we are going to see more and more CEOs from the HR arena very soon. Being a top HR professional today requires one to have many of the skills that are also requisite for the CEO job. Skills such as financial acumen, marketing experience, management ability and communication savvy are necessary for both positions. Good decision making and ability to accurately assess risk and reward are also hallmarks of both great HR and great CEO.
One of the real advantages of working in HR is its unique vantage point on the organization. Since people issues flow through all divisions, in HR we are intimately aware of what is working successfully throughout the organization and what is not working. This makes for a real leg up when an HR executive moves into the CEO position.
Today, the ideal CEO is someone who has worked in a variety of departments within the organization including Human Resources. A great example of this is former CEO of Xerox Anne Mulcahy. She started in the Sales area then worked from 1992 to 1995 as VP of Human Resources. According to her bio she was responsible for compensation, benefits, human resource strategy, labor relations, management development and employee training. She also worked in international Customer Operations. How perfect a background for CEO is that?
The lesson here for HR professionals is that working in HR provides outstanding experience for the top job as long as you also take it upon yourself to gain necessary skills and experience in finance and marketing as well.
Likewise an Accounting or Marketing professional who seeks the top spot should also recognize the value of gaining HR experience.
I agree that HR execs can be key. I even wrote a paper about this 20 years ago. However, in my experience though it’s as hard to get them to take the big picture view as it is to get the other top managers to understand and respect the potential of HR.
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