In response to widespread financial mismanagement in the federal government, in 1990, George W. Bush signed the Chief Financial Officers (CFO) Act. The purpose of the Act was to create a chief financial officer role in over 20 federal departments and agencies. The CFO's role, in part, was to provide "tight financial control over agency operations and the central coordination of financial management functions to support an efficient administration of the executive branch." This was a departure from strictly day-to-day accounting and financial reports. It required CFOs to function at a more strategic and forward-thinking level. Director of finance, controller, fiscal officer, etc. are titles we no longer use. Just as the role of the CFO has evolved from bookkeeping and number crunching, the role of the director of HR has also evolved.
The C-suite in most organizations consists of the CEO, CFO, CIO and/or COO, while HR has mostly had a D-level or director designation. Historically, when it came to HR professionals, the edict was to "fight for a seat at the table" or "prove your worth" when it came to reporting directly to the CEO. HR is still widely viewed as a strictly transactional processing center filled with paper pushers who only exist to say "no" to everything. This outdated thinking holds many organizations back. You can read any business publication for countless examples of organizations that don't have HR represented in their C-suite and the trouble and challenges they encounter as a result. Often, HR is only included after something goes awry or requires some cleanup, even though experience tells us that is not optimal.
Modern HR is much more than transactions and processing, yet the title is generally still "director of HR," and the person usually doesn't report to the CEO. Now, more than ever, organizations require HR to set the tone for good workplace culture, excellent employee experiences, high retention, succession planning, change management and other business objectives. Directors of HR receive directives and information from a COO, deputy director or another executive who doesn't necessarily have an HR background. Their connection to the C-suite can be several levels removed. This is where a chief human resources officer role enters.
A chief is also a strategist and business partner that operates at the executive level and reports directly to the CEO. As human resources leader Julia Modise wrote, "The profile of a CHRO has shifted from a traditional HR professional narrowly focused on his/her function to a well-rounded business leader who can contribute meaningfully in all areas of the business. Today's CHRO is a culture carrier and change agent who is commercially astute, analytical and technologically savvy, who speaks truth to power and influences softly yet assertively." With an increased focus on issues around pay equity, diversity and inclusion efforts, workplace harassment and bullying, the CHRO's voice and perspective are critical in executive-level decisions. Other non-HR executives will filter issues that affect the people side of your business through a different lens, which could easily include blind spots when determining the impact to your employees. Reading the laws and statutes that govern what goes on in the workplace can easily be done. However, understanding the subtleties and nuances of good human resources management is something best left to your CHRO.
The CHRO has their finger on the pulse of the organization and is therefore able to predict and recognize emerging trends and situations that are developing within the workforce and be the liaison between the CEO and the workforce. Your CHRO will ask questions and give input at the beginning of the planning process instead of coming in after the fact or when a decision has already been made. The CHRO brings a different viewpoint and is not strictly looking at facilities, hard numbers or black-and-white outcomes, but also considers the impact to the employees, which ultimately affects employee engagement, retention and other organizational concerns.
There is still a stigma when HR is involved in a situation or they join a meeting because people think either someone is in trouble or something went wrong. As an HR professional of over 20 years, I am often greeted with "I didn’t do anything" or "What's wrong?" when I walk into a room. It's vital for the CHRO to be a visible and vocal part of the executive team in general daily operations and not just when things aren't going well. Showing unity at the executive level sets a great example and fosters an environment where everyone in the organization understands there is teamwork and cohesion from the top down.
In an article for the Harvard Business Review, Ram Charan, Dominic Barton and Dennis Carey assert that "to make the CHRO a true partner, the CEO should create a triumvirate at the top of the corporation that includes both the CFO and the CHRO. Forming such a team is the single best way to link financial numbers with the people who produce them. It also signals to the organization that you are lifting HR into the inner sanctum and that the CHRO's contribution will be analogous to the CFO's."
The C-suite is for collaborative strategy development to determine where your organization is going in the future. "Fighting" of any kind fosters an environment of opposition or "us versus them," not collaboration. Your CHRO provides the same level of expertise in the HR and talent management fields that your CFO provides in the finance field, and they complement each other. The C-suite should bring together executives that represent both the business side and the people side of your organization — and it shouldn't require an act of Congress.
