The HR position is one the most exciting in a company because it influences most areas of the business. Here is my Top 10 list that addresses how to become a chief human resources officer (CHRO) who is a trusted adviser to the board. And for board members, this is a list of what you should be looking for from your CHRO.
1. Understand your people
Know your pipeline. Understand your talent up and down. If you are building depth charts, focus on leadership risk management — assessing the criticalness of each role and the flight risk of its incumbent. Show the board how you plan to deal with anticipated vacancies. Make sure your succession plan ties in with the strategic plan, and make sure your board knows that it does. As a board director, it is important that we know your high-talent people. You always hear — “people, people, people.” People are the most important assets and your board should know the current and future leaders of your organization. But there are many issues that compete for the board's attention. Many HR executives develop talent presentations and profiles, but that just gives us faces and names. We still don't know the people. Whether at lunch, dinner or other scheduled events, you need to figure out ways to get your talent in front of the board.
2. Understand your costs
You need to understand how every dime is spent — not just in your function but throughout the company. And you need to be ruthless on cost management, in good times and in bad. If you become a daily champion of effective cost management, you will gain credibility. Directors will appreciate your strong partnership with the CFO and your ability to work cross-functionally on the cost structure. Further, when a real need emerges and you come to the board for capital, you'll have an easier time justifying your requests.
3. Understand the business of business
Speak P&L! The board wants you to have a deep understanding of the business. An HR executive should be a business professional first. I found that the less you engage in what I call HR “psycho-babble” and the more you speak the language of the P&L and finance, the better equipped you are to help the board. In many organizations the HR chief is all about rules, regulations, programs, and mounds of paperwork. While it is clearly important that you possess and demonstrate expertise in your field, the board expects you have a deep understanding of business. If necessary, determine your needs and seek professional development to increase your knowledge and business acumen.
4. Understand your CEO and executive team
The HR chief should coach, advise, and provide the confidential leadership support that the CEO and members of the executive team need. You should know what makes the CEO tick. The board expects you to fill this role. Know the leaders and be ready to offer your point of view, if asked. This is especially important with businesses having gone through so much M&A and restructuring activity. A board member may come to you specifically and ask your opinion about executive A, B, or C or about how they are thinking about a certain issue. For example, when I was an HR exec, the head of the compensation committee would phone me and say, “I know what the CEO's opinion is on this. I want yours.” A call like that requires you to know where the executive team stands on the issue. You have to have the confidence to be able to state your opinion but also put it in context with the rest of the executive team. The other dimension of this point is that you should provide an understanding ear. The executive team needs to feel that you are there to hear them and listen to them, and that you can offer sound counsel and advice.
5. Understand your company culture
One of the key lessons I can offer to HR chiefs is that the best way to improve, align and advance your company culture is by learning it, living it and working from within it. What is the primary culture? What and where are the subcultures that affect executions and outcomes? This is important to me, as a board member, because with each of these cultures come people issues that can impact the leadership of the organization in the filling of executive appointments and succession planning. Whether you are growing acquisitively or organically, you must be mindful of how the culture is formed and how cultural determinations can bubble up to the board. Ultimately, you want to eliminate succession and leadership decisions that are based on poor cultural norms.’
6. Understand your profession
Obvious? Maybe. The outside world has made this even harder today; everyone has a say in how you do your job — new information and government regulations are everywhere. This means you need to be a constant student of your trade. Because the complexion of the HR world has changed so dramatically, the board expects that you have current knowledge about the latest trends, legal changes, and external environment in all matters related to human resources. For example, if you come to the board with a compensation program, which typically is multifaceted, we are going to assume that you've thoroughly vetted the details with all of the appropriate constituents, i.e., legal, finance, and outside consultants.
7. Understand your industry
It's also important to be a student of your industry. Changes that impact trends in your industry may impact your stock, decisions by your executive team — and maybe even the mood of your CEO. If you understand industry dynamics, you can better partner with business leaders around tactical plans, strategic change, and talent movement decisions. You'll know where and when to mine talent and how to best advise other human resources professionals. For example, when the industry announces some devastating development that tanks the whole sector, it is probably not a good time to make a major capital request for your department.
8. Understand what you do well
The board has to trust you. Be honest with us and with yourself about what you know and what you don't. Surround yourself with people on your team who are experts in the areas where you are not. We're expecting you to provide complete information and solid recommendations. Be error free to the board. HR credibility has a lot to do with the accuracy of your data, so make sure it's right. This also means getting processes and systems in place to give you accurate, timely and error-free data. Scrub it before we get it . . . and when there are errors, limit the number of times you have come to us with corrected data. If there is a mistake made, we don't want you to bury it. We want you to tell us and fix it. But constant problems may signal a broken process. Be mindful of that when you're bringing in something for approval. The final key dimension on this point is that board members need continuity of your data from meeting to meeting. Sometimes this will require a bit more explaining than what might be necessary for a monthly executive staff meeting. A board typically meets six to eight times a year. That means there are time gaps between meetings — and things happen. For example, at one board meeting you are praising “Pete” as a rising star and how he is going to run the company some day, and two board meetings later he is gone. Well, what happened? We're not there every day, and we sometimes sit on more than one board. By making sure you communicate regularly and clearly, you won't have us wondering, “What kind of thought process are they using? Do they even have a plan?”
9. Understand and live the company values
The tone is set at the top. Be mindful of the decisions you make, and those that you don't. Remind others that values are demonstrated over time, not just at scheduled company events. Coach others to be keenly aware of that and expect the same of your team. The board is going to look to you as a kind of litmus test on the “hygiene” of the company, so know what is going on around you and how people are feeling.
10. Understand how to leverage the board to maximize your results
In the past the board of directors was hands off. The only person who talked to the board was the CEO. Other executives didn't have much to do with the directors except to see them when doing pitches at a board meeting. This is not as true today. It is not uncommon for business leaders to invite board members to sit in on a meeting with their team leaders. This is a great opportunity to meet talent in the organization and better understand how they think about their business. Every director I know on a board is more than happy to offer guidance whenever needed. If you've got a “stumper issue,” chances are someone on the board may have dealt with it in the past and can offer some helpful insight. I view my role on a board as a privilege. For me, it's a way to give back. It's a way to help and work to increase shareholder value. I think most directors feel the same way.
In my experience, and taken individually, each of these points is not revolutionary. But when collectively executed, I believe they are transformational for your board . . . and, most importantly, for you as the CHRO â