Faculty Q&A: Patrick Wright on New Research into the Modern CHRO
Every day, chief human resources officers (CHROs) seem to get a new label: business leader, culture steward, chief change agent, human capital strategist. But what do successful CHROs actually do on the job, who do they spend their time with, and what's the delta between the jargon and HR's true role in modern business? Moreover, is there a way companies can tell which executives are the best fit for the constantly evolving CHRO position—or better yet—develop employees from within with the right stuff?
To start answering those questions, Patrick M. Wright, the William J. Conaty GE Professor of Strategic HR at Cornell's ILR School and former CAHRS director, has begun a multi-faceted research project on the CHRO role. So far, Wright is finding that trust, conflict management skills and having a politician's easy touch with handling multiple constituencies are keys to a CHRO's success in today's high-performing firms.
You've embarked on new research into the chief human resource officer (CHRO) role in today's top organizations. Why did you choose this project and what do you hope to discover?
Our (CAHRS) Advisory Board has been talking for a while about how much the CHRO role has changed over the past decade, and the expectation that it will continue to change. I wanted to get a better handle on what the position entails today and how it got to where it is. My initial research examining some of the demographics of current Fortune 100 CHROs is a first step in seeing if there are any patterns or similarities that would suggest an ideal profile for a top CHRO.
Ideally, our research will allow current CHROs to benchmark how they do their job against how their peers do it, while guiding those seeking the top HR job to a deeper understanding of the distinct issues and challenges they'll face. Filling that knowledge gap should also provide organizations and CEOs with a better idea of what makes an outstanding CHRO, and how they can grow that talent from within.
The data you collected on the U.S. Fortune 100 showed some surprising trends, especially about the average time most CHROs have held that position. Why is this so?
We found the average tenure for a U.S. Fortune 100 CHRO is about four years—so over half of those have less than four years on the job. Among the Fortune Global 100 non-U.S. companies, it's even less, with average tenure about three years. Anecdotally, it seems many new CEOs (especially if they're from the outside) want their own CHRO—not someone they inherited. This suggests CEOs today want CHROs they trust and who can deliver the right human capital. The good news is this also means CEOs think the role is critical to their own effectiveness. The bad news is that some good CHROs may be let go just because the new CEO wants to hand-pick who fills that role.
You also found that about one third of U.S. CHROs at Fortune 100 companies were hired from outside the company. Does this worry you, and should it worry these companies?
It certainly indicates that a lot of CHROs may not be doing all they can to develop their successors. When Bill Conaty, former senior vice president of corporate human resources, was preparing to retire from GE he told me that if his successor didn't come from within GE, then he felt he had failed as a CHRO (his successor, John Lynch, did come from within). Too many others seem to be so focused on delivering everything else that's part of their role that they forget to focus on developing their successor. Our concern—and frankly, that of the CHROs on the CAHRS Advisory Board—is that if the CHRO role is so different today, particularly from those that report into it, then you can't expect someone to be prepared for it just by doing their current job. You need to actively expose them to parts of the job they wouldn't otherwise see, and let them hear from other CHROs what's required in that job. No doubt, this takes substantial time and effort.
You've just completed analysis in the second phase of your research, where you compared characteristics of the U.S. Fortune 100 and Fortune Global 100 non-U.S. CHROs. What did you find?
The biggest demographic difference was in gender. In the U.S., roughly the same number of men and women are CHROs (44% to 56%). Outside the U.S., the vast majority of CHROs are men (84%). This information suggests that U.S.-based companies may be more open to female CHRO candidates and possibly other senior executive positions as well.
We also found that U.S. CHROs were much more likely to have been hired from outside the company (28%) versus their counterparts at non-U.S. companies (18%). And in reality, the U.S. figure probably underestimates the actual outside hire rate as some companies bring in "CHRO-elects"—outside hires directly reporting to the CHRO, but who are expected to take over the CHRO role within a given time frame. Of course, these numbers don't mean U.S. CHROs are more or less qualified. But it does seem to suggest that the culture in the U.S. favors a more fluid labor market for CHRO talent relative to non-U.S. companies.
What are your next steps in this line of research?
Our next step is to survey the Fortune 150 CHROs to gather more detailed information about how they perceive their roles. The survey attempts to explore how they allocate their time to different constituencies and aspects of the CHRO role. It also asks them about their goals and challenges over the next few years. We hope the survey will provide us—as well as current and aspiring CHROs—with greater insight into the specifics of what modern CHROs do and how they do it.
At the same time, CAHRS continues to conduct small working groups with CHROs to brainstorm about how they try to do their jobs and the challenges they face. Finally, I'm still doing personal interviews with CHROs in which they can talk confidentially about the reality, good and bad, of their roles. That's how we're starting to create a more comprehensive view of the true CHRO role—not just what's written in a formal job description.
What key points from your research so far should senior HR leaders (and CEOs) to pay attention to?
I think the relatively short tenure of CHROs we studied shows CEOs today are more demanding, and they really want someone they can trust. When considered with some of the data coming from our working groups, that trust is something that isn't developed just by running an effective and efficient HR organization. Instead, it seems to stem from CHROs having a track record of successfully managing conflict with unflinching integrity.
Top management teams are made of up very successful people. But with success comes ego, and even hubris. Effective strategic decision making requires managing the conflicts that arise from making a group of high-flyers interdependent. From what we've learned so far, modern CHROs bear the brunt of the responsibility for making that happen.
Also, when we see that almost one third of U.S. CHROs are hired from outside, it suggests companies aren't doing enough to develop their internal HR talent. We're finding that effective CHROs not only know the business, they also have a network of internal colleagues. When companies have to look outside for their CHRO, it may take as much as a year for that person to build the right sets of relationships, and that's a year of less than maximum contribution that few firms can afford.
Learn more:
CAHRS Research Brief: "The Face of Fortune 100 Chief HR Officers" »