As companies continue to grow and become bigger than they have ever been before, we slowly start realizing the importance of our human capital to our companies. In years prior, CEO’s focused solely on the bottom line and the profit that was being brought into the company. Successful CEO’s in the modern century have now come to realize that human capital is crucial in the advancement of the companies they oversee as well as the day to day operations. Ideas such as work-life balance and government changes to laws have given more power to employees making them more autonomous and capable of balancing work and life. In order for CEO’s to shape their perspective companies into leaders in human capital, human resources has been a crucial instrument to executive boards. Companies such as GE have shown how important the development of employees has been and why having human resources reporting directly to the CEO allows for the company to run smoother and for employees to be more engaged and pleased with their jobs.
I think there are three main reasons why all people in charge of human resources should report to the CEO. The first reason is you cut out the middle man. There is this team building exercise I have used before at work titled “telephone” that I think gives an excellent example as to why cutting out the middle man is crucial. One person says something into the other person’s ear and they have to pass it down the team in a whisper. The words can only be said once, so it is important everyone pay close attention. By the time the message has reached the end of the line, it is normally completely different than the initial message. Cutting out the middle man means that the CEO and the VP of HR are on the same ground as to the company’s needs, vision, and purpose at all times. If the CEO thinks something needs change, he can easily make changes that the VP of HR can then carry out. The second reason HR should report directly to the CEO is because it shows the company that the CEO is putting its human capital (employees) as a priority. When employees feel as if they’re a priority they then connect closer to the company and feel as if the company’s performance is reflective of them. Lastly, HR is the fastest way to reach employees hands on and to be able to get feedback of what needs change in an organization. Not only is it beneficial for the CEO to have access to their employee workforce, but it is also important for the employee workforce to have their opinion heard and access to the CEO. Being able to directly connect with the CEO will have a much more engaged workforce.
The competencies HR executives should possess to be successful at this level include the knowledge of business and the importance of the bottom line as well as human resources and its importance to a company. They need to be able to think analytically and strategically in order to find solutions that aren’t easily found. They have to be effective leaders that can lead change through a company and successfully make it part of the company culture. They have to be credible in their roles as well as able to communicate effectively to every branch of the company. Any executive would need to be results driven and performance oriented in order to achieve the results sought by the company CEO. It is crucial that HR be persuasive and able to get employees on board with new policies, procedures, programs, and culture changes. Lastly, it is important for HR to be ethical. Always remember, employees are our main priority. We should never lose sight of that in order to pay more attention to the bottom line.
The relationship between business strategy and HR strategy is that they should be intertwined. The strategies should have a similar goal, or be the same. If the company’s current strategy is expansion, HR’s current strategy should also be focused on hiring the right human capital that will allow the company to expand successfully whether in one country or internationally. Synchronizing both strategies as one makes sure the company culture is all on the same page as to where the company is headed no matter what role you play. Strategies that I think HR should always have a strong focus on are talent management and development, recruitment, and HR relations. Talent management and development is always important because it allows for companies to develop and mold all of their employees into top talent for the company. Development of employees is important also when considering growth and succession planning. Secondly, it is important that all HR strategies put a strong emphasis on recruiting the top talent to their companies. Actively seeking the top qualified individuals and graduates allows companies to have an advantage over others. Lastly, all companies should focus their employee relation efforts so that employees feel engaged by the company at all times. This can include family picnics, awards, and other types of engagement that allows employees to feel appreciated by the company.
If a CEO where to follow the above mentioned advice I think one of the benefits the company would easily see is a more engaged workforce that sees themselves as a valued part of the company and its culture. Happier employees, are better employees and better employees means better business for everyone. If we can engage our employees and make them feel appreciated the company culture would change dramatically for the better. I also think communication between the CEO and the employees of the company will be a lot more successful and that improvement will be easier for the company to achieve.
The optimal path for any HR professional to take in order to achieve this is a generalist role. In my experiences, a senior HR executive will have knowledge of every aspect of HR. In order to achieve this knowledge one should either take a generalist role at a company with a high population of employees or take on multiple specialist roles. The problem with taking multiple specialist roles is that it would take too long for employees to finally hit all the target areas that are important for human resources in time to become an HR executive by the end of their careers. I would say to seek an entry level job, move on to an HR generalist position and from there maybe go into consulting or a senior generalist position. I think from either an HR consulting firm such as Mercer or a senior generalist job someone would be ready to take on an executive HR role and report to any CEO no problem.