Last week, an article in a prominent CEO publication caught my eye. The title asked the question: “Who makes the best CEO: CFO, COO or CMO?” It really smacked me hard and left me pondering why finance, operations and marketing are placed as the likely successors for the top gig – but HR isn’t?
The article, based on the fifth in a series of demographic studies of chief executives, conducted by Heidrick and Struggles, led me to draw four conclusions.
If Chief People Officers are not considered successors to the CEO, are we selling ourselves short?
Sticking with Mary Barra a moment. As CEO, her starting point has been to champion the people at GM.
As she says: “to build a culture of inclusion where every voice matters” and “to create an environment where everyone can flourish”. And from her experience as CPO, Barra has understood how the power and potential of HR can transform organisations. It’s one of the reasons why, under her leadership, GM has turned around from near bankruptcy to what is widely acknowledged as one of the best-managed businesses operating today.
With this in mind, it’s easy to argue that the role of CPO has become more important in recent years, not less. Who else in the organisation has an overarching view of the business from a people perspective?
Perhaps what we need to be doing is talking more often and more boldly about the value that people strategy brings to a business. Championing your people, fostering a workplace environment where people can give of their best and are motivated to do so is the key differentiator between successful companies and the rest. And effective HR is the core enabler for this to happen.
I challenge the thinking that it’s valuable for the career path of any future CEO to be linear. It is too easy for leaders in the C-suite to spend time exclusively in their own lane. Of course, this may be driven by structural limitations that prevent them drifting outside their technical area or team. But the concern here is that unless up and coming leaders develop a baseline understanding of a broad range of functional areas, how can they become the best person for the CEO role?
If people are truly valued in an organisation, at some point in the future the CEO should have spent time either leading the people capability or, at a minimum, championing a significant people change process.
A great example of a leader who spent time leading the people capability before becoming CEO is Mary Barra, current Chair and CEO at General Motors, and the first woman to run a major car manufacturer. Barra’s rise to the top was anything but linear, but it was smart. From co-op student at the GM Institute to plant manager in Detroit, she held various engineering roles before becoming vice-president Global Engineering. Refusing to be pigeon-holed, Barra then spent two years as vice-president of Global Human Resources and then senior vice-president of Global Product Development.
This is the track-record of a great generalist, who has familiarised herself with the nuts and bolts of the company and positioned herself as an ideal choice for CEO.
We have to challenge the notion of what makes the CFO or COO, working in areas of technical competence, more valuable than a CPO. But at the same time, we also have to recognise that, in some instances, HR isn’t fulfilling that role of people champion or leading people strategy.
In a worst case scenario, the CPO may be overseeing an HR department that appears tied up in bureaucracy, weighed down by the technical demands of compliance and compensation, slow to react and largely disconnected from the rest of the business. When this happens, HR risks becoming irrelevant.
What’s clear is that HR has to change alongside the outsider perception of the role.
According to the 2018 Heidrick and Struggles report mentioned earlier, 46 per cent of all CEOs globally have previously been CFOs or COOs and 67 per cent are promoted from within. So it’s easy to see how this pattern of selecting a successor from one of these two areas of the business can be perpetuated. But the high percentage of promotions from within also shows the opportunities for CPOs to demonstrate their value to the business through a people-led strategy.
Incumbent CEOs can play a big role here. Not only should a CEO expect their HR Director to be championing the people in the business, the CEO should be championing their HR leader. What greater signal could there be that people come first in the organisation.