Here's a staggering statistic. Despite two-thirds of HR directors harbouring ambitions to become chief executive, only a fraction work for companies where the HR director has ever been awarded the top job.
The question is: why?
Given that HR leaders - in theory at least - combine specialist people skills with broader commercial experience, you would think that they make ideal candidates for the role. Yet few become CEOs. We know that half of the world’s chief execs come from just three key backgrounds; finance, operations and marketing whilst the remaining 50% come from 23 backgrounds, ranging from legal to IT and strategy. Only 5% of those CEOs are accounted for by HR directors.
The role of CEO has evolved over the last five years and four clear themes have emerged in terms of how it has changed. Of the CEOs we questioned, 45% say the area of their role that has encountered most change is the environment in which they operate. They said that accelerated pace of change combined with faster and more dynamic communication a to the environment in which they work.
They also say that economic volatility demands multiple strategies and forces them to maintain a competitive edge reliant on agility, creativity and innovation.
The general feeling emerging from the research is that the recession has led to customers having higher expectations in terms of social responsibility from big companies, particularly in the banking sector. Following the RBS scandal, exorbitant salaries, bonuses and pensions, banking has seen customers take on the role of watchdog. They have a new-found sense of ownership which CEOs must respond to. Most of those surveyed say compared to five years ago, customer expectations on standards of behaviour are much higher and therefore there is a greater need for transparency.
A fifth of CEOs survey say creative people leadership is the biggest change in reshaping the role of CEO. They have to have the ability to be people focused by building diverse talent and leadership capability and inspire and mobilise the whole organisation as well as creating a culture of innovation; all qualities which are native to HR practitioners and an area where they can distinguish themselves as CEOs.
Interestingly, when we asked our participants what skills and experience were essential to today’s CEO, almost half (39%) cited people leadership. That means things like leading diverse teams and connecting and engaging with people at all levels of an organisation.
When we asked them to list common personality traits that make the ‘model’ CEO, they identified 12 – with authenticity, strategic ability, inspiration and passion in the top four. They also said it was important to be a visible relationship builder and an effective communicator, which are both skills closely associated to the role of HR director.
Jonathan Chapman, Aviva’s audit director, defines the role of CEO simply as, ‘the ability to take people with you on a journey’, adding: ‘You can have the best strategy in the world, but if people don’t want to follow you then you won’t be successful’.
The need for strong people skills and leadership make the lack of HR directors reaching top jobs all the more surprising. We already know that 63% of HR leaders want to move beyond their role. But only 40% have been offered the opportunity throughout their career to do it. It has got to the point where businesses run the risk of losing talent: 24% of those interviewed admitted they would have to leave in order to become a CEO - either at a smaller company or by setting up on their own.
A significant barrier to HR professionals getting the top job appears to be the way the function is viewed. The single biggest reason why HR people don’t get promoted is a perceived lack of desire or confidence. The 12% of HR leaders who have made it were able to demonstrate accountability, appetite and commercial acumen together with a real desire to lead combined with being fortunate enough to work in organisations which look beyond functional backgrounds and concentrate on individual ability.
For those scaling the ladder to director level through HR, alongside a drive to succeed, you need to share your career ambitions with others, build a breadth of experience beyond HR, and demonstrate strategic thinking and strong commercial acumen in order to be in the running for the top job. If you can do that now, at a time when people leadership and talent management is regarded as the single most important success factor for a CEO, HR will bring a magnificent cocktail of capabilities to the boardroom.
Let’s tap into this often overlooked talent source and access a broader CEO selection pool.