EXECUTIVE SUMMARY
Introduction:
The Leadership Readiness: Next Wave Study was conducted for SHRM India by Nine Dot Nine Media. It includes a survey of Chief Human Resources Officers (CHROs) in India and perspective to position C-suite leaders on the board.
The Leadership Readiness study considers 'The Board' as representing the highest level of business leadership. Based on this perception, respondents were asked to choose from multiple options to evaluate an organisation's readiness for CHRO leadership.
The study presents a picture of HR function readiness in taking up strategic leadership role at board level and at CEO level. Survey data suggests that only 22% of CHROs are willing to join the board, but only 9% believe they are ready. Interestingly, the survey reveals an optimistic peer assessment about CHROs’ leadership capabilities and their readiness to take up CEO level positions.
The Leadership Readiness: Next Wave Study was commissioned by SHRM India and continues its work of developing leadership capabilities among HR professionals. This in-depth research study aimed at developing a common industry vision not just for HR professionals but also for CXOs, and a cooperative approach to address the emerging leadership challenges for CHROs.
CEOs are increasingly looking to CHROs as strategic business partners
Businesses are making new demands on enterprises and their C-suite executives. In this rapidly changing business environment, people management has become one of topmost leadership issues, calling for a dynamic relationship among the entire executive "C" suite. Although not primus inter pares, CHROs are increasingly playing the front and critical roles, busy managing the most important aspect of a company, its people.
Since the past decade, HR has undergone a sea change. Until mid 90's, HR was looked as a support function. In the current scenario the HR function has to play a more strategic role in hiring, employee relations, resource allocation, resource management, training, talent management, performance management, compensation and rewards management, and leadership development. CHROs are therefore increasingly being looked upon to leverage organisational talent in a strategic fashion.
In addition to their operational contributions, CHROs are increasingly being asked to make strategic business contributions by providing inputs on corporate strategy and by associating their functions with the larger corporate goal of strategic differentiation. HR functions have to play a strategic role not just in guiding succession planning, knowledge retention, employer branding, corporate governance and other enterprise-wide initiatives. Therefore, CEOs are seeking CHROs as strategic business partners and change catalysts.
Objective of the study:
Given the increasing demand on the CHROs role, the survey sought answers to the following key questions:
• Are CHROs assuming top leadership positions at the board?
• How are CHROs taking on enhanced leadership position?
• Are CHROs being considered for CEO positions?
• Are organisations ready to have CHROs and C-suite executives on the board?
• What are the various perspective of C-suite leaders on the CHRO on the board?
• Identify and recognise best-practices
HR and the next level of leadership
The survey highlights the need for HR functions to become more integrated with the business. HR strategies should be linked to the business goals and objectives. In addition to their operational contributions, CHROs must be involved in providing strategic business inputs at corporate level and by associating their functions with the larger corporate goal of strategic differentiation.
Human resources practices have direct impact on general business performance. The success of strategic partnerships deepens HR's image, its credibility and enables them to be viewed as partners that can work with business leaders to form long-term strategies and plans. CHROs are therefore increasingly being sought for strategically leveraging organisational talent. This is a big 'ask', as it confers larger, and more varied responsibilities on the CHRO, a situation HR needs to address and equip to deal with newer challenges and demands of the business.
CHROs are keen to leave a lasting impact on their organisations. But as organisations become more networked and intra-dependent, CHROs like other business leaders need to anticipate and prepare for larger, newer emerging roles.
Research methodology
The results of The Leadership Readiness: Next Wave study are based on 80 individual responses from 79 companies comprising CEOs, CFOs, CIO/CTOs and HR Heads. The findings in this report are based on written responses to a detailed questionnaire. The survey population included a broad cross-section of C-level executives spanning over 15 different industries across India.
The sample size comprised large, medium-size and small companies. The majority of them belong to publicly-listed and privately-held companies. Interviews were also conducted with selected respondents. This provided significant opportunities for both qualitative and quantitative analysis. For the study, large Indian companies are corporates with sales turnover of above Rs 1000 crore in the most recent accounting year; mid-sized Indian firms are companies with sales turnover between Rs 50 crore and Rs 1000 crore.
Key findings
Businesses are often a distinct reflection of the leaders who manage them and competitive success is essentially the result of successful leadership. The participants were asked to rate the importance of eight leadership attributes that are critical for a CXO to be successful. The respondents rated "Insights into company's business", "ability to manage change and lead business transformation", and "ability to influence peers at the top management" as the most important attributes required for any CXO's transition to the top leadership positions in his or her organisation.
While the study questions and results are broad, they hint at several areas for HR practioners to consider in the leadership space. The survey recorded relevant and wide-spanning views of various C-level executives (CXOs) on the evolving role of CHROs. Of the many new and interesting insights that emerged from discussions and observations, the more noteworthy ones included:
• Survey participants believe that CHROs are not far behind their C-level peers and are making their presence at the CEO's partners' table and bring expertise in the strategic areas viz; global expansion, mergers & acquisitions (M&A), quality initiative and change management activities.
• CHROs seem to be preparing themselves for the next leadership levels.
• CHROs scored above average on the eight must-have attributes for top leadership positions.
• CHROs are actively playing a part in various management and executive committees where decision-making is driven largely by consensus but CHROs have yet to find a place for themselves on the board.
• Only 22% of CXOs (CFOs, CIOs and CTOs) believe that their organisations are ready to have the CHRO as part of the top leadership positions.
• 22% of CHROs are willing to join the board, but only 9% believe they are ready.
• CEOs value the contribution of their CHRO executives. They find CHROs better than other C-level peers on all parameters except "insights into the company's businesses".
• The concept of 'CHRO-plus' role is still emerging in India. The CHRO-plus role refers to CHRO’s new emerging role, which is being referred as CHRO-plus role in some quarters. The new CHRO role demands HR professionals to develop a strategic mindset, demonstrate cross-cultural skills, international business skills, consulting skills, financial and technological knowledge.
Conclusion
Today’s business environment is highly competitive and challenging. Gone are the days of HR being a support function. Organizations, in the past, only looked at the sales, marketing and R&D functions to foster the growth of the company. Business decisions today are often based on an integrated view of functions across HR, strategy, marketing, finance and operations. This integration demands deeper and faster peer interaction. All these are increasingly making demands on the C-suite leaders to embrace and equip themselves for the next leadership levels across the board.
The survey also highlights the need for CHROs to be closely aligned with the business to enable business transformation and growth. As organisations try to become more receptive, nimble and adaptive, the organisational structure is fast changing. Authority and leadership are increasingly being shaped and defined by new-age market requirements. The study infers that contemporary organisations are gradually moving towards less hierarchical structures and more interdependent systems. Companies are experimenting with new options in organisational structure and design. Despite this, CHROs in India are yet to completely relinquish its ‘compartmentalisation of functional roles'.
The study indicates that CHROs are having to increasingly take additional responsibilities outside their realm of traditional role. Participants felt rapid strides have been made here. It appears that there is an increasing demand on CHROs to complement their people management and leadership skills with sharper perspective on the changing business scenario.
Towards the end, the study showcases significant insights on the emerging role of CHROs and their relationships with CEOs and CXOs. The next step is to understand and document the best practices that have created business leadership and enable building sustainable organisations. A further step would be in supporting organisations in enhancing their HR capability and creating a framework that will help organisations build their capability for next practices.
Note: The full results and analysis of this study will be published by March 2010.
