It’s a corporate cliché that, “employees are our greatest strength.” For most businesses, the workforce will also demand the biggest outlay. CHROs, therefore, are now tasked with managing their companies’ greatest resource, as well as its biggest expenditure – and their remit is growing rapidly.
A resounding 85% of employers say that over the next five years a strategic HR function will be critical to success. Nearly half of CHROs at publicly listed companies now have a remit that extends beyond the traditional limits of HR, encompassing more strategic and commercial duties such as enterprise design and transformation.
The ongoing rollout of AI in the workplace has accelerated this trend by giving CHROs the opportunity to shape the way that their workforce responds to AI, with potentially huge implications for the future direction and financial success of the business.
Given CHROs increased strategic importance, why is their experience managing human resources treated as less transferable than that of those who have spent whole careers in finance, or operations?
There are also gendered consequences to this apparent block on upward mobility among CHROs. Almost three-quarters (71%) of all Fortune 200 CHROs/CPOs are female, but only 9% of newly appointed S&P 1500 CEOs in 2025 were women (down from 15% in 2024).
By overlooking CHROs as candidates for the top job, boards are missing a rich seam of talented women. Why are businesses still less likely to view CHROs as CEO candidates? And what structures need to change for this to change?
Everyone learns on the job – even the top one.
While businesses should value HR skills more highly, they also need to change the perception of the HR function as a career dead-end by promoting movement into, and crucially, out of, the function.
According to research by the Talent Strategy Group, in 2025, 46% of Fortune 200 CHROs possessed business experience gathered outside of the HR function. The report also notes that, rather than being concentrated in legal as has historically been the norm, 2025 CHRO appointees from outside the function have more diverse backgrounds. One example is Stephanie Smith, EVP of HR for The Home Depot, who previously worked in supply chain and operations.
Those CHROs who have made the leap to the top job often benefit from varied professional experience. A well-known example is Joanna Geraghty, CEO of Jet Blue, who became CPO in 2010 after roles in legal and regulatory affairs. Following her move into HR, Geraghty worked as EVP of customer experience and COO before becoming CEO.
Some ambitious CHROs have moved from HR to CEO by actively seeking P&L experience to augment their HR credentials. But businesses can do more to promote cross-functional movement into leadership pipelines.
For example, adopting a “2-2-2” progression structure – where candidates who want to progress to the C-suite move between two geographies, two functions and two businesses – could offer a broader range of experience to employees earlier in their careers, before they become cemented in one function. But this will require businesses to look more closely at their assessment and promotion criteria.
The stereotypical view of a CEO prioritizes expertise in investor management and ownership of the balance sheet.
Perhaps the biggest barrier to HR professionals looking to move into other functions is a lack of balance-sheet experience, rather than a lack of aptitude. It takes a brave business to take a chance on an HR leader in a role with P&L responsibility.
But for cross-functional mobility to become a viable prospect, companies must have a more open-minded approach to promoting workers who don’t fulfil every requirement.
If businesses move to a model where they promote people when they’re 70% ready rather than 100%, it opens up possibilities for candidates as well as bringing fresh ideas to the business.
A candidate who is ready to do the role exactly as it has been done before is arguably less likely to see areas to innovate than one who brings fresh eyes, and must learn the final 30% as they go.
When companies reject HR leaders as CEO candidates based on lack of P&L experience, they are judging them based on criteria that may no longer be relevant.
The stereotypical view of a CEO prioritizes expertise in investor management and ownership of the balance sheet. While the modern CEO still needs expertise in these areas, their overriding mission is to make the whole more than the sum of its parts.
This involves bringing together people from across the organization, fostering collaboration, and creating solutions based on more than the work of just one function. By definition, HR leaders are perfectly positioned to fulfil this mission.
No new CEO will possess deep expertise in everything they oversee. Everyone learns on the job – even the top one. Boards need to think more carefully about which skills gaps are unacceptable pre-appointment, and which can be bridged as the appointee progresses in the role. A more open-minded approach could see fewer great CHRO candidates getting stuck in the pipeline to the CEO role.
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