Attracting the best Gen Z talent
IMD's Lars Häggström argues that although Gen Z talent is drawn to startups because of their dynamic, purpose-driven character, they should also take into account what more established organizations have to offer....
Human Resources
The CHRO agenda: How the role is evolving
The role of HR – and, therefore, of the CHRO – is rapidly changing. IMD’s Lars Häggström draws out the key themes from a new series of in-depth interviews.
What contribution will CHROs make to their businesses over the next five years?
That is the central question we explore in a new series of in-depth interviews with four CHROs. While each faces a unique set of business challenges, all take center stage in their organization’s efforts to navigate turbulent but exciting times. They are helping their businesses adapt successfully to a changing world – and, in some cases, achieving dramatic growth.
While the interviews are forward-looking, they are inevitably framed by recent history. There can be no doubt that the CHRO role has been pivotal during a period that has put businesses’ talent strategies under huge strain. The crisis of the pandemic was immediately followed by a huge labor-market upheaval, as shifting employee priorities played out in the “Great Resignation.” Under these unprecedented pressures, the ability to attract, retain, motivate, and develop talent has rarely been more important.
Multiple studies have underlined the critical role that CHROs played, and continue to play, in managing these pressures. A 2022 survey of CHROs by SHRM highlighted strategic input as the number one competency that the role requires. Mercer’s Voice of the CHRO 2023 survey of US CHROs found that the most common shift, identified by 79%, was to take a more strategic approach to tackling increasing disruption.
These four new interviews echo that strategic outlook. The reflections and insights the interviewees share offer a definitive guide to how CHROs are innovating and evolving their role to make a critical contribution to business success. As much as anything, they are a timely reminder that the companies that will thrive in the coming years will be those that succeed in unlocking their people’s potential. In this context, the CHRO’s contribution is mission-critical.
The full interviews have been published in the past few weeks. Here, we highlight six of the stand-out themes that emerge from across the series.
This situation demands that CHROs monitor, and learn to assess, the implications for their businesses of what is happening in the wider world.
1 – CHROs must engage with the effects of external volatility
Initially, we asked the interviewees to reflect on the changing operating environment. All four shared the view that businesses are increasingly exposed to heightened volatility. Today’s CHRO needs both to understand the implications of external events and manage the impact of them on their organizations.
“Today’s business circumstances are much faster and much more complex than in the past, and less predictable,” says Cristina Monteiro of Netherlands-based chip manufacturer ASML Monteiro. The COVID-19 pandemic, war in Ukraine, and mounting geopolitical tensions in Asia have directly or indirectly impacted many businesses, including ASML. But disruption can emerge quickly and unexpectedly, from any direction.
This situation demands that CHROs monitor, and learn to assess, the implications for their businesses of what is happening in the wider world. “I need to look with a critical eye, to see what’s relevant and what’s not,” says Nadim Penser of Swedish mining and infrastructure firm, Epiroc. CHROs must be able to recognize the trends and one-off events that will influence their organizations’ progress.
“For some firms, geopolitical shifts have, conversely, been driving rapid growth.”
2 – Geopolitics looms large
In recent years, Russia’s invasion of Ukraine and war in the Middle East have had a major impact on businesses with a presence in the nations involved, as well as impacting supply chains worldwide. Meanwhile, CHROs of companies that would suffer disruption as a result of conflict over Taiwan should be putting contingency plans in place.
“We have seen the impact of significant external conflict and worked hard to find ways to support people in those locations,” explains Jay Connolly, Global Chief People Officer of the global law firm Baker McKenzie. For many firms, he points out, recent events have exposed the lack of an adequate template: “There’s no playbook for these issues,” he says. “I think CHROs need to spend more time […] thinking about what tomorrow might bring, and asking how their organizations – certainly the people function – should respond.”
For some firms, geopolitical shifts have, conversely, been driving rapid growth. That has been the case for ASML, as nervousness grows about global reliance on Taiwan. It has also driven massive expansion at Sweden-based defense firm Saab, as Lena Eliasson, Saab’s Head of Group Human Resources, explains: “The tension in the world is the reason why we are growing,” she acknowledges. With 2023 organic sales growth at 23%, the company recruited close to 2,500 net new employees globally, a 13% increase in annual headcount. Such dynamic growth creates its own challenges for HR, not least in the need to attract, recruit, and onboard talent.
3 – CHROs need to engage with AI – within HR and across the wider business
Another major driver of change is AI. Christina Monteiro is optimistic about its impact on HR: “I think AI will enable us to do things that we’re not able to do today, in a way that is both ethical and effective,” she says. It will be incumbent upon CHROs to apply those twin metrics.
In some businesses, CHROs may move faster than customer-facing teams in adopting AI, suggests Jay Connolly. CHROs should engage fully with the technology, exploring its potential while helping shape the wider AI strategy. Among other things, it is a matter of employee experience. Employees will quickly become frustrated if they are denied access to AI tools that they know employees at other companies can use.
Epiroc is seeking to broaden its talent base, increasing diversity and inclusion as it brings in fresh thinking.
4 – Diversity and inclusion remain top priorities
Another significant takeaway from our interviews was that CHROs must remain focused on diversity and inclusion, even as a noisy political backlash grows.
Nadim Penser explains that Epiroc is seeking to broaden its talent base, increasing diversity and inclusion as it brings in fresh thinking. “It starts with the realization that we have blind spots and weaknesses,” says Penser. First and foremost, DEI is a matter of business performance.
Inclusive practices are also imperative when recruiting globally. The challenge is to help people from very different backgrounds to sustain an innovative, high-performing culture. “We have to think about inclusion and how we work together holistically,” says ASML’s Christina Monteiro.
Firms that fail to appeal to diverse talent risk being left with unfillable skills gaps. “It’s so important to have an attractive employee value proposition,” says Saab’s Lena Eliasson. Whatever their background, employees need to see how they would fit into the organization. “It’s the job. It’s the colleagues. It’s your development plans. And it’s the purpose of the company,” she explains.
5 – The ambidextrous CHRO: Leading today and tomorrow
Our interviews highlight the pressure on CHROs simultaneously to shape the medium- and long-term futures of their businesses, while also meeting short-term demands.
To develop this “ambidexterity,” CHROs must be part of strategic conversations and be prepared to champion unpopular but far-sighted policies. “Sometimes, what we need to do for the future means we need to make decisions that don’t seem to make sense right now,” points out Cristina Monteiro.
Tensions between the imperatives of tomorrow and today should not be feared, argues Nadim Penser. In many fields, Penser says, tensions can be healthy – even necessary for driving progress. “If we have no tension in our organization, we’re not innovating,” he says.
Given this sea change, CHROs should ensure that their colleagues across the business understand the importance of HR’s contribution.
6 – The changing role of the CHRO
The extent of the changes described by the CHRO Agenda interviewees constitutes an evolution of the CHRO role.
Given this sea change, CHROs should ensure that their colleagues across the business understand the importance of HR’s contribution. As Nadim Penser puts it: “I don’t think HR is a support function. It’s an active contributor to the business.” This principle is embodied in the CHRO role. A CHRO’s primary identity, Penser argues, is as a member of the senior leadership team. Their first responsibility is to help that team succeed, which means HR policy must be closely aligned with business strategy.
While agreeing that the role has evolved, Christina Monteiro offers a more nuanced analysis. She describes the CHRO role as historically power based. Power flowed to the position, she suggests, both from process and policies and from a strong relationship with the CEO. Today, the CHRO’s influence stems from what HR does. “It’s about having courage and determination and enthusiasm, and caring for people [enough] to step forward,” she argues.
“CHROs should be more focused on influence, collaboration, and peer-to-peer relationships,” continues Monteiro. “We need to master human interactions.” Especially when businesses are navigating difficult and unsettling changes, the human connections built by HR are to the fore.
Lena Eliasson echoes this point. Even with technology playing an increasingly significant role, CHROs must ensure they stay focused on human priorities. “We have to be close to people. We’re all flesh and blood!” says Eliasson.
That truth highlights the crucial contribution CHROs make to business success. At a time of rapid market changes and intense competition, employees need a great deal of support to continue to perform at their best. CHROs have some significant challenges on their agenda. In all of them, the key to success will be people.
To read the interviews in full, please click here.
Authors
Related
Recruitment in 2025: AI is a great aid, but don’t forget the personal touch
AI is rewriting the rules of hiring – job seekers and recruiters alike must adapt to a process driven by algorithms but grounded in human connections. ...
The shrinking life span of teams – and how to navigate it
Here’s how to get the most out of your team – even if you’re only together for shorter periods of time. ...
Reach for the SIY: How to grow a grassroots movement into a global initiative
Anand Narasimhan, Heather Cairns-Lee, and Nancy Lane explain how an executive at SAP in California made it his mission to spread mindfulness around the world. ...