CHRO – Workforce

April 17, 2020October 18, 2024

Chief people officer trends: More women, more degrees, more turnover

An organization may call their head of HR a chief people officer, chief human resources officer, chief talent officer or something else. Whatever the title, the chief people officer has evolved over the years, and they should be aware of the macro trend impacting their role.

This is according to “CHRO Trends 2020,” a report from consulting firm Talent Strategy Group. Researchers produced the report by analyzing Fortune 200 companies and publicly available data. They looked at the 36 new Fortune 200 chief people officers who came into the role in 2019 and identified seven distinct trends. These 36 leaders include UnitedHealth Group’s Patricia Lewis, General Electric’s Kevin Cox, PepsiCo’s Ronald Schellekens and American Express’ Monique Herena.

Chief people officers remain one of the only C-suite roles that is dominated by women rather than men, the report found. Seventy-eight percent of new CHROs were women in 2019, and of all Fortune 200 CHROs, 67.3 percent were women, according to the report. This happened in the same time span in which the CEO role in the Fortune 200 saw a decline in female representation.

FhrFurther, in the pool of CHRO replacements in 2019, a woman replaced a man in 43 percent of the instances compared to 7 percent when a man replaced a woman, noted Zac Upchurch, COO at the Talent Strategy Group and a co-author of the report.

Advanced education is also becoming increasingly important for chief people officers. Compared to 48 percent in 2018, 65 percent of the new CHROs in 2019 hold one or more advanced degrees. Of this majority, 86 percent have earned a master’s degree, and 22 percent have earned a juris doctor.

This tracks with an overall trend for HR managers as well. HR professionals going to business school is becoming more popular, as they can use advanced education to pick up business skills in finance, marketing and operations that they don’t necessarily learn on-the-job as working in HR.

Also read: Tesla’s CHRO Director Pick Points to a New Era

Turnover trends

Another finding from the report was that turnover among chief people officers has increased. In 2019, 19 percent of CPOs turned over, an increase from 16 percent in 2018. In the Fortune 10 alone, the report noted, there were four CHRO replacements in 2019.

Upchurch wouldn’t attribute the higher rate for larger revenue organizations to anything specific. The average tenure of CHROs is a little over five years, he said, and some of them may have just reached their limit in 2019.

CEO turnover rates also likely impacted CHRO turnover rates in 2019, he added. The report found a correlation between the two, and 2019 saw a 40 percent increase in CEO turnover. “The high correlation of CEO and CHRO turnover translates to an increase in CHRO turnover that we expect to continue into 2020,” the report stated.

For example, in November 2019 when McDonald’s CEO Steve Easterbrook was fired after admitting to violating company policy by having a consensual relationship with an employee, Chief People Officer David Fairhurst resigned a day later.

“When the CEO leaves the company, it is very common for it to have a cascading effect. In some cases, other executives leave because they did not get the CEO job and therefore felt passed over. In other cases, they are not aligned with the new CEO and leave to pursue new opportunities. Every executive will now have to switch their personal loyalty to Chris Kempczinski, their new CEO, or consider departing,” said Dave Ramos, chief executive officer of consultancy Shiftpoints Inc., at the time of Fairhurst’s departure.

Upchurch expanded on this logic. A new CEO — especially if they come from outside the company rather than internally — impacts the rest of the executive team, he said.

“I predominantly attribute [this trend] to the changing of the guard and the accumulation of a new strategy,” Upchurch said. “A new CEO [may establish] a new executive team to drive forward strategy, and that strategy is either going to be similar to or differentiated from the previous one.”

Interestingly, while 35 percent of departing chief people officers retired, 31 percent took new or bigger roles within the company, the report noted.

Twelve percent took a lateral move into a business role such as a different executive position. One reason behind this is that some companies see the chief people officer as a stop along the way as someone moves up the company, Upchurch noted. Their ultimate goal may be a different executive role. They may not even have HR experience when they take on the CHRO position. In fact, the 2020 report found that 17 percent of CHROs come into the role with limited to no domain expertise in HR.

Examples of former HR executives who have made these lateral moves in 2019, Upchurch said, include: Jennifer Mann at Coca Cola, who is now senior vice president and president of global ventures; Kathy Gaddes of AmerisourceBergen, who is now chief compliance officer; and Stephanie Lundquist at Target, who is now executive vice president and president of food and beverage.

Also read: The open road potential of a data-driven CHRO

Conversations with chief people officers

The creators of the report also spoke to many chief people officers to get an understanding of what they see as the biggest priorities on their agenda. These conversations provided some qualitative data to the Fortune 200 analysis.

A major theme of these interviews was building capability and accountability, Upchurch said. CHROs want the HR function and HR managers to build on their capabilities in order to meet increasing HR standards and to appropriately hold people accountable to these standards

“There’s a lot of good research about the relationship between what we think we hold people accountable for and how drastic it is versus what we actually do. I think a lot of CHROs are clued into that and saying, ‘We have good processes and practices. What we don’t have is how we hold people accountable for these processes and practices, and we need to enable that by providing them the right capability,’ ” he said, citing a 2019 survey that found managers generally don’t hold their employees accountable.

Another trend that emerged from these conversations were the challenges of balancing both short-term and long-term expectations in HR. Short-term tasks include daily or quarterly duties while long-term involves preparing for the future of work and responding to macro trends.

This delicate balance was true before COVID-19 disrupted the workplace and it still holds true now, Upchurch said.

“All this is now more relevant than it ever has been because CHROs are on the front lines of contingency planning and different ways of working [in response] to COVID-19. But they also need to operate their business. So the question is, ‘How do you do both these things at once?’” he said. HR leaders must manage this complicated relationship “between the quarter-by-quarter basis at which organizations operate while also setting up the runway for perpetual, enduring success.”

Also read: An important collaboration: CHROs and legal confront a crisis

March 5, 2020July 24, 2024

The in-demand potential of a data-driven CHRO

Are you leveraging predictive analytics to reduce turnover? Using hiring data to improve recruiting? Monitoring internal social media comments to measure employee sentiment or identify diversity issues?

If not, you are missing opportunities to become your CEO’s most valuable advisor.

Executives are finally recognizing that the ability to hire, retain and mobilize top talent is the key to their business success. And they are turning to their CHROs for advice, guidance and data to chart their course forward.

“HR leaders who adopt AI tools for recruiting, engagement and reorganization are reaping the benefits of these trends,” said Ben Eubanks, principal for Lighthouse Research in Huntsville, Alabama, and author of “Artificial Intelligence for HR.” “They can absolutely gain credibility and add value for the CEO and every business unit.”

But to become that indispensable business advisor, CHROs have to know how to capture and analyze people analytics, then link those insights to business decisions. And not all of them are ready to deliver.

Also read: AI is coming — and HR is not prepared

The power of data

When companies figure out how to leverage human capital analytics, they experience measurable business benefits that go well beyond improved engagement scores. Visier’s “The Age of People Analytics” report found organizations with mature people analytics processes generate 56 percent higher profit margins than those with less advanced capabilities. They also found that these organizations are more likely to link people analytics to improved business outcomes and labor cost savings.

This shouldn’t be a surprise. People analytics has been a hot topic in HR forums for the last few years. KPMG’s “Future of HR 2019” report found 80 percent of these leaders believe HR can provide more value through analytics.

However, just as many studies show that most HR leaders are still struggling to join the ranks of mature analytics users. PwC’s 2019 Saratoga benchmark report found 55 percent of companies failed their analysis of “good people data”, and another 41 percent were only “partway there.” They also found that lack of leadership around deploying people analytics severely limits how quickly companies can leverage this data for better business outcomes.

Also read: Are more companies in tapping HR executives for board seat?

This combination of high interest in HR analytics and low maturity among HR leaders can either be viewed as a risk or an opportunity, Eubanks said. “Companies need HR leaders who can be on top of human capital analytics,” he said. “It’s an opportunity to become a real partner to the business.”

How to get started

Historically, human resources has not had a lot of experience in using data and analytics in decision-making, said Dan Staley, global HR technology leader for PwC US. “Finance has always been viewed as more data-driven, but HR has to realize that it is sitting on a treasure trove of data,” he said. Companies constantly capture information about hiring, demographics, salaries, performance, turnover, diversity and other stats that offer powerful insights into the behavior and ability of the workforce, he said. The trick is figuring out how to access that data and ask the right questions to uncover actionable results.

Staley encouraged HR leaders to start by talking to the CEO and business unit leaders about what business obstacles they face and how they can use human capital data to overcome them.

Then look at what internal and external data sets you already have access to and what questions it can answer, Eubanks said. For example, combining internal salary data with industry benchmark reports can allow a company to determine whether it is offering competitive compensation packages and where they can afford to make more targeted offers to high-demand candidates. “It’s no longer just your opinion,” Eubanks said. “The data can justify the decision.”

And when HR leaders have data-driven results, they need to communicate in business terms that are relevant to board members. “Don’t just report on reductions in turnover or absenteeism or time-to-hire,” Staley said. “Talk about the impact those metrics have on the business.”

CHROs who embrace human capital analytics and who can communicate the value of linking that data to business strategy can become indispensable to their C-suite.

Also read: AI’s growing role in human resources

“HR leaders have the most influence when it comes to workforce decisions,” said Michael Moon, people analytics leader for ADP in North Attenborough, Massachusetts. They already have experience with hiring and performance management. By integrating data into these decisions, it replaces gut instinct with with evidence based decision-making, and makes it possible to pinpoint what is happening with the workforce and why, she said. “Once analytics are part of the way things are done, it becomes easy to measure the impact on ROI.”

January 30, 2019June 29, 2023

Tesla’s CHRO Director Pick Points to a New Era

tesla board hr executives — Kathleen Wilson-Thompson

When Tesla added a pair of independent directors to its board late last year, the bulk of the attention went to the more famous of the two — Larry Ellison, Oracle’s billionaire founder and a recent Tesla investor.

More noteworthy for the people management industry is the controversial car maker’s appointment of Kathleen Wilson-Thompson, executive vice president and global chief human resources officer of Walgreens Boots Alliance Inc.

Wilson-Thompson, 61, is the latest C-level HR professional picked for a board seat at a U.S. public company, part of a nearly three-fold increase over the past decade in CHROs and other top HR executives with positions on U.S. corporate boards.

It’s a trend that industry leaders, analysts, academics and former CHROs believe will continue.

Boards historically shied away from adding members without operating experience, but more have warmed to the idea of including HR experts to better grapple with risk and compliance issues related to everything from the #MeToo movement and diversity to rising employee activism. A tight labor market that’s made companies appreciate the value of a strong corporate culture and a positive employer brand also is contributing to HR executives’ attractiveness as board members.

“Boards typically haven’t had great insights into what’s happening in the organization,” said Donald “DJ” Schepker, research director at the University of South Carolina Center for Executive Succession, which studies board issues. “Having directors with HR expertise allows them to ask more pointed questions about the culture, and in today’s environment, that’s probably the top issue that boards are focused on.”

Wilson-Thompson has been Walgreens’ CHRO since 2010, four years before the company acquired Boots Alliance to create a global retail and wholesale pharmaceutical giant that today has approximately 418,000 employees and annual revenue of $117 billion. Before joining Walgreens, Wilson-Thompson spent 17 years at Kellogg Co., in various corporate HR and legal roles.

As a woman and African American, Thompson adds to the diversity of Tesla’s board, which previously had two women and two people of color out of nine board members. As a former employment lawyer with a decade of board duty, she also brings experience that the board could use as Tesla deals with management and people issues on multiple fronts.

Tesla added the independent directors to settle a Securities and Exchange Commission complaint that alleged CEO Elon Musk lied in an August Twitter post about securing funding to take the company private. As part of the settlement, Musk stepped down as chairman, and he and the company paid separate $20 million fines.

A Preponderance of Workforce Challenges

Musk’s erroneous tweet isn’t the only problem dogging the car company. As it races to ramp up production of its popular electric cars, Tesla has been investigated for undercounting or ignoring worker safety, and faces a lawsuit that alleges it threatened to deport foreign workers who reported workplace injuries. Separate lawsuits filed by current or former employees and contractors who are African American accuse the company of failing to address rampant racism and race-based harassment, according to the New York Times. Other former employees have sued the company for sex discrimination, retaliation and related workplace violations.

After boosting its workforce by 30 percent in 2018 to meet demand for lower-cost Model S sedans, Tesla in mid-January announced a 7 percent layoff. The reduction will help cut operating expenses in advance of shrinking U.S. tax credits for electric cars that will effectively boost Tesla vehicles’ sticker prices, according to a Jan. 18 email Musk sent to employees.

Wilson-Thompson did not respond to several requests for comment. A Telsa spokesperson declined to comment beyond a Dec. 28 statement announcing the board appointments. In it, the company praised her for bringing “a passion for building and promoting great workplaces.”

Gaining a Seat at the Table

Securing more board seats could be the outcome of the much-discussed, long-hyped goal of getting HR a seat at the table. From 2005 to 2017, the number of HR executives on U.S. public company boards almost tripled, from 84 to a record high of 243, according to Equilar, the executive compensation and corporate governance data analysis firm. Equilar compiled the data by reviewing board seats held by HR executives at companies in the Russell 3000 index, which represents approximately 98 percent of all U.S. public companies.

Even so, the portion of C-level HR executives with board positions is minuscule. Only 3.7 percent of U.S. HR pros who are named corporate officers at the companies they work for also sit on one or more corporate boards. That represents an increase from about 2.4 percent in 2005, but a drop from a high of 5 percent in 2014, according to Equilar.

Wilson-Thompson’s appointment also highlights the increase in the number of women on corporate boards. In 2018, women comprised 18 percent of U.S. corporate directors, up slightly from 16.5 percent in 2017, according to Equilar.

Last year, California became the first state to mandate that by the end of 2019 public companies have at least one female director, a number that by 2021 will rise to two for boards with five members, and three for boards with six members or more. In December, a bill was introduced in the New Jersey state legislature that if passed would impose the same requirements on companies based there.

Despite the bigger role that HR executives play on some boards, others still will not consider CHRO candidates because many of those individuals lack operating experience. CHROs also must combat a misperception that HR professionals aren’t good with numbers, an outdated notion given today’s widespread use of analytics in HR departments but one that nevertheless persists.

“If I have a half hour with a CEO, they’ll walk away convinced they need an HR person on their board,” said Robert Lambert, a former CHRO at Macy’s, Patagonia and REI who now works as an executive search consultant for Allegis Partners. “But the big search firms have thousands of people who look fabulous on paper. Why would they go to the extra effort to pitch an HR person? They don’t, it’s not worth their time. Even for the most accomplished female or diverse candidates, it’s virtually impossible.”

Waiting in the Wings

To get around that kind of thinking, organizations that support HR leaders or women in management run programs to ensure that when the call comes, their members and clients are ready.

According to Women Corporate Directors, a New York organization that supports women on private and public boards, about 18 percent of its 2,400 members sit on Fortune 500 boards. The organization is piloting programs in New York and Los Angeles that groom C-level women executives looking for their first board appointments. The timing is right, said Susan Keating, the organization’s CEO. “Whether it’s #MeToo or the California legislation around women in boardrooms, there’s a heightened awareness of the need for more diversity, and more gender diversity.”

Catalyst Inc., the women’s leadership consulting and advisory firm, created a program in 2013 to coach CHROs and other women with at least 10 years of C-level experience to fill board vacancies. Members of Catalyst Women on Board meet eight times over two years to set goals, strategize and get feedback from mentors. “Having a diverse board with women and people of color enhances problem solving,” said Meesha Rosa, Catalyst’s senior director, corporate board services. “It sets the company up to win in the market of the future.”

Employees, shareholders and other investors are holding boards responsible for corporate-level decisions made under their watch. A recent example of that is the lawsuit that shareholders of Google parent company Alphabet filed in January over a former Google senior executive who was accused of sexual harassment but still awarded a $90 million exit package when he left the company.

“Boards are going to have to be more accountable,” said Johnny Taylor, CEO at the Society for Human Resource Management. “We’re in this knowledge-based economy, so you can’t just dismiss it. You can’t just replace talent. It could be your superstars that don’t want to work here. That’s changed the game.”