How CHROs and CPOs can become CEOs

The importance and value of the CHRO and CPO to the success of the organization has grown significantly in recent years. In a new report, NGS Global says now is the perfect time for CHROs and CPOs to think about how they can contribute as a CEO. To be seriously considered for the role, however, four “must-haves” must be in place. The company exposes everything.

April 19, 2023 – Organizations today are probably more people-centric than ever. Employers say company culture and employee well-being are now key indicators of company health. Inflation, economic uncertainty and the pandemic have presented a mix of challenges to organisations, not least those involving the employee base: health and safety standards, hybrid working and employee engagement, just to name a few. The latest research shows that while inflationary pressures and economic uncertainty point to renewed employee concerns about financial compensation, other concernswith work-life balance and ethical alignment with the employer still at the center of the work-related choices people are making today.

All these elements that run through the heartbeat of organizations are the primary responsibility and mission of the Chief Human Resources Officer or Chief People Officer. “Other imperatives such as attracting and retaining talent, gaining greater insight from recent analytics advances, and improving DEI make this role an absolutely critical component of the C-suite,” according to a new report from NGS Global‘c Cindy Young, Bob Bellanoand Ferdinand Zavala. “However, even 10 years ago, the head of human resources of an organization very often reported to the COO or even the CFO. The HR function has very quickly moved from a primarily administrative role to a central strategic one and is often tied to executive committees as well as a trusted advisor to CEOs in large corporations.”

NGS Global points to several major brands that now have former HR leaders as CEOs: Chanel (Leena Nair) and Anthemis (Briana van Strijp) are just two of many examples.

The report says it is to be expected that some top-level CEOs and CPOs believe they have the necessary skill set to lead organizations as CEOs. “They understand the mindset of employees and have a strategic understanding of how to build an environment that allows passions to take tangible form in products, services, performance and customer satisfaction,” says the NGS Global report. “Yet there is another experience that they typically need to acquire to be considered for the CEO chair.”

Cindy Yang is Managing Partner, Korea at NGS Global and is based in Seoul. She has over 20 years of experience conducting senior level executive search engagements, with a particular focus on the consumer, technology and life sciences industries. Ms. Yang’s client base includes multinational companies doing business in Korea as well as Korean companies expanding their global operations. She focuses on recruiting government and other C-level executives across all functional areas, including strategic planning, sales and marketing, finance and human resources.

NGS Global notes that there are four “must-haves” for CHROs and CPOs to be considered CEOs. The firms say these proposals apply to most industries and organisations, although there will also be additional skill sets needed in certain sectors.

1. Liability for profits and losses

A key component to both mindfulness and success as a CEO is demonstrative liability for profits and losses, according to the NGS Global report. “Almost always, especially in the commercial sector, CEO candidates will know how business gets away from running a business,” the study said. “They will have a deep understanding of business models: how the business makes money, how it profits and how it sustains that profitability over time. CHROs and CPOs traditionally lack this skill set. They can gain this experience by taking on additional responsibilities such as leading a business unit or serving on the company’s executive committee.”

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The report says developing a deep understanding of a company’s business strategy and finances is paramount. Companies note that additional competencies can also be acquired through executive training and development, such as an MBA or other postgraduate degree in finance.

2. Multifaceted managerial experience

“Many leaders are exceptional at what they do, but isolated in their skills, experience and perspectives,” the NGS Global report said. “CHRs and CPOs aspiring to become CEOs must have a significant level of multifaceted leadership experience throughout their careers that demonstrates the individual’s courage and ability to think beyond traditional departmental boundaries. Those with cross-functional experience and/or international exposure will be preferred for CEO consideration. CHROs and CPOs who have led other functional areas such as sales, operations or finance will have a distinct advantage.”

Bob Bellano is a senior partner in NGS Global’s Los Angeles and Newport Beach offices. With over 25 years of executive search experience, he has performed numerous search assignments for CEOs, Presidents, CFOs and senior executives in operations, engineering, technology, business development, marketing and sales. He has placed executives across the Americas, Europe and Asia in Fortune 1000 companies as well as small to mid-sized organizations, many of which are backed by private equity or venture capital. His areas of expertise include technology, business services, healthcare, entertainment, interactive media, industrial, defense and infrastructure/engineering services.

The search firm also notes that experience leading even a fraction of additional functional responsibility is a plus. Additionally, the firm says that managing teams and aligning strategy across geographies and cultures will be seen as highly relevant for any potential CEO appointment.

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3. Big picture vision

Long-term, strategic thinking is a key ingredient to CEO success, according to the NGS Global report. “As leaders, they have the ability to envision the business and make short-term decisions that benefit the organization over longer time frames,” the search firm said. “Part of that decision-making comes from top-level expertise, and part comes from a deep knowledge of the company’s competitive status in the marketplace and a vision of what can be achieved.”

Fernando de Zavala is an Iberia Managing Partner based in NGS Global’s Barcelona office. He brings global experience with over 11 years of experience in the Americas, 12 years in Europe and seven years in Asia Pacific. His career has focused primarily on the HR industry.

For CHROs and CPOs, NGS Global says it’s important to create your own informed and thoughtful vision for the organization and how you will lead as CEO. “Communicate this clearly and effectively,” the firm said. “To establish this vision, actively seek out business learning opportunities. Participation as an active board member is ideal, allowing access to the big picture of strategic challenges and opportunities, as well as providing insight into the priorities of other functional leaders (CFO, COO, etc.). More generally, develop a deep understanding of your key industry trends and emerging technologies. Developing a digitally oriented mindset to solve challenges is beneficial.”

4. Effectively charged network

Tackling complex challenges and driving business growth is the hallmark of CEOs, but they are only as good as network they have around them. “Supporting not only the senior executive team, but also the broader management structure and employee base is imperative to success,” said NGS Global. “The current focus on company culture means that successful CEOs must foster a positive, collaborative and transparent work environment.”

CHROs and CPOs usually already excel at this must-have and usually have more experience in it than a CFO or COO. “They are, as their title suggests, people: they usually have very well-established company networks with stakeholders, the board of directors, other executives and, of course, employees,” the search firm said. “Establishing even stronger strategic ties, both internal and external (think: investors, government, media) is prudent.”

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With contributions by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsanski, Managing Editor; and Steven Sawicki, Managing Editor – Hunt Scanlon Media

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