Why is it so hard to be a Chief HR Officer? One of the questions that′s keeping many HR leaders as well as General Managers up awake?

Read here what Josh Bersin considers important. Also, find out why Patagonia simplified its mission statement big time. And: how to unleash the power of assessments for leaders and their organizations. Enjoy the read.

Why Is Being A Chief HR Officer So Hard?

Josh Bersin recently shared an article that is well worth reading. As he puts it: “Times have changed. Once considered the junior executive in the C-suite, today the CHRO may be the most important of all. And as AI transforms our businesses, the job gets bigger every day.”

I could not agree more. During my career, I had very mixed experiences with HR leaders. Too many saw their role as a “fulfilment center” as Josh calls it rather than “the growth department” he suggests it to become. Here′s the YouTube link to what Josh has to share.

When the size of our start-up was about to triple in people and locations within a very short time, our management team was very clear: we needed an hr leader and department that enabled to manage that growth without losing the essential parts of the unique culture we had created within the first two years of our existence. It′s been tough to find the right individual to lead (which we finally did), but it′s been even tougher to find ways for the larger exec team to accept that role as people were used to the “fulfillment center” role at large.

The slide above shows devastating facts based on the Gallup research.The level of satisfaction that employees express regarding "their" company is at an all time low. That makes everything even harder. The data used for this graph from Josh Bersin are US data, but readers of this newsletter know that the Gallup data show similar patterns across most countries.

Here are some of the key aspects that Josh is referring to – but I truly recommend to read the entire article: “Companies have people challenges everywhere. (…) Most companies still struggle with hybrid work, managers and employees are stressed, and employee happiness is low. (…) In the middle of this we face an ongoing labor shortage. Low fertility rates and retiring baby boomers have pushed unemployment rates to 50-year lows and this problem won’t go away for decades. The traditional “hire to grow” model is failing, as we see the cycle of “hire, then layoff” in fast-growing tech companies. (…) In the last few years companies have finally decided to do away with the functional hierarchy. Most companies we talk with are flattening, reducing mid-level managers, and operating in a more cross-functional way. Forward thinking organizations (Bayer, ING Bank, Telstra, Mastercard, Netflix) are adopting a new operating model we call the “The Dynamic Organization,” creating high levels of agility and faster time to market.” He concludes: “The CHRO must lead this effort, and help redesign the job architecture, pay practices, managerial roles, performance management, skills models, and career strategy.”

His article touches these key aspects:

• Every company is now global
• M&A
• Improving The Leadership Pipeline

In other words, it′s about redesigning the HR function. Here′s what Josh takes from their recent study CHRO Insights?: “We’ve looked at data on 47,000 global CHROs and what we discovered are a few important things.

• First, there is a major increase in the C-level importance of the CHRO.
• Second, the CHRO job more difficult than it looks and many are replaced by their CEOs.
• Third, the CHRO role is expanding.
• Fourth, strong CHROs are now transforming the HR function.
• Finally, the HR function is not developing itself.

Our Systemic HR study found that only 18% of HR departments have an internal development program, 19% rotate people between HR and the business, and only 55% state they have a “culture of professional development” in HR. This has to change.” And here′s the link to the full written up logic. Worth reading.

How To Position HR For Innovation

Gartner looks at three different ways in which HR can enable greater innovation within the function, including defining the value of each HR innovation. This thought piece builds nicely on Josh Bersin logic as just outlined. Gartner focusses on these three approaches:

• defining the value of HR innovation,
• embedding innovation networks, and
• establishing structured innovation processes

It definitely starts with defining the value of HR innovation inside any organization. As the slide below shows, Gartner′s framework provides seven critical dimensions to guide the focus and scope of innovative initiatives.

“We have identified seven critical dimensions — novelty; market impact; timing and scale (at the company level); and focus, participation and breadth (at the program/ initiative level) — that can help HR determine the focus of innovation initiatives. The dimensions fall into two categories: at the organizational level and at the specific program or initiative level. The alternatives along each dimension should not be viewed as mutually exclusive but as a set of options from which to formulate an appropriate innovation scope.“

Why is innovation such as focus area for Gartner? According to them, “a recent survey showed, 50% of organizations with high levels of innovation communicate the potential benefits of innovation to stakeholders, while only 16% of organizations with low levels of innovation do so. Innovative organizations understand the importance of clearly establishing what innovation will solve and communicating the value it will bring to employees, teams and organizations.”

Take a look at the full report here.

Unleashing The Power Of Assessments For Leaders And Their Organizations

Allan Church, Ph.D. , Jim Scrivani, Ph.D. , and Markus Graf share three main reasons why standard "out of the box" leadership assessment approaches often fall short: a) lack of Future Focus and Cultural Relevance, b) over-reliance on Specific Methods or Tools and c) under-leveraging the Insights from the data. Their thinking offers such a rich depositary of knowledge when it comes to leadership in general – in today′s newsletter I can only share on key aspect, so I picked what they call the three levels of assessment insights.

Here are their thoughts: “For Leadership Development – Focusing on the development of individual leaders is often the number one reason organizations embark on assessments per the benchmark data (e.g., 72 percent use data for development per the top development company benchmarks noted earlier) and the reason many of these tools were initially created. Whether for individual coaching or as part of a leadership development program, using assessment data as a baseline can be very effective as the starting point for individuals as they craft their development journeys. Assessment insights help raise the recipient’s level of self-awareness (which research has shown predicts future success) and allow them to target their strengths for reinforcement and development opportunities to work against (…) Data at this level is also useful for identifying future leadership potential, but this purpose is less for the individual than the organization.

For Enhancing Team Composition and Effectiveness – At the group or team level, assessment data summarized across a set of individual leaders can also be used to drive composition (i.e., through the staffing of complementary skills when looking at the team holistically) and team effectiveness (e.g., by focusing on group strengths and potential opportunities for working together more effectively). This typically involves enrolling intact teams and/or talent cohorts in the assessment process with two goals in mind. The first is to create bespoke interventions for the entire cohort (e.g., a networked team with shared purpose and goals or raise the level of collaboration for a specific leadership level). The second is to analyze the data to help support team dynamics and interventions in improving working methods, setting team charters and norms, enhancing communications, understanding formal and informal roles, and optimizing performance.

For Senior Leadership Succession Planning – Arguably, the most strategic and impactful use of assessment data for organizations and their C-suite leaders is when they are integrated into the broader talent management and HR agendas. This integrated assessment includes using insights to identify high-potentials based on the future success profile, and inform talent discussions, planning, and targeted development during formal review processes with senior leaders. In addition, these insights can be invaluable in slating key individuals for succession roles and summarizing capabilities of top successors to c-suite positions for the Board of Directors (in publicly traded companies). For example, assessment data can help pinpoint the development needs of a senior successor to enhance their readiness for the C-suite role using the 70/20/10 model of critical experiences, coaching and mentoring, and formal learning.? Executives can utilize this data to decide who has the more robust profile to lead a significant SVP operating role with 50,000 front-line employees, for example, vs. who might be better suited for an SVP insights or strategy position. While this application of assessment data, mainly when it is based on the unique capabilities needed to drive sustained growth for the future, top development benchmark data indicates that less than half of top development companies use their data for talent decision-making or succession (44%) and even less for identification of potential (36%). Perhaps it’s an issue of accountability rather than capability, as only 13% of companies formally measure the outcomes of their talent management processes (per benchmark studies under suggested readings).

For Driving Culture Change and Organizational Capability Building – the other areas in which assessment data in the aggregate can be leveraged strategically for the organization are for use in large-scale capability or development interventions to close enterprise gaps in core areas (e.g., inspirational leadership, effective collaboration) as well as culture change initiatives (e.g., core values and leadership expectations). In essence, if leadership frameworks and the tools that measure them have been tailored for the future, by assessing significant numbers of leaders, an organization communicates and reinforces the “how” results should be achieved along with the “what.” This should not be surprising given that customized 360 feedback and other tools have been used for decades to drive culture change (see Church and Burke’s chapter on Strategic 360 for Organization Development in the Handbook). Yet, in our experience, many organizations are underleveraging this opportunity. Having a CEO and C-suite team endorse a custom set of leadership capabilities. However, it sends a powerful message about what is critical for the desired end-state’s success. Definitely worth a read. Click here.

The Times They Are A-Changing

No, this is not about the Bob Dylan tune. WTW (Willis Tower Watson) just published a report that says that two thirds of all U.S. employees feel the impact of the increasing cost of living as a consequence of the inflation of the past years – and that it really weighs on them. While the data are pure U.S. based, it does not take much fantasy to assume that this is something that employees the world over are experiencing. What does that mean?

WTW suggest that as “And as companies roll out more unique benefit offerings designed to support staffers, they should spend some time thinking about the financial benefits that workers actually want.?Mark Smrecek, a senior director at WTW puts it like this: “Employers should take action to improve financial wellbeing by adequately educating employees on their resources to close financial gaps”

What is important to notice after a long period in which research often provided good reasons why supportive cultures, mental, emotional and physical health benefits as well as workplace connections made the difference to candidates and existing employees, the financial context has shifted priorities significantly. In this report, about 88% of workers are worried about covering their living costs, with 73% concerned about paying for food, 72% distressed about healthcare, 69% fretting over housing, and 66% troubled over transportation. Around one in five American employees expect their financial situation to get worse over the next year.? Find out about all details of the WTW study here.

Keep It Simple, Stupid

Patagonia followed that rule lately and simplified its mission statement which used to be pretty crowded (“Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis) to a much clearer expression which reads like this “We're in business to save our home planet.” Simplicity always wins – and that′s a great step into the right direction – albeit that Patagonia has been one of the best and most powerful examples of a purpose-led organization which has been yielding powerful results over the years.

In a recent interview with Inc. Magazine ′s “From the Ground Up” podcast, Vincent Stanley – Patagonia′s director of philosophy – shared his insights about growing a business responsibly.

The whole interview is worth listening to, but I have picked the part when the conversation focused on the reasons why for this change as this might help many organizations to consider re-thinking their multi-layered purpose, vision, mission and values statements. Here we go:Interviewer: So, in your book, The Responsible Company, you mentioned that Yvon Chouinard, Patagonia's founder, sharpened Patagonia's statement of purpose in around 2018. It was a result of being dismayed by the deepening climate crisis and the ineffective response from government and other businesses. Obviously, the government has a role to set regulations, but can you talk about the role businesses might play? And to some degree, why did Yvon change the mission statement?

Stanley: Well, I think there were two reasons. The first is the sense of the environmental crisis intensifying, but not really being recognized. But also, I think because when we got into provisions, we started to understand that we could create a positive effect socially and environmentally. It wasn't just a question of reducing the harm we did, which has been the focus of the apparel company since the original mission statement we created in the 1990s.

So, we simplified the mission statement from build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis. We simplified that to we're in business to save our home planet. I was skeptical at first. I thought, this is highly aspirational language. Yes, that's a value of the company, but how central is that to us? But I think that it was a very grounding thing to do for the employees and for the company as a whole. And what I saw beyond my own skepticism about using this language was I saw the employees embrace it and to really ask themselves, OK, how does this affect my work? How does this affect how I work with my team and the products we produce?

Interviewer: So, it became sort of like a fire in your belly kind of thing?

Stanley: I think the lesson for us, and what I feel very strongly, and I put this in the book, is that businesses do have a really strong role to play. The environmental crisis is deeply entwined with the social crisis and the solutions to both are the same. They tend to be the same thing. And to clean up the planet and to restore the health of communities requires the actions of government and civil society and of business. And the role business can play is that we are the most-nimble force in society. We can deploy capital really efficiently, much more so than the government. We can create enterprises that are self-sustaining. So, you don't go to the government to raise taxes, and you don't go to rich people or foundations to reach into their pockets to support you. So, there are a lot of things that business can do that are really needed. But at the same time, I think the responsibility of businesses is to look at the products you're making, the services we're offering and saying, is this really good for people and the planet? And you can at least make those products responsibly. You can clean up the mess that you create in the court. How are the workers treated in the plantations where it's cultivated? What happens and what are the processes in the factories? Are those factories fired by coal? There are all kinds of things that businesses can investigate how things are made, and we have very deep supply chain, so a lot of companies don't know very much about how their things are made. So that's a long answer to your question, but yes, business has a role to play. It doesn't mean that we don't need a lot of action from governments.

Interviewer: So, to what degree do you think that a business should set a purpose goal and maintain it in perpetuity? Is there ever a reason to augment or even eschew a purpose goal?

Stanley: I think the purpose should be related to the products or services that you're offering. If your social and environmental actions are tangential to your business, I think it's very easy to give up.

This link connects you to the transcript of the entire interview.

This has been the 68th edition of the newsletter - let′s ?make soulless companies a thing of the past this year! The next edition of the Building Corporate Soul newsletter will be in your mailbox on July 21.?