CHROs key to helping firms reduce costs and expand offering

Chief human resources officers are walking a proverbial tightrope, according to research from Korn Ferry. While they must find talent to help meet expectations of growth which have grown by 25% over the last year, they must also address increasing demands to cut costs.

The chief human resources officer (CHRO) has become a particularly important function within the boardroom. Following the pandemic, many of the most pressing issues in the workplace like DE&I, ESG, talent management and retention came firmly into the remit of a CHRO. But in recent years, organisations have increasingly tied financial matters to the human resources function, too.

A new study from Korn Ferry shows that because of these trends, most CHROs are no longer focused on people at all – but are shaping business strategy and leading organisational transformations. Because so much of a firm’s change efforts hinge on talent, 61% of CHROs say their CEO often relies on them for advice on key initiatives, while 60% are driving transformation efforts themselves.

This shift in C-suite priorities is further highlighted by the break-down of how a CHRO now spends their time. Just 15% of their time is now spent on people-related issues, while 22% of the time they work related to managing the HR function. 

In contrast, the majority of their time is now spent on those other areas. A 33% chunk of time is spent on advising other members of the C-suite, while 30% is spent leading company-wide transformation efforts.

To adapt to this new remit, the profile of the average CHRO has also shifted. There is an increasing desire for CHROs with diverse experience – with organisations selecting those with an average of experience across 4.5 organisations, and 3.5 different industries. At the same time, the average age of a CHRO has increased by five years – as they tend to have more time to accrue such a rounded CV.

All of this is proving crucial when it comes to navigating a time of intense business pressure. According to Korn Ferry’s poll, CHROs are expected to help drive growth and market expansion in 69% of cases – but conversely they are expected to help drive cost efficiency efforts in 56% of businesses. To bridge that gap, CHROs are increasingly critical to helping organisations transform their structures. 

Currently, 90% of the world’s most admired companies are said to be evaluating their operating models – with an emphasis on agility and the adoption of AI tools aiming at driving productivity gains, while still cutting costs. And here, CHROs are especially important – as they can help deliver such a transformation from within their traditional remit. When asked which roles they believes HR should play in helping get the most from AI, a 60% majority of CHROs told Korn Ferry that reskilling and upskilling talent should be the first thing on their agendas. Meanwhile, 59% said change management, and 49% said strategic leadership were also important.

Laura Manson-Smith, global leader for organisation strategy consulting at Korn Ferry, commented, “Today’s CHROs aren’t just shaping the talent agenda. They’re helping to shape the entire strategic direction of the organisation. This means having a seat at the strategy table, where they’re influencing decisions that impact everything from corporate culture to the bottom line.”