Source: theHRDIRECTOR
Date: October 2006

There are various reports and surveys that state the average length of tenure of a FTSE CEO is now approximately only four years, down from ten years a decade ago. Lynne Hardman, Managing Director at Hays Human Resources, examines some of the main factors that lead to a reshuffle at the top, and how HRDs can become an indispensable member of the senior team.

As more and more HR professionals are reaching the boardroom, increasingly they are becoming aware of how difficult it can be to stay there, particularly if their appointment coincides with that of a new CEO.

The background to the appointment of a new CEO can be varied but frequently, as soon as they are appointed, they set about putting their own stamp on the culture of the business and, inevitably, that means looking at the different internal functions and personnel. In many cases the new HRD appointee is already known to the new CEO, perhaps having worked together previously. Typically a successful HRD will share the values and objectives of the CEO and, when the CEO departs, this strong association is invariably the driving force behind the departure afterwards of the HRD. So it is by no means a coincidence that the average tenure of an
HRD is also around the four year mark. For an existing HRD faced with a new CEO, this represents a real opportunity to show how HR can help them to deliver their objectives.

Ultimately the new CEO needs to gain an early insight into the structure, key people and culture of the organisation. Carmel Millar, interim head of HR for a public sector organisation, has worked for a number of incoming CEOs: “The incoming CEO needs to understand where the key strengths and weaknesses are, they need high level credible advice and management information which will help them to deliver their corporate vision. To make an impact, an HRD needs to be able to engage in informed, meaningful dialogue from the outset about the potential options available to them.”

“an HR director is in a unique position acting as the eyes and ears of the organisation ”

Anne Best, a former HR director for Exel plc (now a division of Deutsche Post World Net), agrees: “HR directors should do everything possible to help the new CEO find their bearings. An HR director is in a unique position; acting as the eyes and ears of the organisation, they are well placed to be a strong confidant for the CEO as they formulate the organisational strategy. The subsequent HR plan needs to be a key lever that will support and underpin the strategic vision of the CEO.”

But of course, a new CEO is not the sole reason for an HR director to change roles. In the past, the HRD was often viewed as one of the most settled of senior corporate positions, but now this is less the case. One of the frequently cited reasons for an HR director’s departure is that of internal barriers, leading to frustrations and a sense of isolation, or a clash of values, influencing the desire for an HRD to move on. Often an HRD is appointed to implement business-critical change yet, when it comes to the execution of the task, they find that beyond the ‘quick wins’, the support and backing promised at interview is simply not there. This is typical where the HR director appointment is a first for an organisation – the company has agreed in principal to employ a head of HR function, but have not truly considered the actual practical support, networks and championing that may be required to help them deliver. If the CEO or senior management team have not embraced the significance of HR at a corporate level, then typically there will be an uphill struggle.

Mike Batcheler, formerly a director of HR and now MD for Sea Change says, “It’s important to understand the CEO’s people agenda. The higher it is, the more likely you will have influence.” For a new HR director, it’s important to ask searching questions, and make sure that not only is there internal commitment to HR but that HR performance indicators fit with overall corporate objectives. “But don’t neglect the quick wins,” says Anne Best. “If you get a number of these under your belt – and these could be quite transactional, such as revising your company car policy – you will be seen to deliver value by your peers. It’s far easier to be credible on the strategic agenda if the fundamental basics work seamlessly.” And according to Millar, “The senior management team need the HR operations to work well. They need recruitment processes to be swift and on time, and for management information to be accurate and timely to facilitate decision making. They also need sound advice when there are problems.”

"to really ensure you are a success and to keep on the CEO’s radar, the HR director has to keep relevant, keep delivering, keep contributing and continue to make sound recommendations"

Similarly, when an HR director is recruited to act as the catalyst for change, particularly where a major cultural shift or organisational restructure is required, once the tangible (and often most painful) elements of the change process are completed, the HRD can often find that their services are no longer  required. Why? The HR director has delivered on the key project milestones and ultimately some organisations are short sighted, believing that the ‘job is done’. In reality, the most significant impact of a good HR strategy tends only to be seen over the longer term. It’s up to the HR director to demonstrate the value they can continue to add, serving to make themselves indispensable to the organisation in the longer term.

Another scenario influencing the exit of an HRD is where the HR function has become marginalised. This could be due to a strategic decision to outsource human resources, resulting in less operational involvement and devolved responsibilities. Alternatively, if there is a reshuffle at the top – for example a change in CEO – the HR director might lose the battle to influence at board level, or HR issues may be removed from the CEO’s agenda, leaving the HR director alienated from strategic decision making. As Carmel Millar points out, “At the senior level, anybody can have the knowledge, but to really ensure you are a success and to keep on the CEO’s radar, the HR director has to keep relevant, keep delivering, keep contributing and continue to make sound recommendations. It can become a horrible reality to be left in the ‘waiting lounge’, but by working hard and staying positive, HR directors can avoid being ostracised.”

STICKING POWER – THE INDISPENSABLE HRD
To stay at the top as a strategically influential HR director requires a combination of consistent high performance, strategic up-skilling and tactical networking/relationship building. Mike Batcheler explains: “By virtue of the profession, you are a business partner and a facilitator. The facilitation comes quite easily, and can be developed through training, but to really gain respect from the team you must demonstrate the value you and your profession can bring. A lot of this is to do with ‘personal power’ and emotional intelligence – self awareness, empathy, the ability to build relationships.”

“cultivate strong relationships and build internal allies”

Of greatest importance is building a good rapport with the CEO. At this level, a similar mindset, values and behaviour with the senior management team is vital for success as is longevity in a role. If the CEO is on side, making changes, implementing processes and policies and getting on with the job will be far easier. They will support an HR director’s decision making, champion them internally and HR will be high on the agenda. Consistently delivering results and improvements, and demonstrating them to the CEO using tangible metrics, will put an HRD in pole position. It is also important to cultivate strong relationships and build internal allies with the rest of the management team. Carmel Millar believes this is critical: “I can’t overstate the importance of building relationships. It’s vital to get out into the business, and get to know all areas of it from top down and bottom up. Networking with peers and their staff in order to gain a complete view of the organisation will mean being able to talk credibly at all levels, and most importantly with the rest of the senior management team.”

“important to demonstrate accountability”

Quite often, the other functional heads are not aware of how the HR function adds value or contributes to the commercial objectives. So, at this senior level, an HR director should be able to give real, factual evidence of their commercial contribution to the company. For example, by talking the language of the FD – providing evidence of the return on investment or savings that projects have made to the bottom line; or to the sales director, demonstrating how recruitment strategies have impacted on sales growth through retention and recruitment programmes. It’s very important to demonstrate accountability; to be prepared to describe in detail how HR has made a significant commercial contribution to the business objectives. Being able to give tangible facts and figures that demonstrate the impact that the HR director role has on the business, will ensure the HR function is viewed as a significant contributor to overall business performance.

It goes without saying that to stay at the top an HR director must demonstrate leadership through active engagement – they must live and breath the policies they are championing; actively support staff internally both at the junior and senior levels so that they have a strong profile throughout the organisation; and they must develop industry links to gain profile externally as well as internally.

“Proactively make contact with peers in similar businesses; most people are generous with their advice, so you can really benefit from building support outside of your own organisation,” says Anne Best. By becoming a regular contributor to industry articles or speaking at seminars and presentations, an HR director’s organisation will recognise their standing within their discipline, whilst enjoying a degree of kudos by association. Its can also be a great PR opportunity for a business. People strategy is now on the agenda of city investors when looking at businesses, so a high profile HRD can be viewed as a tangible commercial asset.

“niche skills will help build a position of power or key person dependency”

To be a successful and long-standing senior or board level HR director does not of course necessitate expertise in every function. However, it is helpful to have spent time in a specialist role, such as organisational development, compensation and benefits, learning and development, or with international responsibilities. These niche skills will help build a position of power or key person dependency – everyone in the organisation will ask the advice of an HR director in their area of expertise, making them a vital member of the senior team. Planning career moves to include a specialist focus, or a range of industry sectors, will give an HRD more depth and breadth, and importantly, greater credibility and clout in the boardroom. So if there is a change at the top, it’s up to the HR director to seize the opportunity and use this change as a platform to accelerate the evolution of the new team, becoming the glue that binds the organisation. By aligning themselves with their peers in the management team, providing information and acting as an a sounding board for the CEO, they will gain respect and become an integral member of the decision making team. And this will ensure that their role remains stimulating, challenging and at the heart of the business – making the HR director an intrinsic part of the CEO’s strategic agenda.