by Jessica Yuen
Three years ago, Harvard Business Review’s Summer 2015 issue’s cover title was “It’s time to blow up HR” with a main article on “Rethinking Human Resources.” In the same year, former Google People Ops leader Laszlo Bock published his book Work Rules. These ignited a discussion about transforming the HR function. Indeed, there has been rethinking, especially at the top — even the job title of Chief HR Officer (CHRO) has been rethought, with “Chief People Officer” (CPO) a popular choice to emphasize the focus on people instead of resources, and some companies selecting alternatives like AirBnB’s title “Chief Employee Experience Officer” that further emphasizes an employee-centric focus.
To better understand what’s changed about the role in the last three years (in addition to the title), I spoke with those at the heart of the action: top talent search firms who place People leaders at fast-growth private companies. At the crux of their jobs, Scott Kehoe at Launch Search Partners, Emily Lewis-LaMonica at True Search, and John Anderson at Allegis Partners, work with CEOs and executives to define their ideal People leaders.
A new strategic leader
Whether it’s new employment models (remote work, gig economy), HR tech and analytics, diversity and inclusion, career development, or something else, evolving trends in the HR landscape are demanding a new, more strategic (and less back office) approach to HR.
While previous requirements still exist, this role is now primarily described as a strategic one, reporting directly to the CEO with a seat at the executive table. In fact, Kehoe notes that when seeking the best candidates, the role has to report directly to the CEO. No longer is it a tactical back office function but more and more, search firms are being asked to find People leaders who can be business partners and key decision makers in company wide strategy and operations. Anderson reflected, “CEOs are looking for business generalists (vs previously HR generalists) — someone who is a varsity player on the team and can lead the team in a strategic way, someone who will lend their voice and expertise to other functions. It’s a “Don’t stay in your lane” role now.”
People leaders are expected to understand the company strategy and connect it to talent strategy. “If your next frontier is say, Natural Language Processing,” explains Lewis-LaMonica, “then your CPO is helping the leadership think through how that impacts the company’s approach to recruiting, onboarding, developing, incentivizing, and retaining NLP talent, and then start to prepare them to do so.”
Companies are now targeting candidates with business expertise from outside HR. Ten years ago, Sheryl Sandberg hired marketing leader Lori Goler at Facebook to lead their People function. Lori’s successful journey led other companies to select People leaders from outside the traditional pipeline including Jacqueline Reses at Square whose background is in Corporate Development + Investing, Robby Kwok at Slack from Corporate & Business Development, and Eileen Naughton at Google from Sales. In Anderson’s article, “The Chief People Officer as the New Business Executive”, he outlines 7 key qualities of CPOs — business acumen tops his list. In fact, Anderson, Kehoe, and Lewis-LaMonica all cited business acumen as the key differentiator for a CPO candidate today.
Supply and demand under pressure
In the last year, the market for CPOs has shifted immensely, with demand vastly outpacing the supply of available, qualified leaders. Search firms are oversubscribed, and are responding to this market in different ways. Kehoe has had to turn away more business in the last 6 months than in the past 3.5 years, while executive search firm Daversa Partners, recently increased headcount by 25%, expanding their team to over 100. What’s causing this jump?
On the demand side:
On the supply side:
What is the effect?
Besides making it harder to fill these top spots, this supply and demand pressure on the market is having a few effects:
It’s a candidate’s market. Given the small pool of talent, it’s a candidate’s market and those with the ideal profile are getting flooded. One HR executive who recently left his last role counted 17 active conversations with interested companies, and hasn’t even started to search for a job. In his words, “I thought I’d have to put in at least a little effort!” Kehoe estimates that there are at least 35 active searches for People function leaders for growth companies in San Francisco alone.
Salaries are going up, but not as much as you’d expect. For top People leaders, companies are putting the dollars behind offers, matching what other executives are making — signaling that this top job is being valued on par with other leaders. However, salary survey data does not yet reflect these packages, and current salary data shows CPO increases have not kept pace with other executive increases; as it stands, the CPO continues to be the lowest paid executive.
Great expectations are leading to misalignment.
The expectation is that a CPO will solve all people challenges (spoiler: all company issues are people issues), so the bar is often not only lofty, but unrealistically lofty, for one person. Any company that has scaled their culture well knows that it is not the responsibility of one person, but a collective effort of every single employee. The expectation for a CPO needs to be reframed to focus on what’s realistic for one person to achieve within the context of the team and budget. If not, the People leader ends up busy with tactical issues, and strategy is deprioritized. The consequence? The CEO isn’t getting the value from their senior leader, and the senior leader is dissatisfied because they anticipated a strategic role.
While interviews are the time to put the company’s best foot forward, it’s important to be as open with a CPO candidate as possible because when they start full-time, the truth quickly reveals itself. One CPO confided, “The same executive who said in interviews that they desperately wanted change, on Day 1 was demanding ‘don’t change anything’. I felt like I joined a different company that the one I interviewed with.”
Advice for CEOs
The goal should be to set up your future CPO for success. To the CEOs who are thinking about hiring a CPO, start to prepare. It will take time to find your perfect People leader — CPO searches typically take 90 days, though with the current market, it is trending toward 120–150 days. These time estimates are assuming you can clearly articulate what you need, align your executive team on those needs, and are open to considering different profiles. Kehoe shares 10 questions that can help CEOs articulate their needs:
While prepping, don’t wait to take action. Anderson noted, “I recently worked with a startup that needed to quickly grow its team. Rather than hire employees who would report to managers who had no previous management experience, or training, the leadership team paused hiring until they were able to put their prospective managers through leadership training. It seemed crazy in the midst of massive growth, but strategically this investment in their leaders was critical to their success and culture, and they didn’t wait for a CPO to invest in leadership development.”
When set up for success, CPO’s can have enormous impact. When Anna Binder joined Asana in 2016, it was already a coveted culture (recognized by Glassdoor, Top Places to Work, and Entrepreneur magazine). Binder not only continued Asana’s awards streak, but also scaled Asana’s incredible culture through initiatives like expanding their leadership program for all staff and identifying metrics to track early on so they’d have the data when they needed it. Before hiring a CPO, Asana’s co-founders had articulated company values, invested in scaling recruiting, set-up amazing company benefits, and hired a top Head of Diversity and Inclusion. By investing early and often, Asana was able to attract and hire their ideal People leader.
At the end of the day, the real secret is to always prioritize investing time, effort, and resources into attracting great talent, developing your employees and defining your culture — CPO or not. While rethinking HR has moved the needle, the next focus should be to reinvest in HR.
Jessica Yuen is the Chief People Officer at Couchbase. Previously, she was Head of People at Gusto.
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Originally published at medium.com