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Tips for Building the CHRO Pipeline

Tuesday, July 1, 2008
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Through the Center for Advanced Human Resource Studies in the School of ILR at Cornell University, I have been researching the CHRO role for the past three years, interviewing more than 50 CHROs and CEOs.

Based on this research and conversations with a number of CHROs, here are some of the tips I have identified for building the CHRO talent pipeline.

Identify the pool of potential successors early, and constantly replenish it.

Having someone ready does not begin by looking at the direct reports that exist two years before your retirement. Start at the entry level and try to identify those who are demonstrating the potential to sit in your seat 15 to 20 years from now.

For instance, I remember Randy MacDonald of IBM telling me about a 25-year-old in his organization that could sit in his seat someday. He was not tagging him as the successor, but identifying him as someone who might succeed his successor's successor. He was already beginning to develop that person with that goal in mind.

Send them to both inside and outside development programs.

While it may be true that 80 percent or more of what people actually learn comes on the job, where they get sent tells them how valued they are. Someone who is rotated through a number of assignments, but never sent to a formal training program does not believe they are being invested in, no matter how hard you try to convince them.

Shell identified different "inflection" points in an HR career, and then developed internal programs to help high potential HR professionals to effectively cross those points.

In addition, sending them to outside programs (e.g., University of Michigan, Cornell University, University of Southern California) will signal the value the firm places on them and give them an external network of similar high potentials at other organizations. 

It also says, "we trust you enough to act in our combined best interest, not just your own," which can be a critical retention message.

Actively manage their careers.

Those who spend their entire careers in specialist roles will never gain a deep enough understanding of how the business works. Those who spend their careers as generalists will never develop deep enough functional expertise. A CHRO needs both, and so potential successors need to be moved through a variety of roles to help them build functional expertise and business knowledge.

This kind of career management should be a constant process of moving into different kinds of roles over the long term. Taking an HR executive who has been in specialist roles for 20 years and suddenly putting them in a generalist role in the last year before succession (or vice versa) does not provide the breadth and depth of experience that will be required by future CHROs.

On the specialist side, at a minimum, future CHROs need depth of knowledge of talent and executive compensation, so rotations through these roles is critical. Credibility to lead all of HR often means being seen as having been successful in both functional and business-partner roles.

Get them out of HR?

Maybe ... I have asked a number of CHROs how important it is that high potential HR people spend some time working somewhere in the business other than HR. Some of them came up through the line and/or worked on line or other staff jobs, while others spent their entire careers in HR.

The consensus across both groups seems to be that it is beneficial, but not necessary. However, they also agree that if it is to happen, it has to happen early in their careers.

Bill Conaty, retired senior vice president of HR at GE says when they hire into their leadership-rotation program, at least one of the four rotations will be outside of HR, and most often in audit, as a way to help them learn how the business makes money.

John Murabito, executive vice president of HR for CIGNA, ran marketing in a previous role and said that while that role did not really increase his knowledge of the business, it did later provide him with more credibility in the eyes of other business leaders.

Get them international exposure.

Given today's increasingly global market, future CHROs need to have a much more global perspective than their predecessors.

This is best achieved by being exposed to a number of other cultures, regulatory systems, and norms for doing business. While long term (e.g., two to three year) expatriate assignments are good, they (a) tend to expose the individual deeply, but to only one situation, and (b) often risk the individual losing some touch with the main office.

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Special projects consisting of one- to three-month assignments generally can provide a deep enough experience for an individual to learn about that part of the world, but will not require expatriate pay nor as much inconvenience for family members (especially if scheduled over summers).

An individual who has three to five such assignments over a five to 10 year period will have a much broader experience base and deeper appreciation for how cultural and institutional differences need to be accounted for when running a global HR organization.

Get them out of their comfort zones.

As potential successors get closer and closer to the CHRO role, they need to be pushed out of roles in which they feel comfortable. No matter what the preparation, when one steps into the CHRO role, it is different from any role they have ever faced.

You need to see how they react when faced with situations for which they are not perfectly prepared. If they cannot adapt now, they certainly will not be able to adapt in the top seat.

IBM's MacDonald's idea of "double-hatting" his direct reports (to have both functional and business responsibilities) puts them in a situation for which they are not prepared. In addition, it prepares them for the dual responsibilities that the CHRO has for both the business and the function.

Get them in front of the CEO and the board of directors.

Because they will be involved in the decision, they need to have a chance to evaluate the potential successors. More importantly, however, our research suggests that the part of the job CHROs felt least prepared for was dealing with the board of directors.

With the new requirements of Sarbanes-Oxley and SEC executive-compensation-disclosure rules, boards are expecting more from the CHRO, both in expertise and in -- as Eva Sage-Gavin of Gap likes to say -- "showing up."

The more potential successors can see how to "show up" by presenting not just information, but also asserting a point of view, the more easily they will be able to transition into the role. 

Patrick M. Wright is the William J. Conaty GE Professor of Strategic Human Resources and Director of the Center for Advanced Human Resource Studies in the School of ILR, Cornell University.

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