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HR's Struggle to Find Successors

Like the cobbler's shoeless children, HR is apparently neglecting succession planning for its own function. A few factors could be in play, experts say, including the changing HR competencies sought by CEOs.

Monday, September 26, 2011
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Despite HR's role as the steward of talent management and development, a recent study suggests that HR leaders are doing a far better job developing CEO and CFO successors internally than their own HR successors.

A recent study of Fortune 500 companies by Patrick Wright, a professor at Cornell University's School of Industrial and Labor Relations and dean of the school's Center for Advanced Human Resource Studies, found that only 36 percent of CHROs were internally groomed, compared to 54 percent of chief financial officers and 65 percent of chief executive officers.

"When I presented on the topic of CHRO succession, I would regularly get asked how the chief HR officer differed from other C-suite jobs," says Wright. "So this year, for the first time, we decided to add questions on CEO and CFO succession to the study."

The findings were reported last month in a blog post on the HR Policy Association website.

Wright says he wasn't surprised by the 36-percent figure, since it was consistent with prior Cornell/CAHRS Chief HR Officer surveys. But he was surprised to see that CFOs and CEOs were having much better success than their HR colleagues.

The apparent neglect by HR leaders of HR succession plans, Wright says, is reminiscent of the tale of the cobbler's children, who went shoeless because the cobbler was so busy making shoes for his customers.

"I find it surprising that the function in charge of leadership development is worse, far worse, at developing its own leaders than finance," Wright says. "It suggests something is seriously wrong with the function."

Wright says he would like to see more HR leaders embrace the attitude of retired General Electric Co. chief HR officer Bill Conaty, who once said he would have felt he had failed in his job if he had retired before developing his own successor.

A few factors could be at play here, experts say.

Wright believes some HR executives may be unwilling to take the risk of giving potential successors the exposure they need to be considered for the top post.

"Some HR leaders, like Eva Sage-Gavin of the Gap, make a great effort to bring ... direct reports into board meetings ... so they can be exposed to the dynamics of what happens at that level," Wright says. "But other HR leaders view that as far too risky, fearing that if that person screws up it would reflect badly on them.

"If you want to develop successors," he says, "I think it's incumbent on you to get your people in front of the board and get them acclimated to the dynamics of what happens in the board meeting."

Susan Meisinger, an author, speaker and consultant who writes HREOnlineTM's HR Leadership column, believes the nature of conversation may be another reason.

HR succession issues are more difficult, Meisinger says, because much of the contact between HR and the CEO touches on confidential topics such as performance and compensation.

That makes it tougher for HR leaders to give potential successors the kind of exposure they need, as opposed to CEO conversations with finance or marketing leaders, which tend to be much more numbers oriented and less sensitive.

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Like Wright, Dave Ulrich, a professor at the University of Michigan's Ross School of Business and a partner at the RBL Group in Provo, Utah, agrees the profession could do a better job developing the next generation of leaders. But he also believes there are good reasons CHROs are not having the same success finding internal talent as their CEO and CFO colleagues.

There's a much wider variance in terms of what's expected of an HR leader than other functions such as finance, Ulrich says.

"As senior business leaders see the changing potential of HR to deliver value, they want to raise the bar on HR," he says. "They want future HR leaders who can do the basics at a world-class level. But they also want HR professionals who can become true strategic partners who can contribute to their business' success."

Nowadays, Ulrich says, "CEOs are looking for more in their HR professionals ... . They want something different from their CHROs."

And with these increased expectations, he says, the pool of candidates is smaller.

In contrast, Ulrich says, the variance for finance is far less, since "we know what's expected of the CFO."

The good news, he says, is that the bar for HR is continuing to be raised, adding that HR leaders should be able to "reduce the variance as expectations become clearer."

In the meantime, other experts say, HR leaders should continue to focus on ways to strengthen their own bench strength.

Wright believes HR leaders need to improve the assessments they're performing on their own talent and put potential successors in situations that shed light on their competencies.

Specifically, Wright says, potential successors should be given experience in two key areas: talent management and executive compensation. "These are kinds of experiences that will broaden them as potential successors, particularly as the HR role is defined today."

 

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