The HR-Leadership Revolution -- Will You Thrive?
By John Schwarz, CEO, Visier
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More than ever before, the business world needs strong HR leaders.
The workforce in the developed world is rapidly aging. New, first-time workers are barely replacing workers who are retiring. Despite increasing automation, there will be a serious shortage of skilled workers everywhere in the next 20 years. At the same time, the world's economic center of gravity is moving to Asia, while labor costs in emerging economies are increasing.
The changing workforce demographics require a more nimble and skilled approach to linking talent and business outcomes. Now, more than ever, business leaders need strategic workforce insight and the ability to model how workforce trends impact revenues and profits -- quickly and accurately.
A February 2015 study -- conducted by Harris Poll on behalf of Visier -- surveyed 301 corporate executives at companies with revenues of $1 billion or more across America and asked about sought-after HR leadership skills. The results are clear: Strong CHROs are crucial to business success. (The Harris Poll survey results can be downloaded at www.visier.com/hr-revolution.)
Successful CHROs are:
* Data-driven, as 80 percent of executives say their company cannot succeed without an assertive, data-driven CHRO who takes a strong stance on talent issues and uses relevant facts to deliver an informed point of view.
* Business-oriented, with 81 percent of executives saying they value business acumen more than technical HR skills when hiring new senior HR talent.
* Performance-focused, as 78 percent of executives say their company cannot succeed without a CHRO who takes on responsibility for contributing directly to business performance.
Informed business executives know that talent has the upper hand in today's market, with hiring, new-job creation and voluntary turnover all at five-year highs.
Leadership and talent- management capabilities have a strong correlation with financial performance, according to the Boston Consulting Group. For example, the organization found that "talent magnets" -- those companies that rated themselves strongest on 20 leadership and talent-management capabilities -- increased their revenues 2.2 times faster, and profits 1.5 times faster, than "talent laggards," or those companies that rated themselves the weakest.
And, according to professional services firm Towers Watson, "effective HR programs are a leading indicator of financial performance."
So when HR works, the business works. And CEOs know that.
CEOs want to think of the CHRO the way they think of the CFO. They want a strategic adviser who can speak the language of the business with hard data. According to our survey, 74 percent of executives agree that their company's HR organization needs to be more data-driven in workforce decision making.
When I was CEO of Business Objects -- a global company that had more than 30,000 customers worldwide prior to its acquisition by SAP -- I always valued the HR executives who could provide an informed point of view on talent issues, and appreciated those opinions that diverged from my own, provided they were based on evidence.
But, unlike Wall Street, HR does not have the tradition of closing the books every quarter, gaining instant access to data -- revenue, profit and earnings per share -- that clearly paints a picture of business outcomes. I have seen that, when the numbers from HR and finance don't match up, most executives tend to side with finance, whether it is warranted or not.
There is an incredible opportunity today for HR leaders to truly transform their organization's impact on the business. With workforce intelligence -- or enabling HR with both workforce analytics and planning technology -- HR can become a data-driven powerhouse that not only aligns with, but also drives, business strategy -- resulting in better business outcomes.