WHAT IT TAKES TO BECOME A GREAT CEO (OR VP OF HR)!
There are literally hundreds of books written by and about CEO's. Each has a similar list of “their” required competencies for success. However when you compare the behaviors and the competencies that it takes to become a successful CEO with the behaviors actually exhibited by current VPs of HR, a clear pattern emerges. By looking at the variances in the two behavior patterns (between VP’s of HR and CEO’s) it is possible to develop a plan of action for HR leaders that someday want to become corporate leaders.
In the next section I will outline the 10 steps that VPs and other leaders in HR must take in order to both increase their effectiveness as well as to increase their chances of ascending to the CEO level!
THE 10 STEPS FROM VP TO CEO
I. Declaring your intentions to be the CEO
Declaring yourself to be a non-player is the first mistake made by most HR leaders and VPs. In the aggressive world of business it is necessary to state your intentions of becoming a business leader early in your career. Many of the VPs of HR that I know have openly declared that they do NOT aspire to higher positions and that the top VP job is the position of their dreams. Unfortunately by taking yourself out of the running early, you are stereotyping yourself as a "staff person" and a “strictly behind the scenes player”. You can’t argue that “all overhead or staff” jobs are dead-end jobs because the number of CIO’s and VP’s of finance that become CEO’s are too numerous to count.
So what you need to do is in fact the opposite of what most VPs do. You need to declare your desire for P & L responsibility and to become the CEO. Push aside the traditional "catholic guilt" that often accompanies HR departments. Be bold and instead of being modest state that you are in HR “just to develop excellent people management skills” so that you can apply them as an effective line officer and eventually as CEO!
II. Build a well-recognized "HR brand"
Many VPs seem satisfied with the assumption that "great people that are working hard" will automatically be recognized and rewarded. VPs need to learn from the business side of the enterprise that great products seldom succeed on their own merit and that people and functions are no different. They also need a “brand” to succeed.
Image is just as important within an organization as it is externally. Great HR functions start with a focused strategy that includes building a brand name both for the leader of the team and for their function. Building an HR brand requires the use of all of the combined tools of PR, market research, sales and image building.
The first step for a successful VP of HR is to identify what “image” you must have in order to be recognized as a leader within their own corporation. This means assessing which individuals in top leadership positions have a great image and what makes them visible and admired. The next step is to use market research techniques to assess your current image among other senior leaders and managers in general and among their own staff. Successful VPs then use PR and brand building tools to increase their exposure and to improve their image as business leaders among the employees, the managers, the executives, the customers and the board of directors. There are two basic approaches, internal PR and external. The external one is the most effective. Great external image building starts with being “written up” in the leading business and industry publications. Start by speaking to industry groups and by writing articles. Develop an HR program with a catchy name and a few unique features that writers will want to “talk” about. Don’t be modest, it’s good for your image but it’s also good for the firm’s image.
A related part of the branding effort is to build and effectively communicate a "shared vision" among all of the HR staff. Every member of the HR staff must be sending the same consistent, focused message. All HR programs and communications must reinforce the image (HR brand) of what we are and what we are not in HR. Any individuals, programs or initiatives that "cloud or confuse our brand image need to be eliminated. In addition this means that HR must also work to shed any negative "HR cop" and "staff mentality" images that might exist.
III. Financial acumen and metrics that prove that HR programs work
VPs of HR are notorious for calling themselves "business partners" when in fact they often fail to “act” like business people when they refuse to use the language of business (dollars and numbers). CFO’s acts as a strong filter in determining which programs are funded by an organization. They also generally define a firm's success measures. Success is generally measured only in terms and ratios that are found in financial statements i.e. margins, profit, ROI and productivity. Often however HR defines its success in totally different terms such as effort, satisfaction, a balanced scorecard and "we have a program". HR often focuses on the “process” where successful business leaders focus on measuring and improving results and bottom line impacts. The absence of metrics or the use of "soft", internally, focused metrics is the single most consistent differentiator between HR and successful line functions.
HR will never be considered a serious player until it focuses its metrics on the (external) financial impact it has on the business. HR must demonstrate its impact both on customer value and on stockholder value. The financial impacts of great hiring, retention, incentive compensation and rapid learning are easy to demonstrate using dollars and numbers. The impact of great HR on productivity is also easily measured. However by failing to use these types of metrics for each of its HR programs, HR is sending a dual message. First, that it does not understand the language of business and second that it is afraid that its programs have little or no impact, so it avoids business impact measurement at all costs. In addition, when HR does measures its financial impact, it focuses exclusively on costs. If HR is to be strategic, it needs to focus on increasing revenues and profit and not on the cost cutting side.
If VPs of HR are to become CEOs it is essential that they work with the CFO to develop extensive continuous improvement and business impact metrics that are credible in the financial community. The fact that HR results seldom appear in the annual report and that HR does not compare our firm's “people productivity” to that of our direct competitors just helps to confirm the common suspicion that HR is no more than a bit player!
IV. Anticipating and forecasting
CEO's seldom dwell on history. Instead their focus is on looking forward. In direct contrast HR professionals, almost without exception, produce no forecasts or predictions and they issue no warnings to managers about upcoming people problems. CEOs and managers need HR’s help to "see around corners" on people issues. If VPs of HR are to be true leaders they need to monitor and forecast the external business environment so that they can prepare managers for such events as labor shortages, changes in worker expectations, future turnover and labor strife. When HR begins to make forecasts and to predict trends and events it not only shows that it is forward looking but also that it is willing to take a risk and to put its reputation on the line, based on it’s forecast. Effective VPs of HR need to develop "smoke detector" metrics that offer an early warning to managers about upcoming problems. HR can then proactively push information and solutions to them… just in time. Great HR leaders don’t just fight fires; they forecast and prevent them!
V. Focus on building a competitive advantage
CEOs are constantly focused on being No. 1 (or No. 2) in everything they do. Beating (and even crushing) the competitor is essential if you are to dominate in a fast changing business environment. HR, in contrast, focuses itself internally and seldom compares itself directly to a firms external competitors. Only one in a thousand HR departments actually does a function by function competitive analysis in order to assess if “everything “we” do in HR is better than everything” they do” in HR". VP’s need to lead the way by sponsoring competitive intelligence programs and in keeping our “people program” information (that might be used by competitors) confidential. Visionary VPs of HR need to develop a consistent message that everything we do in HR needs to be designed to produce (and maintain) a competitive advantage by having “hard to copy” people programs. HR professionals also need to exhibit a level of "paranoia" and instead of copying or benchmarking others it needs to develop unique leading edge programs in order to continually build on our competitive advantage.
VP’s of HR can send a mixed message when they propose outsourcing major HR functions. By hiring vendors that can do the exact same work for our competitors, HR sends a clear message to top management that either HR is not seeking a competitive advantage or that HR programs, by their very nature, have little competitive impact. Both messages help build the image of a VP that is a cooperator not a fierce competitor!
VI. Forget equity, differentiate and focus on performance
Most VPs of HR that I know seem to have an obsession with equity. This "socialism or social work" mentality is the death knell to an effective HR function. Traditionally HR spends most of its time on "trouble employees" rather than on top performers. It also frequently treats all managers and employees “the same” to avoid the impression of favoritism when they should be treated differently due to their added contribution. This “treat them all the same” approach is prevalent in spite of the mounting evidence that top performers and key managers have a significantly higher impact on the firm's profitability than any average performer does. VP’s that do their market research also recognize the fact that top performers demand different treatment than most workers. And if they don’t get it, they can and likely will leave. A wise VP of HR increases productivity and HR impact by focusing its limited resources and time primarily on the firm’s top performers, key managers, key positions, profitable divisions and on your most impactful people programs.
In a similar light, maintaining a firms productivity requires that HR continually redeploy (shift) its best people and resources from low impact / low return HR programs to high impact/ high return HR programs. This constant redeployment requires a process that continually ranks HR programs by their rate of return. The next step obviously is to simultaneously drop the least effective HR processes and programs and re-invest in programs with a higher ROI. By demonstrating that the VP of HR continually reinvests his/ her resources wisely to meet the changing needs of the business, HR sends the message that it is agile and performance focused.
VII. Taking the lead with technology
In a world of rapid change, nothing sends a clearer message that you are on the leading edge than by being “early adapters” of effective technology. By embracing the e-commerce and the rapid change model HR can not only change its image of being soft on technology but it can also become the leader in doing everything faster, cheaper, better in a 24/7 global economy.
Technology can reduce internal HR costs but it can also impact employee productivity by adding speed and a global capability to the HR equation. If HR is to become strategic, it must be able to act fast on people issues. Faster accurate decisions can only occur when VP’s move to make HR paperless and to provide every manager with desktop access to "expert system” decision tools and people information. These desktop tools will help to give managers more “ownership” of their people decisions. Having a “range” of acceptable answers that are provided to managers make for faster but more effective people decisions that fit the unique needs of their local business area.
VIII. Global thinking
The world of business is shrinking rapidly everyday. Because of the growth of the Internet and e-commerce, companies now need the capacity to do business around the world. Unfortunately most HR functions are U.S. centric. If a VP of HR is ever to become a CEO they must develop a global vision and strategy but still retain the ability to "mass customize" their programs so that "one size fit's one". Because every geographic region is unique, HR programs must be capable of customizing its recruiting, retention, compensation benefits and training so that the best features of the corporation are utilized around the world while at the same time allowing for customization when there is a compelling local need.
Effective HR professionals must also have "global brains" so that they can both learn rapidly and also share information and solutions from (any industry) around the world. World-class VPs of HR can demonstrate that their people programs have increased productivity and also have helped to give us a competitive advantage in every geographic region around the world.
IX. Demonstrated responsiveness and effectiveness within HR
In order to build credibility and to get a seat at the executive table VP’s of HR must not only demonstrate a strategic vision but they must also demonstrate excellent service delivery in the transactions area. Many HR leaders have not succeeded because they "failed to make the trains run on time". Successful VPs of HR must demonstrate their strategic knowledge but they also need to deliver solutions and routine HR “answers” that are the best in the industry. HR must excel in the areas of transactions, customer service and responsiveness as well as in the more strategic areas of HR.
X. Building a performance culture
CEOs are expected to be winners year in and year out. VPs of HR are no different. They are expected to build a culture that emphasizes, measures and rewards performance alone. A performance culture means that every "people program" must focus on increasing the productivity of our employees. HR must develop a "sense of urgency" within every manager and employee. Managers must be measured and handsomely rewarded for excellence in attracting, retaining, developing and increasing the productivity of its workers. This also means HR programs like training, employee relations, recruiting and compensation must shift their focus away from the average and towards top performers. Mixed messages must be eliminated and the focus must shift away from the “average” and toward attracting, retaining and developing top performers. When the press, colleagues, competitors and top management begin describing our culture as " single minded and performance focused" then the VP of HR has succeeded in their mission.
The speed of change is an essential element for any successful corporation in the 21st century. HR has a reputation for changing at the “speed of rock” so the VP must become the "driver of corporate change" and they have to do it at Internet speed. This means changing the “DNA” of HR by retraining some and by replacing others.
VPs of HR don't become CEO's for fairly obvious reasons. All most all staff functions suffer the same fate. For example very few purchasing managers, accountants or facilities people become CEO’s either. The 10 reasons why have been highlighted in this article. Whether you just want to be an effective VP of HR or if someday you want to ascend to the CEO position the steps you need to take are clear. You need to be more aggressive, build your image, focus on metrics and on results that impact the bottom-line. There is no evidence to suggest that CEOs are "born" but in the same light they seldom seem to pass-through the VP of HR position. If you are to be the exception to “that rule “ you need to dramatically change the way you think and act. Even if you don't make it all the way to CEO, you might end up being the most impactful VP of HR in your industry if you follow these 10 steps!