How HR Can Earn the CEO's Trust

Introduction

HR leaders have heard it all before: CEOs don’t think they are strategic thinkers, and that’s why HR doesn’t deserve a seat at the table with other executives. In fact, recent data indicate that the C-suite believes HR’s inability to anticipate business needs is getting worse.

For example, CEOs report that their top HR professionals aren’t able to use analytics to forecast the company’s employment needs, that they can’t effectively identify new talent pipelines and that they don’t link employee development to business planning. A meager 11 percent rate their HR team’s skills in these areas as good, down from 20 percent three years ago, according to a research report from Development Dimensions International (DDI), The Conference Board and EY.

“While HR leadership should be in an enviable position, in reality it’s losing the race,” the report’s authors wrote. “Their organizations are changing faster than they are, putting them even farther behind.”

The Global Leadership Forecast 2018 is DDI’s eighth such report since 1999, and it found that HR professionals who are succeeding with analytics are 6.3 times more likely to get opportunities for advancement than those who aren’t and 3.6 times more liable to have a strong reputation with senior business leaders. 

“Executives in the C-suite are highly aware of the broad business advantages of making data-driven decisions, and they expect HR to apply the same digital advantage to their talent decisions,” says Evan Sinar, chief scientist at DDI, which surveyed more than 25,000 business leaders and 2,500 HR professionals.

“If HR wants to be seen as a strategic business partner in the C-suite, they need to go beyond just carrying out the business needs of today,” Sinar says. “They need to prove that they are basing their strategy and decisions on solid data, and they need to demonstrate—often using visualization and storytelling techniques—how those decisions are linked to better business results and financial performance.”

To be sure, not all HR professionals buy these results.

“It can be very frustrating for HR when their company’s top executives don’t listen to their concerns, which I know from firsthand experience,” says an Atlanta-based HR director who requested anonymity. “The executives assume our concerns are related to administrative tasks, when in reality they go directly to company strategy on long-term issues like creating talent pipelines, immigration, employee drug use and payroll practices.”

Other HR professionals cite a vicious circle: Because they’re perceived as reactive and not strategic, they aren’t given the resources they need to change that perception. And with shrinking staffs, they say they have no choice but to focus on compliance, compensation, recruiting and other pressing daily concerns.

“If your company’s HR managers are working in the trenches and dealing only with day-to-day employment issues, you’re probably understaffed,” says Cristin Heyns-Bousliman, vice president of HR and general counsel at Blake’s Lotaburger, a regional restaurant chain based in Albuquerque, N.M. “We have 1,700 employees across 75 locations, and I have a team working on the daily issues, which allows me to participate strategically with senior leaders. But many HR departments aren’t resourced that effectively, especially at smaller companies, and those CEOs often leave HR out of strategic planning conversations.”

Anticipators Are Critical

The research divided HR professionals into three categories:

Partners work toward mutual goals with line managers, share information with the business about talent gaps and provide HR solutions.

Reactors set and ensure compliance with policies, respond to business needs, and install basic initiatives to manage talent.

Anticipators use analytics to forecast talent needs, provide insights and solutions to ensure a high-quality supply of talent, and link talent planning to business planning.

Forty-eight percent of top executives say their HR leaders act as business partners, 41 percent see them as reactors, and only 11 percent view their HR chiefs as anticipators, which is the role they want HR to own within their organizations. Among HR professionals asked the same question in the study, 62 percent say they are partners, 21 percent are reactors and 17 percent are anticipators.

“It’s interesting that the anticipator role was rated low by both leaders and HR,” says Richard Wellins, a senior associate at DDI and one of the authors of the study. HR leaders’ self-perception tends to be low historically, he says, but their view of themselves has improved in recent years—more than it has among top company leaders. He wonders whether that professed improvement is accurate.

“HR can get defensive and say they don’t get a seat at the table, but I would ask them two things: When and how do you get involved in the strategic planning process, and how do you compare to other functional areas in regard to leading digitally and leveraging predictive analytics, which are both critical and future-focused?”

If HR isn’t included in the strategic planning process until after business decisions have been made, then top management is saying it doesn’t think HR has the capability to participate, Wellins says.

“While I think some senior HR executives are creating real insights around talent requirements versus future business strategies, many do not,” he says. “There’s a difference between being an HR partner and [being] an anticipator, which has much greater value to the CEO. As an anticipator, HR goes to the C-suite and explains the strategic benefits behind their decisions.”

On the other hand, if you are embracing data analytics, hiring data scientists and otherwise taking a lead in anticipating the company’s future needs, yet still aren’t getting recognition from the top, then you may need to do a better job of tooting HR’s horn.

“Tell stories to the C-suite about how those higher-level analytics your department has embraced have changed your business planning,” Wellins suggests.

Becoming More Strategic

So what does it mean to manage employees strategically using data, digitalization or analytics?

Imagine Alexa-style digital assistants serving as virtual coaches to answer benefits, retirement and paid-time-off queries. Or chatbot-enabled resolution for common employee questions. Perhaps cloud-based services for employees and managers that HR once delivered in person. And leveraging data analytics to project future talent needs.

Executives don’t want to risk putting the wrong person in a position simply because they seemed right during the interview, Sinar says. Instead, they’re looking to HR to provide data that will help predict a person’s likelihood of succeeding in a job.

Another approach is to start testing new technologies and ideas within HR, and then share those results to demonstrate that you’re willing to take business risks.

“Become an effective adopter by watching the trends and being open to test-drive new technologies, including AI [artificial intelligence] and machine learning, which show some real promise for HR data processing and analysis,” says Sharlyn Lauby, SHRM-SCP, president of the ITM Group Inc. in Fort Lauderdale, Fla., and author of The Recruiter’s Handbook (SHRM, 2018). “I don’t think it’s about trying to convince the CEO to view HR differently,” she says. “In my experience, HR needs to deliver. And when they do, then the C-suite will view them differently.”

Of course, not all CEOs are as flexible and enlightened as HR might like them to be.

“CEOs need to ask themselves, ‘Am I being transparent with HR?’ If a CEO doesn’t believe that HR is thinking strategically but doesn’t provide an opportunity for that within the company, then HR can’t change the perception,” Heyns-Bousliman says.

She notes that HR is a direct link to the company’s most valuable assets—its employees. “CEOs who pay attention to that give HR a seat at their table,” she says. “If they don’t, the financial side of the company likely will dominate the discussion and planning, and the company can end up harming its people. However, top executives often leave HR out of these conversations, and their perception becomes reality and a self-fulfilling prophecy.” 

Tony Lee is vice president of editorial at SHRM. Dana Wilkie is an online writer/editor for SHRM who focuses on employee relations.

Here are examples of strategic HR in action...

Lawson Products, Chicago

Power Partners: Michael DeCata, CEO, and Sue Eaglebarger, vice president of human resources

Number of Employees: 1,600

What It Does: Distribute industrial maintenance and repair products

Sue Eaglebarger didn’t need to worry about opening a line of dialogue with her CEO, since she was one of the people who helped integrate him into the Chicago-based company when he came on board as chief executive in 2012. Michael DeCata, meanwhile, needed HR as a partner in his mission to change the culture at Lawson Products to a more data-driven one. 

Lawson has been in business for 65 years, but when DeCata arrived from General Electric (where he’d been for 18 years), he implemented the Lean 6 approach that GE had used to cut waste. It involved managing process, not outputs, and using analytics to make the business operate more efficiently.

Business First

“I think of myself as a businessperson first and an HR person second,” says Eaglebarger, who has been with the company for 28 years. She meets weekly with the entire 11-member operations committee, which is made up of the CEO, CFO, general counsel and all the VPs. She also has monthly one-on-one meetings with DeCata and bimonthly consultations with the finance department, and she is involved in the annual budgeting process and corporate strategy meetings.

 “Unlike years ago, we are seen as a strategic business partner versus a policy enforcer or roadblock,” Eaglebarger says. “Our HR strategy is aligned with the business strategy. We are customer-focused. We deliver services. We provide real business solutions. And yes, we still mitigate risk, a challenging task given the extremely complex and constantly changing regulatory requirements.”

Finding the Ideal HR Leader

It’s about more than knowing the basics of payroll, recruiting and labor law. “I look for coaching skills, including the coaching of senior executive teammates; conflict resolution skills; general business acumen; business strategy skills; and accountability to the financial performance of the company,” DeCata says. Although she was already at Lawson when DeCata arrived, Eaglebarger was just who he was looking for.

By Susan Milligan, a freelance writer based in Washington, D.C.

Photograph by Ashley Hamm

[SHRM members-only HR Q&A: What educational resources should I consider to further my HR career?]

International Foundation for Electoral Systems (IFES), Arlington, Va.

Power Partners: William Sweeney, president and CEO, and Laurette Bennhold-Samaan, vice president of HR

Number of Employees: 189

What It Does: Support citizens’ rights to participate in free and fair elections around the world

HR plays a critical role in every function at the International Foundation for Electoral Systems (IFES)—from the executive team to the staff to the board, according to William Sweeney. The department has been instrumental in cultivating a diverse workforce with more than 20 nationalities and over 40 languages spoken. “However, we are a mission-driven organization, not an HR-driven one,” Sweeney says. “The HR function is not about rules or administration. … It must take a comprehensive, 360-degree perspective.” 

He found someone who has that perspective in Laurette Bennhold-Samaan, who has been at IFES for about a year. 

What the CEO Looks for in HR

“I have learned through experience the importance of HR being a strategic partner, a strong, key player in the organization,” Sweeney says. “I look for my VP of HR to be a leader, an innovator, [and to] have the energy to do the job and an independence that can allow for fairness.” 

Sweeney also wanted someone who would tell him the truth, even when doing so might feel uncomfortable. Bennhold-Samaan was up to the task. “A key quality that I value in our relationship is honesty. It is the only way to have a trusting relationship. We have developed a mutual respect for each other and for our roles in the organization.”

What HR Values in the Top Leader

Openness is also paramount to Bennhold-Samaan. “We have open communication—he always has time for me and listens,” she says. “We strive for clarity on goals and direction, which are then articulated and agreed upon. We have a strong level of trust and respect for one another.”

She knows Sweeney values her role in the organization. “I appreciate that he understands and respects the strategic nature of HR,” Bennhold-Samaan says, and how talent acquisition, retention and development are all connected to the mission—and ultimately to the success of the organization.

—Lisa Frye, a freelance writer based in Arlington, Va.

Photograph Courtesy of International Foundation for Electoral Systems

Maestro Health, Chicago

Power Partners: Rob Butler, CEO, and Sheryl Simmons, chief human resources officer

Number of Employees: 350

What It Does: An "all-in" employee health and benefits company

It’s not surprising that the 350 employees of Maestro Health were unnerved at the news that the employee health and benefits company was being acquired by AXA Group, a Paris-based insurance company. And it could have been a headache for an HR manager tasked with smoothing things over.

But instead of taking a siloed approach, CEO Rob Butler and CHRO Sheryl Simmons held two joint “town meetings” with employees letting them know what was happening and how it would affect them. The acquisition process ended in February of this year. 

The pair are determined to make HR and the C-suite speak as partners. That means Simmons is at strategy meetings and weighs in on the impact that business decisions will have on the staff—as well as what kind of staff will best achieve the company’s business mission.

Communicating with One Voice

“It was the Rob and Sheryl road show,” Simmons says. “We spend time in each location [Chicago headquarters, Charlotte, Detroit and Orlando]. We open the floor for Q&As, and it’s not filtered. It’s what employees need to hear from us as a leadership team,” she says, especially when there are big changes afoot. 

How CEOs Can Cultivate Culture 

“It used to be a good old boys club,” where the attitude executives had toward HR was “I’ll call you as I need you,” Butler says. But he took a different approach when he founded Maestro in 2014. He wanted company culture to be paramount—which meant HR needed to be more involved. “If Sheryl doesn’t know the strategy and she doesn’t know where we’re taking the ship,” company plans can’t move forward, Butler explains. “She has to know before anyone.”

Critical Components

Simmons and Butler agree that two things are fundamental to a strong partnership: constant communication and the ability to vent frustrations openly with each other. “You need to click,” Simmons says. “[CEOs] want the same thing from the CHRO as they do from the rest of the C-suite.”

—Susan Milligan  

Photograph by Andrew Collings

Next Steps Toward Improvement

Here are some tips for how HR leaders can enhance their abilities as anticipators:

• Ensure that HR is well-represented in your company’s strategic planning process.
  

• Step up to greater accountability by providing business leaders with the support and tools they need to bolster engagement and employees’ sense of purpose and growth.
  

• Work on building stronger predictive capabilities on your team.
  

• Consider rotating respected line leaders within and out of the HR function.
  

• Deploy smart technologies to enable leadership effectiveness while freeing up HR professionals’ time to concentrate on the more-value-added tasks their businesses require.