HR director ascending to CEO a more viable reality

India, like many other emerging economies including China, has seen explosive growth in the last few years. Well-established companies have diversified and are increasingly venturing further into unfamiliar and unchartered waters.

This is true not only true of Indian family run companies but also MNCs that have made India a test-bed for new products and services. This hyperactivity is creating both opportunities and challenges for the nation’s business leaders and specifically the CEOs.

Historically, broad macroeconomic trends have dictated which backgrounds were most desired for executives to be promoted to or hired as CEO. For a long time, it was your family background and educational pedigree that determined whether or not you had a shot at the top job.

As the country’s population exploded through the 70’s and 80’s and marketing and distribution dictated a company’s fortunes, the heads of sales and marketing typically became the de facto choice of leader.

In the late 80’s and into the 90’s the emphasis on marketing soon gave way to finance as the focus shifted back to new ways of gaining competitive differentiation to drive profits. As factors like the cost of capital, how soon you could get it, and what the stock market thought of your management team became increasingly important, more and more CFOs moved up to become COO and eventually to CEO.

Today, we are seeing a different approach to finding the ’right’ person to drive organisations into the future, with an accent being placed more on their leadership style and competencies than on what functional stream they come from. Specifically, there is a definite emphasis on leaders with strong ‘people skills’ who can inspire their workforce to new levels of performance during periods of rapid change and even through crisis situations.

At the same time, the human resources function is the new differentiator as the ’hunt’ for talent has become evolved into the ‘war’ for talent not just in India, but globally. Perhaps not surprisingly, more and more HR directors and chief talent officers are being watched and even groomed for the CEO role as the emphasis on good people leaders and aligning talent management strategies with a company’s overall business strategies.

Korn/Ferry International together with the Economist Intelligence Unit conducted a pulse survey of 50 Asia Pacific CEOs across industries. Most respondents listed ‘strong people development skills’ as a key competency that will become more important for the Asia Pacific CEO in the next three years. This was seen as being even more important than the ability to work across cultures or drive change.

And, according to the survey, CEOs in the region are already are spending more time on staff management and development than on engaging with customers or strategic planning. These findings are in line with research that has been done in the past twelve months by several consulting firms globally and reflect the fact that businesses everywhere recognise people as their number one asset.

In this context, many HR directors are working directly with the CEO to make critical hiring decisions ranging from staffing a newly opened manufacturing plant to finding a leader to run a recently acquired company on another continent.

They also participate on strategic committees with the finance and IT teams to develop cost-cutting plans or people integration strategies. This exposure to some of the biggest issues in the company and the CEO’s thought process in handling them bolsters their already solid understanding of how to deal with people, and positions them well to become effective CEOs in the future.

Finally, the HR head’s involvement in driving and enhancing the corporate culture through smart incentive and communications programs helps make the CEO’s ’evangelist’ role easier. Once again, the core personal and interpersonal skills and other competencies such as integrity, flexibility and innovation demanded of the CEO today are already well-honed in the HR function.

HR directors who have been able to embrace their changing roles and enhance their skill sets and have carefully listened the CEO while seated as their right-hand man are within striking distance of the ultimate suite. Although we haven’t frequently seen the HR director ascend to the CEO role yet, it is only a matter of time before the global marketplace, the talent scarcity, and a wave of talent converge to make this a more viable reality.