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The Evolving Role of CHROs: Champions in the Boardroom and Beyond

In today's corporate landscape, Chief Human Resource Officers (CHROs) are taking on more significant responsibilities than ever before. A recent report from The Conference Board reveals that nearly 70% of public companies have seen an increase in CHRO engagement with their boards over the past three years. This transformation is largely attributed to various factors, including the ongoing pandemic and changing workforce dynamics.

A Pivotal Shift in the CHRO's Role

The pandemic was more than just a health crisis; it acted as a critical turning point for many organizational roles, particularly that of the CHRO. As companies faced unprecedented challenges, they had to rethink their approaches to workforce management, employee welfare, and organizational resilience. Diana Scott, US Human Capital Center Leader at The Conference Board, states that the combination of issues like aging populations and evolving employee expectations has underscored the necessity for CHROs to be deeply involved in the C-Suite and board discussions.

Engaging with the Board

The report, based on insights from 55 corporate secretaries and interviews with over 30 CHROs, CEOs, and board members, outlines some crucial changes in how CHROs engage with their boards. Key findings include:

• - About 31% of CHROs report being significantly more engaged with their boards, while 38% note moderate increases in engagement levels.
• - A notable rise in the percentage of board directors possessing human capital expertise has been observed, jumping from 10.2% in 2018 to 25.5% in 2024 for Russell 3000 independent directors.
• - CHROs now frequently attend board meetings, with 39% participating in every session.

Expanded Scope and Influence

The evolving role of CHROs involves a wider array of responsibilities that extend beyond traditional human resources functions. Their roles now encompass:

• - Business and financial strategy development
• - Workforce and labor market analysis
• - Operational efficiency initiatives
• - CEO and leadership succession planning
• - Support for mergers and acquisitions

Rita Meyerson, Principal Researcher at The Conference Board, emphasizes that CHROs are poised to influence organizational strategy significantly through their established partnerships with CEOs and boards. By leveraging their expertise in human capital, they can aid in governance risk assessments and long-term talent planning.

Building Influence and Trust

For CHROs to enhance their impact, they must focus on developing trust and a strong presence among board members. This can be achieved through:

• - Cultivating professional credibility and demonstrating business acumen.
• - Engaging in open dialogues with the CEO and board members.
• - Steering important discussions around human capital strategies.

Empowering CHROs

According to the report, it is essential that board directors create a supportive environment for CHROs to thrive. This involves:

• - Establishing a direct relationship between the board and the CHRO.
• - Enhancing the quality of discourse related to human capital strategies during board meetings.
• - Involving CHROs more actively in discussions about executive compensation and succession planning.

Leadership from the CEO is crucial in legitimizing the CHRO's role. By advocating for human capital priorities at the board level, the CEO can help position CHROs as key strategic players within the leadership team.

Avoiding Common Pitfalls

Despite the critical importance of the CHRO role, several factors can undermine their influence. These include:

• - Boards that undervalue the contributions of CHROs and their expertise.
• - Tensions surrounding CEO succession planning.
• - Limited opportunities for CHROs to interact with board members.

Andrew Jones, another Principal Researcher at The Conference Board, notes that for CHROs to maximize their effectiveness in board discussions, there must be clear expectations set by board directors, providing the essential support for constructive workforce risk analysis.

Conclusion

As the corporate landscape continues to evolve, the role of CHROs is set to expand further, enhancing their presence and significance in boardrooms. By building strategic partnerships and demonstrating their value to the organization, CHROs can ensure that employee well-being and human capital remain pivotal components of overall business strategy.