The single biggest problem for HRDs is their inability to influence and shift their CEO towards the right HR agenda for the company. Despite the image most HRDs portray, with a few notable exceptions, they do not tend to have a major impact on the CEO and broader business agenda beyond the mechanics of HR.
The reason for this is simple: the majority of HRDs don’t understand the type of CEO they are dealing with.
My career-long mission has been to work with the world’s top CEOs. This has helped me understand there is not one way to be a CEO in the Western world; there are about six different ways that they do the job.
Each CEO type has a different set of motivations, strengths and challenges. Sometimes a CEO can have two or three different CEO types, but they normally have only one. These types are: the commercial executor, the financial value driver, the corporate entrepreneur, the corporate ambassador, the global missionary and the people champion.
It is fundamental that the HRD understands what type of CEO they have, so they can understand how HR fits into the CEO’s leadership. This determines how much ‘freedom to act’ the HRD is likely to have and whether their role is going to be limited to execution, to education, or being a confidant.
For example, when working with a commercial executor CEO, a HRD will be limited by the question: ‘How does this impact on the bottom line?’ Or with a value driver: ‘How does this impact share price?’ If you work with a global missionary, a corporate ambassador or a people champion, you will probably be left to get on with it.
Knowing the CEO type provides a framework for communicating with him or her. For example, a value-driver CEO likes options and choices. The key way to move and engage them is to talk about repetitional risk and soft failure risks, making sure they are clear on the consequences of failure. The CEO type also helps you understand the ‘pull’ agenda, what the company is likely to expect from you, and also your ‘push agenda’, what will be resisted and what will not be valued.
The six types of CEO
CEO type: Commercial executor
Measure of success: Business metrics
Typical traits: Driving focus to be the best in their industry; relentless focus and attention to detail; interested in performance management
CEO type: Financial value driver
Focus: Shareholder value
Measure of success: EPS
Typical traits: Grasp of key value metrics for the industry; focus on transactions and portfolio disposals; sees HR as a necessary evil
CEO type: Corporate entrepreneur
Focus: Personal mission
Measure of success: Cash
Typical traits: Something to prove; belief in a better way; searching for breakthrough opportunities; the company is their life; sees HR as being mainly hiring and firing
CEO type: Corporate ambassador
Measure of success: Market cap
Typical traits: Global vision for societal impact; operates at the geopolitical level; transforms industries
CEO type: Global missionary
Focus: Corporate potential
Measure of success: Holistic management measures
Typical traits: Personal mission to make a significant difference; corporate mission to make their company great
CEO type: People champion
Focus: People and culture
Measure of success: Engagement
Typical traits: Personable; excellent communicator; warm with strong values; fundamental belief in people
Having courageous conversations
HRDs often talk a big game when in reality they don’t have the impact and influence they’d like. There are several reasons for this, such as not being commercially savvy enough, but the most important is the inability to have more courageous conversations.
To enable these conversations, HRDs need to set up the relationship between themselves and the CEO in the right way. You can think of it a bit like the parent-child model. In that relationship, the parent – or CEO – knows best and has the authority. The child – or HRD – is expected to deliver and not let the parent down.
In an adult-to-adult relationship, there are two peers with mutual respect and trust. Via back-and-forth iterations, they will work out the best solution (although the ultimate decision rests with the CEO).
There are several important but difficult conversations that HRDs should be having with their CEOs. Making decisions to move on an under-performing ExCo colleague for example, dealing with inappropriate behaviour of high performers, raising blind spots in the CEO’s own performance, or standing behind an HR initiative the CEO doesn’t want.
But one of the most important is having the courage to invest
in their own personal development. HRDs often have big budgets and are responsible for developing others, but are afraid to invest in themselves. They can worry about the perception of colleagues and accusations of self-indulgence. Yet many CEOs would welcome it to see an improvement on the HRD’s organisational impact and on the business as a whole.
Steve Tappin is a CEO expert and confidant. He is the host of BBC’s CEO Guru series and author of Secrets of CEOs. He is also one of the personal coaches on HR magazine’s HR in the Boardroom programme, a high level, innovative and exclusive group specifically designed for HR directors from large or complex organisations who seek to have greater impact and deliver greater value to their board, CEO and chairman.