The Chief Human Resource Officer (CHRO) is new to many people—it is a corporate officer who oversees all human resource management practice and operation for an organization. The appearance of the term CHRO, to some extent, is an evidence that human resource management function has been elevated over the last 20 years (in China, it is over the last 10 years) in many organizations, from mainly administrative responsibilities to more strategic level. The expectations of HR leaders in China are very high, given that this region is leading growth and innovation and China is a market with increasing velocity.
The CHRO needs to understand a company’s business model—the variations of models can well define the differences in human resources management and practices. For example, there needs to be different staffing and talent management practices for a high-margin vs. a low-margin business. Trying to use the same approach to dissimilar business models will lead to business failure and cause a CHRO embarrassment. The business and strategic acumen form the credibility for CHROs to be a valuable member of the senior executive team in making critical business decisions.
The CHRO role is harder to fill than ever in China. The high-velocity environment and extremely competitive talent market make the CHRO role challenging. CHROs in China need to give a lot of attention to building HR infrastructures from scratch to achieve efficient day-to-day operations; at the same time, Chinese CHROs cannot lose focus on strategic talent management and development in order to ensure business growth. What makes it more difficult is that a lot of CHROs find their teams lean, and there are not enough capable team members who can share the responsibilities. Some companies are creative in addressing this challenge. For example, at L’Oréal, 40 percent of the HR leadership roles come from business functions. Volvo has a dual structure with a Swedish and a local Chinese CHRO, and this has enabled both CHROs to scale up quickly. Of course, some of the solutions may be phased out over time as the confidence and experience of the local team grow, but it is important that a CHRO builds and develops his/her own next generation of HR leaders. A CHRO needs to become the role model for the entire company in the area of talent management, development and succession.
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Trust is an essential element for CHROs in China, who need to have informed courage to know when to share what information with whom and how. They have to apply good judgment on what is escalated and communicated by understanding what is good for the company. For example, it is important for Chinese CHROs to help global headquarters be aware of what is happening on the ground. At the same time, they have to know how to drip feed effectively to empower local decision making because speed is vital for execution. The traditional way of reporting can be frustrating because by the time an executive gets everything together to present to headquarters, things will have changed. In this area, multinational companies are lagging behind Chinese state-owned enterprises and private companies because their headquarters are in China, and they can move faster. Wise CHROs in China know how to build trust with the head office and, simultaneously, how to empower local decision making.
The CHRO is the keeper of an organization’s culture that attracts, trains and empowers talent. Knowledge of a company’s business model and products plays a critical role in building corporate culture. For example, Colgate-Palmolive is focused on a global culture and process to better serve its global customers, while Prudential reflects its origins with a more local and decentralized approach. Customers do define, to some extent, how a company should build its culture and process. For a product like toothpaste, there is not much variation in customer needs across regions so keeping a global standard is important. Whereas for an insurance company, customer characteristics vary a lot from country to country, and it is essential to provide truly individualized products to meet vastly different needs—in this situation, having a decentralized culture that allows the business to better reach the local market. By having this understanding, a CHRO can then determine whether he/ she wants to have standard or tailored HR practices in place.
CHROs make important contributions to business success. Human resources management as a discipline is still young in China and Asia but is developing fast. Excitingly, the continued vibrancy suggests that there is more positive development to come. There is no reason why China cannot bypass some traditional HR thinking and establish best practices worldwide. Of course, critical thinking and innovation will play a large part in creating a competitive edge.
Adela Yang oversees the Leadership & Succession practice of Russell Reynolds Associates in Greater China. Based in Shanghai, Adela’s expertise as an industrial/organizational psychologist is focused on leadership and key talent succession, management, and development. She advises organizations across industries to identify and develop the next wave of top leadership talent to achieve strategic, sustainable results.
Many of the insights and opinions presented in this paper originally appeared in “Delivering Global Talent in a High-Velocity World: What CEOs Look for in a CHRO” by James Bagley, global leader of Russell Reynolds Associates’ human resources practice, and reprinted by permission of the publisher, John Wiley & Sons, Inc., from The Chief HR Officer: Defining the New Role of Human Resource Leaders, by Patrick M. Wright, John Boudreau, David Pace, Libby Sartain, Paul McKinnon, and Richard Antoine.
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