Long reads

What happens when HR makes it to the top

22 Aug 2019 By Peter Crush

It’s still rare for people leaders to make it to the dizzying heights of CEO. So how did these three make it, and are they the start of something big? 

There are, if you know where to look, an array of statistics demonstrating the drastic lack of diversity afflicting CEO roles. For instance, 17 of the people leading FTSE 100 companies are called John – far more, of course, than are women. In the US, Michael or Jeffrey are the equally popular equivalents.

And if you’re on the diminutive side, you can forget the biggest roles. Almost a third of Fortune 500 bosses are at least six foot two in height, compared to less than 4 per cent of the population at large.

To this list of requirements could be added another telling entry: if you aspire to be chief executive, it’s best not to get there from an HR director role. While some business leaders boast direct HR experience at some point in their CV, relatively few enter the corner office directly from the HR function. 

There are exceptions to the rule – three of them can be found profiled on these pages, while former HR leader Nigel Travis became a trailblazer at the turn of the millennium when he became president of Blockbuster and later CEO of Papa John’s and donut giant Dunkin’ Brands (he is now executive chairman). But while HR is increasingly respected inside businesses, is supplying a steady stream of executive board members and is taken seriously by the investment community, old habits die hard.

Recruiter Robert Half says 55 per cent of CEOs in FTSE companies arrived in their role from finance. Operations and marketing are not far behind in the popularity stakes. There are many reasons for this, but one particular sticking point is that the recruitment industry still responsible for much executive sourcing is simply not considering HR. Many headhunters do not have specialist knowledge of the function or may separate HR recruitment from general executive hiring.

“When we’re being briefed to find a new CEO, HR directors don’t come on to our radar,” admits Alison Ryan, chief customer officer at headhunters Exemplia Group. “Often, clients have their own specific requirements – one of which is commonly that they want an existing CEO, because what they really want is track record. If it’s not a CEO, it’s someone who is second in command, and it’s just a fact that means a finance director, COO or CIO.”

Organisations, particularly in the private sector, are either looking for a commercially oriented individual to pursue growth or someone with the financial awareness to slash costs, adds Ryan. “In both cases, HR tends to sit off on its own… It’s not necessarily that I think HR directors can’t do the [CEO] job, but wider stakeholders would consider someone without experience in profit and loss a huge risk. HR is far too remote from the financials of running a business.”

That belief risks perpetuating old tropes about who a CEO ‘should’ be, argues David D’Souza, the CIPD’s membership director. “Headhunters specifically, but maybe society at large, need to ask whether we’ve actually got the right construct for a modern CEO. It still feels like the image of a CEO is someone who needs to be charismatic, possibly risk-taking, assertive and driven – which also brings gender into the equation.

“Yet at the same time, organisations also say they need change management skills, the ability to transform and bring people with them. It’s lazy not to look at the skills HR directors possess.”

The argument from some recruiters is that HR professionals simply don’t aspire to be CEOs. As Louise Chaplin, head of board at search firm Eton Bridge Partners, puts it: “The first question really has to be ‘do HR directors really want it?’ People know they’re not going into front-end commercial roles when they enter HR. The remit of HR is internal in nature. It’s just a feature of the function. Sure, there will be very good commercial HR people, but they still tend to be the voice of the people in the business, not the voice of the front end of the business.”

But while, at a broad level, there may be some truth in this argument, the same could be said of parts of the finance department, which has been a supply chain for executive talent for decades. What Chaplin’s thoughts really speak to is the external perception of HR’s roots as an administrative function rather than a business enabler. 

“There’s still a perception problem in HR generally, around its ability to create clear linkages between the people and the business,” says Dr Matthew Donald, fellow at CPA Australia and author of Leading and Managing Change in the Age of Disruption and Artificial Intelligence. “HR is still seen as either a support function or a custodian of systems that managers then have to apply, even if that may not be wholly true.”

This belief flies in the face of the growing reams of evidence that strong people practices make a dramatic difference to the bottom line – more so than ever because intangible assets (principally, people) account for around 85 per cent of corporate balance sheets. But it undoubtedly affects the confidence of some HR leaders who are in fact better positioned than they might realise for the CEO role.

“Getting to the top can feel like a closed shop, but HR directors need to examine themselves too,” says D’Souza. “My feeling is that it’s less about them not having hunger for the CEO job, and more about releasing their potential ambition. HR directors can be good at understanding boardroom politics, but they can also be less willing to play politics.”

“HR directors that have kept up with their own development should be able to do the top jobs,” adds Richard Crouch, chief operations officer at Southampton City Council. “HR is itself now much more of a relationship management skill.”

Crouch was HR director at Somerset County Council when he moved into his current role, but was until recently Southampton’s interim CEO – a job he says he was asked to apply for permanently, though he didn’t feel it was the right move for him. He admits he wouldn’t have been “brave enough” to apply for a CEO position when he was an HR leader, but having proved himself able in the role he urges others to follow in his footsteps: “I consider myself to be a business generalist with HR expertise, and I think that’s the way round it needs to be to get a look-in at the top table. While it’s hard to present this in a CV, you’ve just got to go out there and get the experience yourself. 

“HR directors shouldn’t be daunted. They should push for the next step up. I did, and I never felt out of my depth, and actually I think my conflict resolution skills were a great asset.”

But for those who still feel a direct move into the top job may be a leap too far, there are other options. Ryan suggests that while HR experience is increasingly relevant for CEOs, the smartest thing HR leaders can do is seek out a COO role that will broaden their operational experience and enable them to position themselves as the chief executive’s go-to ‘fixer’.

Non-executive director roles are similarly effective stepping stones, increasing exposure to the business and building influence. Others will take a CEO position at a radically different type of organisation – perhaps a charity or consultancy – to get direct experience of leadership.

Jeremy Campbell, a former HR leader at HR providers including Ceridian and SD Worx, has just taken on the CEO role at a leadership development company. “What my new employers were interested in was whether I could run and grow a business,” he says. “Fortunately, I’ve always been commercially focused… but the fact I’ve been an HR practitioner helps.”

For Campbell, the question of whether HR directors can become CEOs is a matter of positioning. “Like it or not, the tag of HR director is still one that doesn’t conjure up the image of running the whole business, just the people part within the business. You need to be interested in the broader remit, which means not just contributing to the people part of boardroom conversations but wider issues. Do that, and your credibility to move to managing director or beyond is enhanced.”

And there will always be a place, too, for those who simply don’t want the responsibility of running a business. That doesn’t suggest a lack of ambition, says Andy Cook, former HR director of Gate Gourmet who says he “never had any aspirations” to leadership. Ironically, he has found himself there anyway, as CEO of industrial relations consultancy Marshall-James, but he adds: “I’m technically a CEO, but it means I just do things I don’t particularly enjoy.

“What I will say, though, is that there are generally two types of HR director – those who choose not to do the top role, and there’s nothing wrong with that, and those who feel they are not given the opportunity. Perhaps there should also be a third – those who have the aspiration for it and seek it out themselves.”

In any case, the task of increasing the people profession’s influence at the top level is bigger than just the CEO. “Good businesses are talking strategically about people related issues at every available opportunity,” says D’Souza. “That happens because they have current and former HR professionals in positions of real influence, but also because they have those conversations organically.

“Over time, as senior HR professionals get their voices heard inside organisations, you start to change the conversation for the better.”

More immediately, two things are clear: one is that changing ingrained perceptions and long-standing default routes into leadership will be a slow process. The other is that with groundbreaking HR leaders demonstrating that they are not just capable of becoming CEOs but can take the role in a different direction thanks to their relationship building skills, change will surely happen.

“Creating innovative cultures, having an employee population ready to cope with change, creating organisations that are high-performance oriented – these are all precisely the skillsets HR directors possess in abundance, and which are needed more so now than ever before,” says D’Souza.

Arnold agrees, and points out that the general trend – espoused in the idea of the VUCA acronym, which describes the increasing volatility of our economies – is for people to become ever more fundamental as a driver of organisational differentiation. “The human aspect of work will be more complex, and corporate success will be about explaining this and creating trust. The skills of HR directors should actually be uppermost.”

In the UK, Brexit may stall this process. If it provokes a recession, boards’ impulse is to reach for the cost-cutting hand of the CFO when they look to appoint a new leader. But longer term, no business can stand out from the competition unless it has the best people and a clear strategy for how to use them to create value. And that calls for HR.

“What HR directors really should realise is that they have the potential to bring so much more diversity of experience to the CEO role,” says D’Souza. “They have the skills to make more ethical and better decisions. They increasingly have the data analytics. Now it’s a case of putting themselves forward.

“Businesses have to be fit for purpose – they need HR directors right at the top. Something will have gone very wrong if, in five to 10 years, we don’t see more great HR professionals running organisations.”    

“Being a CEO absorbs your whole life”

Kevin Green (pictured right) was HR director at Royal Mail before becoming CEO of the Recruitment & Employment Confederation, a role he occupied for almost a decade. He now runs What’s Next Consultancy and is a speaker, author and non-executive director.

Why don’t more HR leaders become business leaders?

HR directors and chief people officers have to see themselves as business leaders. At the moment, they see themselves as technical experts and the conscience of the organisation, and I’m not saying that’s not valuable, but principally they are there to make the business successful.

A lot of HR people also like to be the adviser, the power behind the throne. That’s an important role to play, but for me if the profession is going to move on we need more succession planning. Too often, HR leaders aren’t considered [for CEO roles], partly because we manage our careers too narrowly.

People who have aspirations to business leadership often don’t perceive HR as a valuable place to be. We end up with people who are empathetic but we need to ally that to commercial acumen. 

What’s the shift from HR director to CEO really like?

If you think an HR director job is hard, a CEO’s job is a lot harder because, if it fails, you are responsible. HR directors don’t get fired when businesses fail. Being chief executive absorbs most of your life. There is no balance – at the weekend, on holiday, you’re always thinking about it.

What advice would you give someone becoming a CEO for the first time?

You have to think about the capability around you. You’ve got to get the top team right – that’s one of your most important jobs. Analyse what’s actually going on. What’s your offering? How do you compete? What are the external trends that might knock you off course? I’ve always used a coach – a great coach will give you feedback and get you to think things through.

“It’s like going from primary school straight to university”

C-J Green (pictured centre) went from group HR director to CEO of Servest Group, a multinational facilities management business that was eventually acquired by Atalian. She is now an HR, transformation and technology consultant.

What’s the shift from HR director to CEO really like?

It is enormous. I naively believed that because I was fascinated by the whole organisation and not just my department, because I was commercially astute and aware of what was going on in the business, the step wouldn’t be massive. But it’s like going from primary school straight to university. When you move into a CEO role, it’s completely different. It’s like you’ve been wearing blinkers for ages and someone suddenly takes them off. You suddenly can’t deal with the amount of light coming in. It’s quite an extraordinary feeling.

But I always say to people, particularly HR people, don’t be in a desperate hurry to be the chief executive because, if you want to shape and change things, you have more opportunity to do that when you are the people person sat next to the CEO.

Did you present yourself differently when you became CEO?

No, but I thought about it. In my entire time as a people professional I had been quite noisy about authenticity and we had programmes around the idea that you can be ‘you’ at work. I think I was ever-conscious of the fact that I was the voice who supported people and said they could be themselves at work, and I consciously didn’t suddenly want to not be C-J any more.

Was anyone surprised you became CEO?

Probably everyone, but that’s fine. There were more people outside the industry who’d say ‘wow, an HR person making it to the top’. Until they said that, I hadn’t thought of it like that. I didn’t anticipate people would think not only was I a girl, I was also from HR. But I wasn’t overly bothered. You can’t be distracted by that stuff.

Why aren’t more HR leaders making the move?

Because of the commercial skillset. There is a big learning curve to go through but it becomes a self-fulfilling prophecy. I’ve not come across many seasoned HR people who can’t take on those skills – it’s just exposure. Just because you’re not from a numbers background doesn’t mean you can’t count. 

Also, people professionals spend a lot of time networking with their own profession, but how long do we spend with people who are different from us? You tend to find they gravitate towards each other and are quite inward focused. 

Will more people follow in your footsteps?

I hope so. I’m not saying we’re going to have waves over the next few years, but we will see more of it. We have to admit that the profession is heavily dominated by women and there are greater expectations to look around for female leadership, and we will look to the people profession and see they have some high-calibre female leaders.

“You have to be able to tell a compelling story”

John Evans (pictured left) is a former HR leader who is now interim CEO of Edinburgh-based charity Hearts & Minds.

What’s the biggest difference between HR leadership and business leadership?

When you’re in a functional role, you’re the champion and defender of that function. You are focused on it and rightly so. A CEO has multiple considerations and has to be able to step back and take that wider view. 

As an HR director, as long as you can connect with people and champion the culture, you can work almost anywhere. But as a CEO, you lean more towards the strategy and values because you’re externally facing – if you can’t tell a compelling story, you will struggle to engage external stakeholders.

Why haven’t more people made the move previously?

Traditionally, organisations have always looked at the CFO route, and increasingly to chief technology officers or chief digital officers. Marketing directors were in vogue for a while. But I strongly suspect there’s a gender issue in there as well. I could give you a list of phenomenally successful female HR directors who would make brilliant CEOs but haven’t done it. 

What advice would you give an HR leader who wants to become CEO?

Get a breadth of experience. Talk to the marketing director or the CFO, for example, and join in their meetings. Build your technical skills around finance, digital and markets. Talk to headhunters about what they look for. Make sure your physical and mental fitness is 100 per cent. Do check-ins with the people around you – they can tell you how you’re doing. 

But also challenge yourself about whether it’s a job you really want to do. If you’re chasing the job title, that’s the wrong approach.

And when you get there, you have to be absolutely on top of your game. How you fill any gaps in your capability is really important. Have your plan for the first 100 days – and agree with your chair on what good looks like.

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