In today's dynamic and rapidly evolving corporate realm, Chief Human Resource Officers (CHROs) are increasingly garnering attention within the leadership sphere. With the constant influx of digital transformation, organizations are swiftly allocating resources towards HR initiatives.

At its core, the CHRO is an executive responsible for prioritizing employee effectiveness above all else. Their duties encompass overseeing employee benefits administration, payroll management, and ensuring compliance with company policies and labor regulations.

However, the role has undergone significant evolution and now stands as one of the most vital executive positions in numerous companies.

What's driving this transformation? Simply put, growth priorities are shifting.

The relentless pace and nature of change in recent years—marked by talent shortages, unconventional hiring patterns, retention challenges, and the globalization-induced need to balance talent demand and supply—have reshaped the function and significance of the CHRO role. Formerly perceived as a fading position slated for replacement by technology and automation, the CHRO role has now emerged as a critical conduit for growth.

According to a recent PwC Pulse Survey, 77% of executives consider the ability to acquire and retain talent as paramount for achieving growth. Furthermore, 62% have indicated improvements in employee compensation through bonuses and cost-of-living adjustments. Despite these findings, studies by McKinsey and the Conference Board suggest that CHROs are still ranked as the eighth or ninth most crucial role within firms.

Why is the Value of CHROs Often Overlooked by Organizations?

Despite human capital consistently being ranked as a top priority by stakeholders, one in ten HR executives feel undervalued in their roles, with nearly half believing that their function is perceived as less critical to the board compared to counterparts in finance.

Let's step back and examine how executives traditionally view the CHRO's role within organizations. A Harvard Business Review study in 2015 revealed that CEOs undervalued the entire HR function, including the CHRO. However, recent disruptions have underscored the importance of CHROs in red ink.

While CHROs are often associated with operational functions, their responsibilities vary across organizations and industries. They primarily focus on addressing workplace demands, encompassing tasks such as onboarding, recruitment, managing employee difficulties, addressing grievances, and ensuring health and safety protocols.

In practice, HR professionals play a strategic role in sustaining organizational vitality. They evaluate hiring practices, compensation, and benefits to remain competitive, provide resources for career development and succession planning, and identify and address areas of concern within the workforce. HR has transitioned from a process-focused role to a strategic function that tackles core business challenges.

Despite the administrative tasks essential for business operations, stakeholders often perceive CHROs as confined to non-essential functions. They are viewed as a cost center rather than a revenue generator and are sometimes relegated to administrative support roles, lacking influence in strategic decision-making. Instead of highlighting the significant value CHROs bring in leveraging human capital to attract and retain talent, executives fail to emphasize their strategic importance.

How are CHROs Addressing these Challenges?

Amidst discussions on digital transformation and future technologies, it's crucial to recognize that people remain fundamental to a company's progress. This realization has elevated the CHRO to a pivotal position in driving growth and secured their seat at the corporate table.

The CHRO's role has transitioned from execution to strategy. With ongoing talent shortages, inflation, and evolving work trends, companies rely on CHROs to devise strategies for attracting and retaining top talent.

Talent acquisition is just one facet of the CHRO's enhanced prominence. They must also stay abreast of evolving trends to appeal to the best candidates. This involves prioritizing employee happiness and motivation, as companies with cultural issues struggle to attract top talent. By identifying and addressing gaps in company culture, CHROs play a vital role in shaping a desirable workplace environment.

In summary, CHROs now have the opportunity to create value across the organization. For example, Moderna's CHRO, Tracey Franklin, expanded her role beyond conventional boundaries, contributing significantly to the company's workforce expansion and its pivotal role in developing a COVID vaccine.

Why are CHROs Critical Decision Makers?

The PwC report underscores the importance of talent acquisition and retention, positioning the CHRO as one of the most influential leaders in the C-suite. The current corporate landscape presents a myriad of challenges, from the great resignation to the impending metaverse, necessitating proactive responses from CHROs.

Addressing these challenges and anticipating future disruptions are imperative for organizational success. As such, CHROs must take center stage in guiding companies through these transformations.