March 2, 2023

TPL Insights: Building Peak-Performance Cultures #160 – How the Right CHRO and C-Suite Mindset Drives Growth and Peak Performance

By Rob Andrews

By Rob Andrews with italicized content from Ellyn Shook and Yusuf Tayob’s report The CHRO as a growth executive published on January 17, 2023 on Accenture’s website, https://www.accenture.com/

Setting Sights on New Growth

According to Accenture’s report, only 5% of global companies are following through on disciplined human capital practices that build peak performance cultures and drive sustainable growth. From 2017 to 2022 the level of macroeconomic, social, geopolitical, climate, consumer and technological disruption increased by 200%. And today, tight labor markets and talent shortages continue beyond the pandemic as skill gaps remain at high levels.

In this environment it is abundantly clear that organizations need to accelerate change—not only to compete but also find new paths to growth. Accenture has identified five key forces of change that are essential to success in the next decade: total enterprise reinvention, talent, sustainability, the metaverse continuum and the ongoing technology revolution. For C-suites looking to forge ahead, these forces are showing the way.

Of these, two are especially essential given today’s challenges:

  1. Adopting a total enterprise reinvention strategy that transforms every part of the business through technology, data and AI, and new ways of working AND
  2. Embracing new opportunities to access and create talent and to unlock people’s potential

Bold leadership is required, and saavy CEOs are stepping up. To speed transformation and growth, they are focused on leveraging the full potential of data, technology and people. In fact, they’ve put it at the very top of their agenda.

It’s the right priority. Accenture research has found that by activating the growth combination of data, technology and people, companies stand to gain a premium of up to 11% on top-line productivity—the ultimate driver of profitability and revenue growth. It’s the human element that makes the critical difference: When companies implement data and tech solutions that fail to put people at the center, the premium reduces to just 4%. That 7% gap in productivity underscores the significant impact that people have as an important source of competitive differentiation and continuous growth.

Yet the reality is that just 5% of large, global organizations are following through. These leading companies sit at the top of their respective industries for placing parallel emphasis on the digital core and talent creation to achieve their business goals. They are able to shape transformation in ways that are people-led.

What Else Makes this 5% So Effective?

The answer lies in the new skills, redefined roles and boundaryless connections taking shape in the C-suite. With unprecedented access to data, enabled by cloud solutions, executives are discovering powerful ways to lead change within the enterprise and beyond.

The Nexus: Chief Human Resources Officers (CHROs). With the skills they bring and the impact they make across all parts of an organization, a new type of CHRO is stepping up to lead their C-suite peers in connecting data, technology and people and cultivating collaboration. Indeed, Accenture has identified how these CHROs, who are central to creating the digital enterprise, are bringing business growth and exceptional human experiences into higher resolution. These skilled and connected “High-Res” CHROs are accelerating continuous reinvention by finding new streams of value in every corner of the organization.

Awareness isn’t Translating into Action

The importance of CHRO impact is gaining attention from top leaders: in fact, 89% of the 570 CEOs they recently surveyed say that the CHRO should have a central role in ensuring long-term profitable growth. But only 45% of those CEOs, by their own admission, are creating the conditions that allow CHROs to lead business growth. And when they combined those findings with results from their survey of 570 CHROs, they found that just 29% of CHROs are playing that role, having both the profile and the conditions they need to act as High-Res CHROs.

Seizing the Opportunity

By cultivating the right skills, connections and conditions, organizations can tap their CHROs to maximize the growth combination of data, technology and people. Through this groundbreaking research, they offer a look at these High-Res CHROs, the strengths they bring to the table and the breakthrough ways they can lead and innovate across an organization.

As Cisco’s Chair and CEO Chuck Robbins puts it: “CHROs have the ability to drive a company’s growth and business outcomes by effectively using people strategy, data insights, and technology to the company’s advantage. When a CHRO is empowered to operate in this way, the result is a culture that benefits both people and profitability.”

How to Spot a High-Res CHRO

The Skills to Lead

Compared to other CHROs, leaders are at a higher level of proficiency across all skills measured in their research. They’re also more likely to be at the very top level of proficiency for six critical skills relative to other CHROs: advanced in systems thinking, financial acumen, leadership, technology and data, strategic talent development, and business acumen.

The combination of financial acumen, business acumen and systems thinking will be particularly important in the future. It positions CHROs to operate as anticipators, driven by data and insights, instead of as reactors. Today’s High-Res CHROs are already 2.3x more likely to be at the top level of proficiency in this combination. As such, this blurs the lines between front and back office, enabling them to seize opportunities even beyond their function.

Accenture’s research indicates that more CHROs will be on the path to developing this enviable skillset, as they are continuously learning, unlearning and reinventing themselves. Through their interviews they found that CHROs globally are already deepening their expertise (honing critical skills like data science and analytics on the job) to meet future business needs.

The Connections that put Those Skills to Work

High-Res CHROs are 4x more likely to have strong relationships of mutual influence across the entire C-suite, starting with the CEO and particularly with the CFO, CTO and COO. They also build networks externally across organizations and industries to influence broader change beyond their companies. The resulting collaborations enable innovation to build competitive advantage.

Through their relationships and data-driven insights, these CHROs strengthen organizational resilience and execute the business strategy. In fact, their interviews highlighted that there is no business strategy without talent strategy. This clear expectation must be set by the CEO, shared across the C-suite and embraced by the board.

CASE IN POINT: FERRERO

The choco-confectionary company Ferrero has an enviable growth story. From successfully expanding into new product categories to rapidly widening its geographic footprint around the world organically and through acquisitions), the company’s strategic decisions have propelled it to reach in 2020/21 a consolidated turnover of 12.7 billion Euro, with an increase of 3.4% compared to the previous year’s turnover of 12.3 billion Euro.

The Ferrero Group also completed key initiatives such as: increasing investment in its iconic brands, strengthening internal R&D activities and, for another consecutive year, investing in improving and expanding its factories, plants and equipment. As part of the Group’s continued technological development strategy, it expanded its production capacity.

Fueled by digital transformation, prioritizing their people and preserving a strong culture, HR has been essential to Ferrero’s innovation and growth. Chief Human Resources and Organization Officer Giuseppe Addezio says that “HR has entered a new age because of digital transformation, which is changing the agenda of companies. It requires reskilling, redesigning processes, changing the organizational model and always taking care of their people throughout.” Ferrero’s integrated cloudbased HR system sits at the heart of change, enhancing the employee experience, streamlining processes and equipping leaders and workers alike with important data to work smarter.

How to support a High-Res CHRO

Profile alone is not enough. Their research shows that even when CHROs have the right skills and connections, 55% lack the conditions to impact business growth. But when they do have an optimal environment, their CEOs are more than twice as likely to say the HR function is exceeding their expectations in terms of discovering business value through the company’s people.

What are the keys to creating these conditions?

First, C-suite Leaders Must Prioritize their People

They recognize talent as key force to drive change and competitive differentiation. This commitment starts with all leaders (not just the CHRO) asking a simple question—Are people Net Better Off working here?—and taking personal accountability for the answer.

Becoming Net Better Off means employees’ fundamental needs are met and they feel: (1) healthy and well (physically, emotionally and financially) (2) connected, with a sense of trust and belonging (3) their work has purpose (4) they have marketable skills to pursue vibrant careers. Meeting these needs unlocks 2/3 of people’s potential at work and offers a revenue boost upwards of 5% even in unstable economic times.

Second, they must Enable Boundaryless Collaboration, Powered by Data

Reinvention can only happen when leaders break free of their silos—not just to find new ways to work together, but to explore new avenues for using data and technology to lead broader change.

To foster an environment in which this is possible, CEOs must position CHROs as central to the priorities, processes and decisions that impact P&L and shape longterm profitable growth. This means involving them in areas outside of the typical HR purview, such as capital allocation, real estate decisions and product innovation, alongside their core remit to access and create talent and unlock people’s potential.

Future success requires reinvention today. It all starts with connecting data, technology and people; but it takes the right skills and environment for those connections to truly matter, both within the company and beyond. Reaching the top 5% requires bold leadership—not only from a High-Res CHRO, but from each member of the C-suite. Every executive must be a growth executive.

I hope Part 1 of this blog post has been helpful. Stay tuned for next week’s post when we will reveal the second half of Accenture’s research, along with their own observations.

Warmest Regards,

Rob