Power to the people managers: We need more CEOs well versed in HR - Sunday Times

Every business is a people business, no matter its product or service, so why are human resources chiefs constantly overlooked in succession plans?

I’m not ashamed to admit that when I launched HomeServe, I thought of the human resources department in rudimentary terms: helping back-office functions, focusing on the administrative side and sorting out compensation and benefits, while also ensuring the company found the right new recruits, retained the best, and neatly settled exits and exit interviews. Their influence on the direction of the business was minimal and they tended to report to senior executives.

Even though they were essential to the company’s success, I was more likely to trust the strategic judgement of my fellow finance executives or marketeers. My successor, I surmised, would be one of them and not an HR director.

Today, my mindset is completely different. Experience has beaten that blinkered prejudice out of me, even if I still see it among other chief executives and chairmen. HR directors, chief people officers, whatever their title, should be embedded across an organisation and — equipped with the right skills — can make perfectly good candidates for the top job. After all, they help to develop a company as much as anyone and have valuable insights lacked or underappreciated by other executives.

And yet they still lack clout when it comes to succession plans. A recent survey of FTSE 100 chief executives showed that 57 have a qualification in business, economics or finance, 65 achieved the top job having been either a divisional director, chief financial officer or chief operating officer, and only six were in “other” C-suite roles such as HR.

Every business is a people business, no matter its product or service, so you want the very best people-people at the summit — those who know how to strengthen organisations with positive, purposeful cultures, a clear identity and values that drive the overall strategy. Leaders need to shape and transform a company in a sustainable way by influencing and empowering people, getting the best out of them during periods of uncertainty and when hybrid working is a norm.

Much of this is down to a great HR team that knows how to develop staff consistently, improve team dynamics, motivate people and bring them together around an agreed agenda. Not to mention having an uncanny knack of seeing around corners to ensure issues never get out of hand.

Some lazily label these emotional competencies as “soft” skills. For me, they are higher-level leadership abilities and strategy-implementation skills that improve productivity across the business, just as effectively as anyone working in a financial role. Sometimes I wonder if that word — soft — works against people whose greatest skills are in helping people to achieve their ambitions through empathy, encouragement and an arm around the shoulder, rather than a kick up the backside. Soft implies something that’s not connected to hard profit, growth and operational success, and yet it’s essential.

Looking back, I think that if I’d had a more people-focused attitude, and spent even more time walking the floors of our call centres and being in the field with our engineers, I would have been a more successful chief executive. That’s how you pick up real nuggets of learning that help to steer and strengthen the direction of a business.

However, that doesn’t mean career HRs should automatically be considered for the top job. They need experience at the commercial cutting-edge of business, developing broader managerial know-how, technical and financial expertise and profit-and-loss responsibilities. To reach the pinnacle, HR professionals should be encouraged to expand their remits to include either operations, marketing or sales, so that they have some ownership of the revenue line within their roles.

That’s why people-focused directors, if they want to grasp the top job, have to get out of their comfort zones and adopt new skills and disciplines. Mary Barra was vice-president for global HR at General Motors before rising through the ranks, in areas such as product development, to become chief executive of GM. Roisin Currie was people director at both Asda and Greggs before becoming the latter’s chief executive after adding retail director to her responsibilities.

Natasha Adams was Tesco’s chief people officer before becoming the Irish operation’s boss. And Leena Nair ran Unilever’s HR operation before being poached to join Chanel as its chief executive.

There is a noticeable knock-on effect here. Perhaps if more HR executives — very often women — were given the right cross-business experience, the gender ratios of FTSE bosses might be a little less imbalanced.

Equally, if your succession plan is pointing towards a superstar chief financial officer, maybe he or she would benefit from a stint in HR to develop people skills and learn what it takes to create a happy workplace. I sometimes wonder if the reason why some “beancounters” never quite cut it in the top job is that, no matter how experienced they are with revenues, they are not great at leading teams, valuing individual contributions, delegating effectively, demonstrating the importance of collaboration, or maximising output through constant communications and rigorous performance management. The best HR leaders are over-burdened with such qualities.

I’m a marketeer myself but I appreciate the importance of data, detail and having a firm grip on the numbers. So I’m not saying that people with such a background don’t make great chief executives. But, in the end, it’s people who deliver products and services for customers and people who inspire greater growth. It’s why I’m a firm believer in giving more power to the people managers.

Richard Harpin is founder and chairman of HomeServe and Growth Partner, and owner of Business Leader