Functional to fundamental: The transformation of the CPO and why it’s time to make room for them at the big table

Chief people officers (or chief human resources officers to some) are having a moment. There has long been a trend of functional (as opposed to operational) management roles being perceived as limited due to their relatively specialised scope.

That is, until such time as this scope comes to occupy the pointy end of companies’ priority lists. In recognising that that time has well and truly arrived for HR leaders, there is an opportunity for corporate Australia to further embrace this ever-expanding function at the senior executive level.

Always a key part of any business, HR, of course, received an unprecedented relevance boost from the COVID-19 pandemic. A global phenomenon, it succeeded in turning longstanding ways of working on their head and significantly altered the employment dynamic in the process.

HR leaders may have thought their time in the corporate driver’s seat would subside in line with an easing of the pandemic and a return to business as usual. Little did they know that what awaited them was a perfect HR storm – productivity issues, a skills shortage, a tight labour market, and an emboldened employee who, aware of all these factors, was arguably demanding more from their employer than ever before.

And then, throw in the increasingly significant roles HR leaders have been asked to assume in major business transformation strategies and initiatives. This is a particularly pertinent development when one considers the key part to be played in managing the AI-related workplace adjustment to come.

All of this speaks to the critical importance of the role of the chief people officer, who is ultimately responsible for shaping a workforce that makes work work – now and into an uncertain future.

Australian executive teams are paying attention to this now more than ever.

An early example of this was HR leader Alex Badenoch’s tenure at Telstra, which saw her ultimately assume the expanded position of “group executive transformation, communications and people” and drive the company’s “agile at scale” workforce management approach.

More recently, Qantas’ appointment of Catherine Walsh as its chief people officer, a brand new role reporting to the group chief executive, Vanessa Hudson, with Ms Hudson’s comments regarding the importance of the role being particularly insightful.

“Several months ago, we announced the chief people officer role to make sure the voice of our people is front and centre on the leadership team … Ultimately, building a stronger culture and better relationships with our people is one of my highest priorities and a shared responsibility across management,” she said.

While the HR leadership function has become more recognised at the executive level in Australia, global businesses have seen chief people officer to chief executive appointments abroad, headlined by Chanel’s appointment of former Unilever chief human resource officer, Leena Nair, to the top job of global chief executive. This begs the question: does this represent another pathway to the prized chief executive role in Australia?

Susan Lloyd-Hurwitz, former Mirvac chief executive and president of Chief Executive Women (an advocacy group), reflected on her own experiences as chief executive in a recent The Australian Financial Review article where she makes the following point:

“I would say 90 per cent of what I did was around people, so why would coming through a human capital and culture function not equip you very well for that?”

Ms Lloyd-Hurwitz also noted that by increasingly tapping functional roles like HR, which have relatively higher female representation, as a source for executive position appointments, companies could help to improve the still-significant gender imbalance at the senior corporate level.

An open mind and a willingness to provide senior executive opportunities are obviously key to a company better harnessing its HR leadership function while also providing access to stretch opportunities. This includes considering whether there are any opportunities for HR leaders to spend time in other parts of the business to round out their skill set. And ensuring they have a support team structure that possesses the range of skills and expertise required to help them respond to the myriad of challenges associated with an expanded role.

Chief people officers are having a moment. They’ve demonstrated their value through one of the most challenging work environments of our present time and the pivotal role they play in an organisation’s success. The question for organisations is: how are you enabling your HR executives to thrive? Because if you’re not giving them a seat at the leadership table, it may only be a matter of time until someone else does.

Gareth Jones is the Mercer Evolve practice leader, and Audrey Lopez is the associate of workforce solutions at Mercer.