NOW and in the post-pandemic future, chief executive officers (CEOs) must create more competitive business strategies and models. As competition intensifies, the life cycle of business strategy and model gets shorter. As the market shifts, the business must be able to adapt and customize the organization. Enterprises must find a way to renew their organizations every time a seismic shift happens in the market.

CEO challenges

To succeed in business, the CEO must have access to capital, technology, supply chain and talent. With shareholders’ support, CEOs don’t lose sleep over them. Often, what keeps CEOs awake at nights is where and how to get, develop and leverage the talents that he or she needs to jumpstart, grow and sustain the business.

This is the part where I should say that “CEOs should never fear, after all HR is here.” Somehow, I’d like to tiptoe as I proceed, but I can commiserate with some CEOs.

The CEO must ensure that his/ her organization has a talent strategy that can exploit opportunities offered by the organizational playing field. To do this, the chief HR officer (CHRO) must give the CEO an accurate assessment of the organization’s talent capability and bench. In times of disruptions, internal talent sourcing, manager development and succession planning will not be enough support for business growth.

A company that I worked with decided during the strategic planning session to become a global health care company. One of our business strategies was to “invite” a Filipino genius who was working with a global company outside of the Philippines. Once we were successful in “enticing” the person to join us, we did a personalized onboarding, handholding and nurturing to ensure he would hit the ground running within days. Before he had his own laboratory, he first shared my room in the executive suite. In less than six months, the company was ready to saturate the market with his first invention.

Business strategy must be translated into HR strategy and implemented seamlessly. It sounds easy, but in many industries and enterprises, HR has not earned the status of a Player in the Big League. To add salt to the wound, some CEOs aren’t exactly a fan of either the HR function or the HR practitioner. The final nail in the HR coffin is that some HR practitioners don’t have strategic thinking and are content with the traditional administrative role they play, which often makes them famous for doing “menial” jobs.

HR’s Holy Grail?

On the other hand, there are CHROs who seem to have found the “Holy Grail of HR,” as a strategic partner of the CEO, and end up having a seat in the board. The concept got a nudge from Ulrich (1997) in his “four roles of HR” (administrative expert, employee champion, change agent and strategic partner of the CEO). Barney and Wright (1998) reinforced this with their “resource view of the firm” concept. This ushered in an era of a promise that HR practitioners can rise to have a seat in the Board, and “exercise strategic influence over the business.”

However, there is a growing stream of literature suggesting that HR can exercise its influence outside of the boardroom. Torrington and Hall (1996), Armstrong (2000), Kelly and Gennard (2001), Stiles and Taylor (2002), and again Kelly and Gennard (2007) all support the view that “HR practitioners do not need a board position to exercise strategic influence.”

A 2003-2004 interview with 72 board members (30 of whom were HR directors) in 49 organizations showed that “strategic decisionmaking takes place at the executive committee (ExCom) Level and that HR practitioners can exercise strategic influence through informal networks.” (Kelly and Gennard, 2007, p. 108)

A not so recent survey was made with 1,188 HR directors, including 255 who sit in the boards. Over 50 percent of the 255 HR directors in the board “see themselves as strategic business partners.” Four factors seem to differentiate the 255 HR directors from other HR directors who do not sit in the board: 1) more positive about their involvement and influence over business strategy; 2) more positive about the overall performance of the HR function; 3) agree with CEO’s perception about the HR function; and 4) more positive about integrating business and HR strategies.

Sometimes, I would like to think that a seat in the board may not be necessary for HR to exercise strategic influence, or it may have no impact at all on the performance of the HR practitioner, but it has a symbolic significance to HR directors in terms of their perceived role and influence. When I was with a global oil company, my CEO would always tag me along during board meetings. In the minutes, I would see myself in the minutes as “ALSO PRESENT” — i.e., not a member of the board but present during Board meetings. Somehow, I felt elated that my CEO “did not want the board to make a business decision without first hearing about the impact of a particular business decision on the people…”

HR practitioners

The HR function is now recognized as equally important as other business functions — finance, marketing, supply chain/logistics, manufacturing/production, information technology, etc. People are now seen as a most important resource in the business. People can be a source of competitive advantage if an enterprise’s employees have differentiating qualities and are more productive, creative and value-creating than those of the competitors.

Often, the questions in the CEO’s mind are: 1) Does my CHRO truly manage and leverage our human resources well? 2) What role does my CHRO play during strategic planning — venue and logistical arrangements, menu for participants, administrative details, or does he/ she participate in determining appropriate business strategies? 3) Does my CHRO effectively translate business strategies into HR strategies? 4) Is there a vertical fit between business strategy and HR strategy? 5) Is there a horizontal fit between HR strategy and HR programs? 6) Do the HR programs truly improve the numerator (business revenues) and bottom line (ebitda), and our employer brand?

The level of competence of the CHRO directly affects 1) the level of integration between business strategy and the HR functions; 2) the synergy between the CHRO and other functional heads, as well as between the HR group and those of other functional groups; 3) the employees’ perception of the overall effectiveness of the HR programs and employee experience; 4) the CEO’s perception of the CHRO’s performance and that of the HR group; and 5) the CEO’s respect for the overall HR function in the organization.

In HR’s defense, Wharton Professor Peter Cappelli and New York University Professor Anna Tavis, wrote, “Because HR touches every aspect of an organization, its agile transformation may be even more extensive [and more difficult] than the changes in other functions.”

Ernie Cecilia is the chairman of the Human Capital Committee and the Publication Committee of the American Chamber of Commerce of the Philippines (AmCham); chairman of the Employers Confederation of the Philippines’ (ECOP’s) TWG on Labor Policy and Social Issues; and past president of the People Management Association of the Philippines (PMAP). He can be reached at erniececilia@ gmail.com