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| 5 minutes read

When Does Your Organization Need a Chief Human Resources Officer? Sooner Than You Think

Human resource management is one of the most difficult responsibilities to grasp for many midsized enterprises. It is not the mechanics that are the issue (you can outsource the basics until you are ready to bring things in-house). It is the approach that is difficult to grasp. How can you create, develop, and drive a cohesive team that can assist your firm in growing and scaling without breaking the bank? That is the job of the Chief Human Resources Officer (CHRO).

What Exactly Is a Chief Human Resources Officer (CHRO)?

A CHRO is a functional business leader who collaborates with senior peers to define and impact organizational strategy. This professional, also known as a Chief People Officer (CPO) or Chief Talent Officer (CTO), takes a high-level view of your company's objectives. They will then work with you to establish the necessary procedures, systems, and human resources to guarantee that you can meet them.

Some may claim that most organizations can function without a CHRO right away, although, this is generally because one of your other executives steps in. However, as you expand and develop, your skill requirements will become increasingly difficult. Overtime, you will require an HR executive who can take this critical role to the next level. This individual will design employment policies that correspond to regional and industry standards, while developing a dependable system for hiring, training, and managing the people you need to operate a successful firm, in addition to managing your HR department on a day-to-day basis. Most importantly, progressive CHRO experience and expertise are needed in anticipation of growth, not during or after an enterprise scales.

What Does a CHRO Do?

The CHRO is primarily focused on driving business activities that improves the return on investment of what typically is the first or second largest operating expense of a business, the workforce. The essential areas include workforce adaptation, organizational effectiveness, and employee experience. Now, let us take a look at each area of responsibility and how it contributes to these objectives.

1. Offers Strategic Leadership

The CHRO serves as a trusted adviser to the CEO, executive team, and (depending on the organization's size and complexity) the Board. They oversee remaining current on the business's human resource requirements as well as the subtleties of the environment in which the firm works. Also, they identify and express any problems, then collaborate with the company's management to integrate any necessary adjustments throughout the strategic planning process.

2. Establishes a Financially Disciplined Future-Focused Human Resources Function

Employees use technology to stay engaged and productive, which is encouraged by the CHRO.

HR management must be adaptable and competent at managing the ever-changing needs and expectations of your staff. Meanwhile, they must gain a clear grasp of the business's cost challenges and how those pressures might and will change in order to devise suitable measures. In many situations, this means that HR must promote technology that allows certain operations while simultaneously utilizing analytics to give the business the data it requires to make real-time choices.

3. Improves Organizational Capacity and Efficiency

A competent CHRO will be an enterprise change leader capable of assisting a business in identifying and addressing structural issues within its workforce or procedures that are impeding its success. They are also stewards of the organization's culture, collaborating with corporate executives to convey and encourage employees to accept the organization's values.

Organizational design is a common way for accomplishing these objectives. This is a method of identifying problems inside a company's underlying structures or operations in order to improve talent effectiveness and efficiency. In doing so, the CHRO will examine both the activities and behavior of the organization's employees in order to identify the core cause of any issues, such as concerns regarding diversity and inclusion. HR executives may then boost employee engagement and happiness by implementing executive coaching and staff training programs to address such challenges, resulting in a more effective workforce and lower turnover costs.

4. Creates and Oversees the Talent Life Cycle

The CHRO is in charge of your complete talent life cycle. They will devise a plan for establishing the necessary policies, processes, practices, and personnel to handle the following activities:

  • Recruiting New Employees
  • Management of Performance
  • Succession Planning in Learning and Development
  • Leadership Training
  • Compensation and Reward

When Would You Require the Services of a CHRO?

Some argue that midsize companies do not require a human resources strategy and can get by with a professional employer organization (PEO) and some administrative help. However, regardless of sector, company size, or complexity, strategic HR is required if critical initiatives are to be completed. While tactical HR is obviously important for operating a firm on a daily basis, selecting the proper vendors and determining the best tools for staff recruitment and retention are the foundations of your employer brand, and these activities must be undergirded by specialized knowledge and experience.

As a result, the question is not so much "when" you need a CHRO as it is "how" many CHRO hours it will need to execute your strategic plan or realize your investment thesis. After all, just as you would want a CHRO to adjust your HR strategy to your company's budget, I advise you approach this function similarly.

What Does a Chief Human Resources Officer Get Paid?

The average CHRO compensation (base, bonus, and perks), for a small-to-midsized company, ranges from $250K to $480K, depending on the area, sector, and other factors. For many midsized enterprises, this might be prohibitively expensive, if not excessive, when you do not require someone full-time. When this is the case, a fractional CHRO is a viable option. 

A fractional CHRO (also known as a part-time CHRO, outsourced CHRO, or interim CHRO) is an experienced HR executive who performs all of the tasks of a full-time CHRO for a fraction of the cost. They usually work on a project or on an hourly basis. A fractional CHRO's hourly cost ranges between $450 and $750 per hour, with most needing a minimum commitment (for continuous engagements) of 10 hours per month. So, yes, you can receive the strategic HR help and counsel you want without breaking the bank.

How Do You Find the Best CHRO?

A CHRO is a company executive who specializes in human resources. As a result, their education and professional path will most likely demonstrate a wide spectrum of experience, including specialist HR training. Such diversity is required to be a successful and influential CHRO. Look for someone who has experience working with companies at various stages of growth. The ideal applicant will have experience working with senior business executives in complex and even thorny situations. Also, they should have profit and loss responsibilities in their recent experience. Ideally, they will have prior experience in a major transformation, such as a merger or acquisition, business unit spin-off or reorganization, or a large-scale systems integration project.

© Copyright 2023. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.


article, labor strategy, talent & culture, content-team

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