CHROs in the Boardroom: What’s Trending, What’s Next?

Steve Odland: Welcome to C-Suite Perspectives, a signature series by The Conference Board. I'm Steve Odland from The Conference Board and the host of this podcast series. And in today's discussion. We're going to talk about the evolving role of the chief human resources officer, the CHRO, and how they're going beyond traditional, transactional HR stuff to become really critical players in corporate governance and in the boardroom. 

Joining me today is Dr. Rita Meyerson, principal researcher in our Human Capital Center at The Conference Board, and Dr. Andrew Jones, a principal researcher in the ESG Center of The Conference Board. Welcome to both of you.  

Andrew Jones: Thanks so much for having us, Steve. Great to be here.  

Rita Meyerson: Thank you.  

Steve Odland: All right, so Dr. Meyerson, we need to start with you. The expert in human capital, all things. Let's start with the CHRO. What the heck is a CHRO?  

Rita Meyerson: The CHRO is probably the most dynamic role within the C-Suite and has changed dramatically in the last, let's say, several decades. We can talk about how they have been traditionally responsible for attraction and retention of talent. And in the last several decades, we've seen the CHRO, or the HR function, move from execution of HR operations to a more strategic partner and what we call in our research to an enterprise leader. But let me break that down for a minute. So transactions includes talent acquisition, compensation, performance management, learning and development.  

Steve Odland: Oh, so HR stuff. 

Rita Meyerson: Yes, HR stuff, but we've seen in the last 20 years a movement towards strategic talent partner. Sowe've seen data and insights leveraged to enhance talent-related policies and programs, so supporting culture and employee engagement, including DEI and wellbeing. And as we conclude today, we're going to continue talking about this aspirational enterprise leader. And what that means is an equal peer within the C-Suite, where they have commercial and decision-making responsibility within the management team and the board, and how we're going to get there.  

Steve Odland:Yeah, and the term you used was "partnership," I think. And sowhereas before there were more of a transactional function leader. That you go off to the hiring, firing, all of that stuff. And now because we live in a more knowledge-based economy, it's really important to take care of your human resources, think of them as human capital. And that's how the term has evolved. And so CHROs really become instrumental in shepherding the resources of an organization and furthering its strategic goals and talent.  

And so you two have partnered on this big study that we've just completed on the role of CHROs in the boardroom. Andrew, you're a specialist in corporate governance and all things related to the board and how corporations work. And it's really remarkable when you look at the trends over time, as Rita was saying, that the CHROs really are critical as part of the C-Suite, but also to the board of directors. Talk about that.  

Andrew Jones:Yeah, it's a really good question, and I think it's obviously the fundamental point we explored in our work that, as the CHRO role has evolved in the ways that Rita outlined, we've also seen CHRO is becoming a lot more engaged with the board. 

And obviously, that looks different at different companies and also in different regions, whether we look at the US or Europe. But I think taking that big-picture view, and we have some quantitative survey data to underscore this, as well, that just in the last few years, CHROs have become a lot more engaged with the board. They're attending a lot more of the full board meetings there, and also increasingly attending meetings of specific board committees beyond compensation, which I think has historically been the place where the CHRO has showed up.  

So I guess, as the CHRO role has evolved for all the kind of reasons we laid down, including some of these deeper structural shifts, also showing up a lot more on the board and playing a lot more influential role in the running and management of the company.  

Steve Odland: And CHROs always engaged with the compensation committee of the board of directors because you were always trying to get all of the, certainly the senior, compensation worked out because that's the purview of the board of directors and needed to be that advisor. But when we're talking about human capital, Rita, it's a whole different dimension here. Because now you're talking about the strategic resources that are driving the business model of an organization.  

Rita Meyerson: Yes, and that is a very forward-looking way to view human capital as an asset and the role that it plays within the management team and within the board. 

There's been a significant shift, let's say in the last 20 years, with digital transformation and having a lot more access to data, to understanding how to optimize and be efficient with human capital. And culture has taken much more of a front seat in organizations and with the board. But COVID-19, the pandemic, was really a pivotal moment for human capital to be seen as a driver in business strategy.  

Steve Odland:Yeah. And this whole notion of culture is important for a lot of reasons, right? But retention is a big one, which is what you're talking about with COVID, where people then started changing jobs because you could do everything virtually for that period of time.And people lost really important skill sets in their company.  

So this point about culture and understanding what kind of flexibility is needed, what kind of work-life balance, what are the values of the company—all of this is important. And so governing all of that, shepherding all of that, having the accountability for all of that, is primarily led by the CHRO. 

And so that then determines how your recruiting is going to go and whether you're going to bring in the right skill sets and whether you're going to retain them.  

Rita Meyerson: Exactly. And I know you and I have talked about this, but as you, as a transformational leader, the culture is so important, and it'svery hard to change it. So really being mindful about how important that is within their role and the board's role. . And the partnership between those two entities are important when you talk about culture.  

Steve Odland:Yeah. Now, Andrew, boards are not the same all over the world. And the US form of corporate governance is different to the, say the European form, where there's a management board and supervisory board. What we've been talking about with the CHRO is primarily US governance focus. How does that change when you've got a two-tier board structure?  

Andrew Jones: It's a really good question.And yeah, to clarify, there are really big differences, as you said, Steve.Very common in Europe is the two-tier system, where you have the management board, which is comprised of executives, and the supervisory board, which has oversight of that board, but it's very separate.  

And obviously in the US and other markets, it's much more of a unitary board, where you combine executive and non-executive directors. I think it's interesting, so obviously that adds different dimensions to how CHROs interact, right? Obviously, with the board in the US, you have the CEO or president on that board. The CEO may even be the board chair. I think that does potentially add a different dynamic than in engaging with a supervisory board in Europe that is very separate or may even include employee representation or broader stakeholder representation.  

I think one important point to add that really came out of our research, though, is despite the quite significant differences in between governance models, many of these trends are actually cross-region. That we're seeing CHROs show up more, whether it's with the unitary board in the US or the supervisory board in Europe, for the same drivers that Rita and you outlined: this increased recognition of human capital risks and opportunities, increased focus on culture, increased focus on workforce strategy. I think that's bringing the CHRO more into the orbit of the board across jurisdictions, really. Soit's an interesting big picture despite the geographic variations. 

Steve Odland: Talk about how you did this study. Together, collectively, you sat with many CHROs and board members. Talk about how that process went.  

Andrew Jones: Yeah, it was a really extensive and very timely research project.I think it was obviously inspired by many of the issues we've already discussed. And what we did in practice was, yeah, we spoke to a lot of people, right? We actually had about 30 or 40-plus rigorous research interviews with CHROs in the US and Europe, but also CEOs, board directors, including some former and current board chairs.  

We actually also had a quantitative survey of corporate secretaries of public companies in the US and Europe, recognizing that the corporate secretary has a very interesting perception of the board and how executive roles are showing up there. That survey was primarily more US than Europe, but it was trans-regional. We also actually collated a lot of public disclosure data as well on board composition board committees and so on. So we had an extensive research base that informed this piece.  

Steve Odland: And lots of meetings and interviews. So, Rita. What did you hear differently from CHROs versus board members on the role of the CHRO? 

Rita Meyerson:That's such a good question. I think that if I was to sum that up, we heard about the remit of what they are responsible for and what they're doing, but there's certainly room to grow. So this aspirational view, where you have a trusted relationship with the CEO, which many of them had, but being fully embedded with the board on issues around human capital and the workforce, potentially AI, the multi-generational workforce, things future-focused, there's still improvement for that and room to come.  

And what's surprising was we didn't hear so much from the CHROs around the collaboration with other C-Suite functional members. So the COO, the CFO, and the CLO. However, we heard that loud and clear from the CEO and the board members. That partnership is so important. 

Steve Odland: Was so important, but you didn't hear it from the CHRO. So this seems to be a gap, doesn't it? You've got board members and CEOs saying, this is really important stuff. It's really important that the CHROs take a strategic view of human capital and engage with the board and management team to do that, but you didn't hear it quite the same way from the CHROs. What did you make of that?  

Rita Meyerson: There's room for improvement. And the idea that you're on a management team leading the company and managing the operating of the company. That is new, taking an enterprise leadership perspective is a new way of thinking, I think, for CHROs and CEOs, and you need to encourage the partnership across those functional leads of C-Suite leaders. 

Steve Odland:Yeah.  

Andrew Jones: And if I could just add, I mean, I think Rita outlined it so perfectly. I think we really heard land and clear from, I think both CEOs and board directors, perhaps particularly board directors, a hope and expectation that the CHROs would really broaden out their business acumen and commercial fluency and fluency with some of the core financial and operational decision-making aspects of the business. And I think many CHROs are doing that.  

But it's still a work in progress, and perhaps the CHRO has a particular nuanced barrier to overcome in that there might still be some perceptions of HR as fundamentally operational and people management. 

Steve Odland: But this is interesting, because a few years ago, if you would ask CHROs, they would say, "Oh, I'm not taking seriously enough in the boardroom. I could be giving so much more," and, yada, yada. Now it seems to be the other way around in a very short period of time, where there's been a pivot here with CEOs and boards really seeing a bigger vision for this.So the fact that you didn't quite hear that the CHROs had kept up is interesting. Does it suggest that there are skill set gaps with CHROs?  

Rita Meyerson:Yeah. So the commercial and financial acumen, for sure. Having run a P&L, being part of a business unit, doing a rotation within the organization where you have that P&L responsibility. Also, partnering with one of those functional C-Suite members to lead a strategic project across the organization, some type of transformation, would give exposure to and elevate the skills of the CHRO that maybe did not have a business role prior or wasn'tmaybe a general counsel, which we saw. 

Steve Odland:So if our listeners are aspiring CHROs or developing in the system, your advice to them would be get some cross-functional experience. Go run a business, get some P&L experience, because it'll make you a better CHRO in the long run.  

Rita Meyerson:You'll be able, exactly, you'll be able to make better human capital-informed decisions having understood what it is to run a business.  

Steve Odland: OK. But if you're in the role and you haven't run a business, you're not going to say, "Oh, pardon me, I'm going to go do this for a while and not come back." So therefore, you're recommending more project—  

Rita Meyerson: Strategic projects, right. 

Steve Odland:So jump in and be a co-lead on some business project where you can really engulf yourself. Yeah, we know that you have a full-time job, and you have to do that, too. But this is going to make you so much better.  

Rita Meyerson: Yes. It will legitimize your role in the boardroom. And what we heard, surprisingly, from one of our board members that's been very engaged in this project, and she's been the chair of several public companies boards, is that she sees in the future, the near future, that the CHRO and the general counsel, or the chief legal officer, have a huge opportunity to partner on AI and the governance of that and how it's introduced into the organization. 

Steve Odland:We're talking about the role of the CHRO in the boardroom. We're going to take a short break and be right back.  

Welcome back to C-Suite Perspectives. I'm your host, Steve Odland, from The Conference Board, and I'm joined today by Dr. Rita Meyerson, Dr. Andrew Jones, both from The Conference Board. Sowe're talking about your study that you did, and collectively you interviewed and researched this whole area with many C-Suite members, board members, and CEOs. Talk about what the CEOs said specifically. 

Andrew Jones:So the CEOs were interesting, right? Because obviously, the CHRO is often seen as really almost like the right hand of the CEO, right? Such a trusted advisor, strategic advisor. And we definitely heard a continued appetite for CHROs to play that role. But at the same time, I think building on the previous point, we heard before the break, gaining that sort of more commercial and financial fluency. Something we actually heard from quite a few CEOs was that there might be a real opportunity for CHROs to gain that through exposure by working with the CFO, for example.  

We generally heard a big appetite for increased integration across the C-Suite for the CHRO and to really embrace that role of being a business leader that, "Yeah, you bring the people skills, you bring the HR expertise, you bring that capacity, but you can then bring that lens on the broader enterprise priorities." 

Steve Odland: So OK, Rita, you'readvising that they get some business experience, some P&L experience somewhere along the way or in seat. Assuming they do, what then can they do to better meet the expectations of the boards and their CEOs?  

Rita Meyerson: It's really important, and I would think if you're in that role and you're able to do a rotation and you have that experience or you're on a strategic project, you need to bring those learnings into the conversations, both in the management team and in the boardroom. As you make decisions, you need to go through that lens, that you've run a business, with that commercial and financial acumen.  

Steve Odland: Meaning don't just talk about the HR issues. Talk about the strategic goals. How do we make the strategic goals, and what role does the human capital play in that, and what can they do to help make that happen, yeah?  

Rita Meyerson: Exactly. Exactly. But look at it as any other asset in your organization.  

Steve Odland: So maybe then, the CHRO should look to their other colleagues, the COO or the CFO, and say, "OK, what role do they play in engaging?" Because they're also kind of staff positions, they're not running the business, per se. They're part of the executive team. But their engagement comes from what do we do financially to drive the business? What kind of investments do we make? What kind of returns do we expect? What did the data say? 

So maybe, youdidn't say this, but maybe if CHROs thought and acted more like CFOs in the sense of how they make their recommendations and engage, maybe that would make them more powerful and influential?  

Rita Meyerson: A hundred percent. You can apply that to also what the general counsel brings and managing risk. Because we saw that, while CHROs are involved with compensation and potentially, if it's a compensation and talent committee, they're not as engaged in, and Andrew can definitely talk about this, audit and risk committees and non-gov, where they have some opportunities.  

Steve Odland:Yeah, and they should be in those committee meetings because, I'm just thinking about risks, when you're in a knowledge-based economy, the risks come from people, mostly.  

Rita Meyerson: Yes.  

Steve Odland: And so therefore, who's in charge of that? So it does bring a whole different—OK, so Andrew, we were talking about what the CHRO should do differently. What should the boards and their CEOs be doing differently to help develop and guide their CHROs? 

Andrew Jones:I think this is a really importantquestion, becausewe've been talking about the evolving role of the CHRO, and all the things the CHRO can do to build their visibility and credibility and legitimacy. But obviously, the board in particular, has a critical role to play in providing the space for the CHRO to thrive and to demonstrate that, right? 

We definitely heard loud and clear in a lot of our research that the board can really be clearer in setting expectations and pursuing a more direct relationship with the CHRO. And that relationship shouldn't circumvent the CEO or be behind the CEO's back, but I think we recognize that board access is often mediated for the CEO. And I think boards can just be clearer, being clear on the kind of discussions they want to have, particularly when it relates to workforce and culture, the kind of data and metrics that they would like to see. Perhaps thateven could extend as far as scheduling direct executive sessions with the CHRO or inviting the CHRO to present directly on some of these topics.  

We really heard that the board can create more space for the CHRO. And then, obviously, it falls on the CHRO to capitalize on that and, in doing so, elevate the entire discussion around human capital.  

Steve Odland: And then, of course, the relationship between the CEO and the CHRO is just so important. Rita touched on this a minute ago, but they are the advisor on all these things and the CEO can empower the CHRO or completely disempower the CHRO, depending on how the CEO acts with the rest of the team.  

So if the CEO allows the rest of the executive team to go around the CHRO and come to the CEO for human capital decisions, you'd completely chop the legs out from underneath the CHRO. So there has to be specific partnership behaviors. Yet they, the CEO and the CHRO, need to agree collectively on how are we going to team this? And what are we going to do, and what are we not going to do?  

Andrew Jones: And I think this is such an important point, I think, and we do make this recommendation in the report based on what we heard, that the CEO has such an important role to play in championing the CHRO. And, as you say, setting the tone of them as a genuine peer in the C-Suite that has an equal voice and a right to influence core business decision making.  

Steve Odland:Yeah. And so are the CEOs who are listeningyou've got to really be deliberate about this. And it'svery hard as a CEO not to have your head of operations come in and say, I talked to the CHRO, but she doesn't want me to do this. I really need to do this. Can I have your support? And of course, the CEO wants to say, sure. But it takes a lot of discipline to go, "No, you guys need to go work this out because I can't just override the CHRO on all these decisions." 

Soit's not only support, but it's also an agreement on accountabilities. RACI, essentially. And who's going to do what. So, Rita, then what are the derailers of CHROs? One of them is for the people to go around to the CEO, but what are some of the other common derailers?  

Rita Meyerson: I'm just really glad that we covered that point about the role of the CEO being an excellent leader and really empowering the team, the management team, to take human capital seriously. And putting the CHRO at the forefront of that.  

Other derailers that we saw were the boards undervaluing the CHRO and human capital in general. 

Steve Odland: But isn't that, I'm sorry, but doesn't that really depend on the person?  

Rita Meyerson: Yes. Yes, it's certainly unique. So in the more mature, sophisticated organizations, that wasn't as prevalent, but in some organizations that still exists. So depending upon where you are in your life cycle, not every board, and not every management team is as sophisticated on that. 

Steve Odland: OK. But if they're dismissing the CHRO or not listening to the CHRO, doesn't that fall back on the CEO and the board then to say, "OK, here are the skill sets we need in this role," and really to upgrade the role?  

Rita Meyerson: Exactly. That is why we accentuate the point, that this is a partnership between all three: the CHRO, the CEO, and the board. And they all need to work together to ensure that this is that human capital is elevated.  

Steve Odland: So, Andrew, that brings a different point in on governance because the boards have been told, and they think that their role is, to select the CEO. And then the CEO's role is to select his or her direct reports, including the CHRO, and it's not the board's role, but what Rita's saying is, yeah, maybe they need to have some input in this cause it's a very strategic role.  

Andrew Jones:It's such a good point. And it's something we haven'tperhaps touched on yet, but runs through the report a lot, which is succession planning. And the whole process of talent development, we heard loud and clear that first of all, the CHRO has a critical role to play in that. And it extends well beyond just making nominations late in the day, they should be involved early on. But also the board itself has to take a much more proactive role in that, yeah. And the board should be taking that holistic view, looking to the longer term, looking well beyond, as you said, Steve, the kind of the narrow niche singular focus that you just outlined.  

Steve Odland:So it says, then, the role of CHRO is going to change. You have some, and we just said this, you've got the top tier companies for whom this is already done. So, it's hard for us to peanut butter this situation and be right in every case, but it's going to change. And that means that the role of the CHRO in the boardroom needs to evolve. So as you dial forward, I don't know, just pick a decade out, it's longer than the next couple of years, but it's still within our careers. But go a decade out.  

How do you see the role of the CHRO different then than now? 

Andrew Jones:I think we see the CHRO role being potentially very different, I think, in the sense of how integrated into some of this key decision making and being a regular, ever present in the boardroom and in board discussions. Leading on key issues related to workforce, strategy, culture. And we actually outlined in the report some of the big coming disruptions that we think will really create a space for the CHRO. 

And the two that really stood out, I think, were one, generational shifts in the workforce, which will require very delicate, very long-term management. And the CHRO is best positioned to really lead that within the confines of the board. And also the impact of AI and automation, which heralds potentially huge disruptions for talent, for workforce strategy, for culture. And again, the CHRO can and should be really playing a central role in that, within the board, within the C-Suite. So we expect this trend to continue. The evolution of CHRO and the board is, it's evolved a lot in recent years, but I think it's going to evolve a lot in the years to come.  

Steve Odland:So the role of the CHRO, Rita, is going to change. You also have this generational thing, which Andrew brought up, and that's a subject of a whole ‘nother, it's a whole ’nother kettle of fish. But Gen Z has now overtaken baby boomers, right? In the workplace. So we are sitting right on the pivot point today, and hence the needs of the populace, the employee populace, are shifting as well. There are some generational things that happen in every generation, but this generation is different. It's digital native, AI native, all of that stuff. What do you see as the primary skill sets of the ideal CHRO a decade from now? 

Rita Meyerson: You need to have an equal focus on commercial and financial acumen, in addition to understanding human nature and motivation and leadership. So a balance between those hard and soft skills are really important.  

Steve Odland: To what end?  

Rita Meyerson: What the newer generation, so Gen Z and we know, OK, so 31% of the workforce by the end of 2025, right? We've talked about that. Their focus on wellbeing, on being part of a purpose-driven organization, on their expectation on work-life balance, on being part of a collaborative team. All of that needs to be integrated into work as much as you're focused on the balance sheet.  

Steve Odland: And then CHROs also then need to understand the business model. Because if they're to be effective in interpreting. All of that. But still, it's the balance, isn't it? It's not just, you have a multi-constituency world, customers, employees, owners, community, environment, and so you've got to make it all work. So you can't just do everything for the benefit, "oh, we'll just make everybody, flexible, you don't need to work. Don't come in, we'll just pay you." You go from an extreme like that to, "OK, we're going to focus only on the shareholder." And so it's got to be a balance, and the CHRO is the pivot point in making all of those constituencies work and putting it all in balance. 

Rita Meyerson: They have to be a highly sophisticated operator and executor.  

Steve Odland:Yeah.  

Rita Meyerson: Navigating that multi-stakeholder point of view you talked about.  

Steve Odland: Andrew, any last thoughts on the study?  

Andrew Jones:Yeah. Obviously, we've been speaking so much about the CHRO and the CHRO's evolving role in the board. I just wanted to add that, at the same time, the same trends that propelled the CHRO into a more prominent role have also had a big impact on the board itself. 

And actually the boards, I think, as Steve, have been actively diversifying, actively refreshing, actively appointing directors with brighter sets of skills or new sets of skills in the last few years, whether those are around the environment or technology or now AI. And human capital falls into that bucket. And actually we have disclosure data that shows that the share of independent directors at US public companies with disclosed human capital skills has gone way up in the last few years. And I think it just reinforces this recognition of human capital as a top-tier governance issue. And I think at the same time, it's obviously shaping a board that is a little bit more conducive to the CHRO showing up and doing their thing.  

So I just wanted to add that, that there's a whole "next" dimension here, too, which is the board itself is always changing and always evolving, as you know so well,  

Steve Odland: Rita, you get the last word. 

Rita Meyerson:I'm excited about the future. I think that, although this is challenging, that it'sa very exciting time to be part of human capital.  

Steve Odland: Dr. Rita Meyerson, Dr. Andrew Jones, thanks for being with us today.  

Andrew Jones: Thank you so much, Steve. It was a pleasure.  

Rita Meyerson: Thank you.  

Steve Odland: And thanks to all of you for listening to C-Suite Perspectives. I'm Steve Odland, and this series has been brought to you by The Conference Board.