A multinational has lost its CEO and CHRO, denting company morale. With a new CEO in place and restructuring imminent, where should it look for a CHRO?

The Issue

The chief human resources officer (CHRO), who had worked very closely with the former and recently departed CEO at a large multinational, has also left the business unexpectedly. Her departure has not only left a vacuum at the top, but has come as a surprise to other employees in the business, and other stakeholders. Morale and employee engagement are low, fear and uncertainty about the future are rife.

Although a new CEO has been put in place, he hasn’t yet shown his colours. Nevertheless, he will be leading the restructuring of the business. This will include selling off one of its divisions, which is likely to result in big changes, including redundancies. A new CHRO needs to be put in place fast.

The previous CHRO not only worked very closely with the CEO, she was also a trusted adviser to divisional heads and senior management. Her role included supporting and mentoring the CEO as well as helping to put in place coaching across the business to help senior management and their teams develop their full potential.

How can the business ensure it appoints the right person to CHRO (for example, someone external or the current HR director who lacks experience of mentoring/coaching at board level) and that they hit the ground running, ensuring employee engagement is boosted, and any planned restructuring goes smoothly?

The Interventions

Lisa Gerhardt

Global HR practice leader, Boyden Global Executive Search

Statistics show that a change of CEO will often prompt a change of CHRO. Nevertheless, it’s an awkward situation. And when there’s a change at the top, the CHRO’s role becomes pivotal. Part of their remit is to support the new CEO using coaching and mentoring skills, acting as a sounding board for difficult decisions. The same principle applies not just for the CHRO and the CEO, but also for divisional MDs and their HR leaders.

Thus CHROs must position themselves as partners and constructive challengers, and establish trust if senior management are to open up to them. Helping the CEO build a high-performing and cohesive executive leadership team is vital to the success of the business and a critically important element of the HR leader’s role. Here, coaching for performance improvement will be important, particularly in the first 100 days.

An external appointment of a CHRO who has already notched up experience of helping to coach/mentor senior leaders through change and transition could offer an effective solution. To offer this type of support to such senior people, the new CHRO must also be able to contribute to the overall company vision and direction and speak the language of business. Unless they have this capability they will not be able to establish and hold the credibility required to support the CEO and/or senior management team.

If the advantages of promoting someone from within the business outweigh any lack of relevant expertise, the coaching element to the role could be outsourced to an external executive coach with particular experience of helping businesses through periods of change and transformation and dealing with redundancies. Or the internal appointment could be trained in coaching/mentoring skills by an external provider, who could also roll these out elsewhere in the business.

John Blakey

CEO, executive coach and author of The Trusted Executive

It seems the organisation has lost a highly trusted executive with the departure of the CHRO – someone who was trusted by the previous CEO, senior managers and their teams.

The unexpected departure of this individual, as well as the CEO, will have created a ‘trust vacuum’ at the top of the business. This is not ideal when contemplating a major change exercise, such as a business restructuring.

For these reasons, quickly re-establishing trust in the senior team is the priority when assessing the way forward.

Assuming that the current HR director has the trust of the key stakeholders, then this is a unique contribution that they can bring to
the situation.

In contrast, the HR director’s lack of coaching and mentoring skills is a gap that can be plugged by other means, such as external executive coaching support.

Also, assuming that the current HR director has been with the organisation for a while, their knowledge of the detailed workings of the organisation will be crucial at a time of change.

Making an external appointment risks demoralising the current HR director at a time when their support is likely to be critical to the success of the restructuring project. At a very practical level, making an external appointment could well take up to six months to complete, which is a further risk when major business change is imminent.

These benefits of promoting the current HR director need to be balanced against the make-up of the rest of the senior team.

However, the new CEO and the rest of the team may well bring sufficient external experience and perspective to ensure there is no risk of ‘group-think’ or stagnation.

If this is the case, then, all other things being equal, promoting the internal candidate and supporting them with coaching would get my vote.

You’re hired!

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