A new breed of CHRO is driving value in high-growth tech companies

Ruby Sheera

November 15th, 2022

A new breed of CHRO is driving value in high-growth tech companies

Traditionally a back-office, or admin-heavy role that struggled to get a seat in the boardroom, CHROs are now a powerhouse of the senior leadership team in high-growth tech businesses. The right-hand individual to the CEO, their role in attracting, developing, and retaining the best talent has become one of the top investment priorities of private equity firms, vital to delivering sustained growth.

HR professionals have fought long and hard for representation at the top of businesses. Traditionally seen as less important than other roles in the C-suite, often bogged down in administration, or with little real influence to enact change, HRDs or CHROs were frequently left out of boardroom discussions and left to administer the “tea and biscuit” chats on behalf of the line managers. But, in fast-growth, private equity-backed tech companies, this is now changing.

Faced with a war for talent and rapidly evolving skills needs, organisations that take a strategic, innovative, and data-led approach to developing and managing their people, are increasingly getting ahead, and investors are making HR a strategic priority. This is demanding a new breed of CHRO which, empowered by technology, is fast becoming one of the most critical in the boardroom, and peers of any position across an organisation.

Supporting a digital workplace

While the CHRO role has been evolving and increasing in importance for some time, several recent workplace trends have accelerated this change, as the ability to attract, develop, and engage employees has become a critical value driver – particularly as markets tighten.

As investing in advanced technologies has become imperative across business sectors, skills shortages are a huge challenge across Europe. TechNation recently warned that the UK’s technology skills shortage could stifle growth, with nearly 12 million workers lacking essential digital skills. Companies are struggling to find the talent to achieve their goals, and they need to think strategically to ensure that the value creation plan doesn’t suffer as a result.

It's no longer enough to offer attractive rewards and benefits packages. Hiring fully qualified talent is becoming prohibitively expensive, plus there simply aren’t enough skills to go around. CHROs have led the way in devising new approaches to filling talent gaps and nurturing skills from scratch through ‘recruit, train, deploy’ initiatives. These programmes ensure that companies not only have the technical skills they need, but also build a team of brand ambassadors, with the behaviours, and attitudes that deliver results.

It all feeds into organisational culture, which is now widely recognised as key to innovation and high performance, not to mention engagement and retention of staff. And as the custodian of culture, it is the CHRO who must ensure the right ingredients are in place for a positive, authentic culture to develop from the bottom up, rather than the top down.

Connecting people to value creation

One reason why the CHRO has played second fiddle to others in the C-suite has been the lack of concrete data to support and measure people's strategies. People are often seen as unpredictable and unquantifiable, unlike financial or operational processes. But as technology has become increasingly sophisticated, this is no longer the case.

People analytics and other performance data are giving CHROs an unprecedented view of what is happening across the workforce, who is performing and who isn’t, and the value that people are delivering. Data means that the best-performing individuals can be identified more accurately, and the right development plans put in place to ensure they fulfil their potential. Similarly, people analytics can help organisations to develop a happier workforce by tracking engagement levels, being responsive to employee needs, and creating a positive employee experience – a key driver of creativity and productivity.

CHROs can also draw on data to inform decision-making and hold the business to account, by linking people strategies directly back to the investment strategy, while also communicating and demonstrating progress back to the wider business. Furthermore, they can truly optimise the team for growth, ensuring that the people journey always aligns with the value creation journey. As a result, CHROs are winning brownie points with investors, who can now connect people strategy directly to outputs, and plan accordingly.

A cross-functional and cross-sector role

The breadth of their role means that the new breed of CHROs must be more commercial than ever before, with a deep understanding of every area of the business, the value creation plan, and the skills that an organisation needs - not just for now, but for many years into the future.

CHROs must be true business partner, who works cross-functionally, with the freedom to roam across the business, and plugged into different networks, as management shifts to managing ‘teams of teams’ rather than individuals. They are as comfortable talking to the Chief Technology Officer as they are to the Chief Sales Officer, and can weaponise other board members to perform, by supporting them with the right team, that has the functional, domain, situational and behavioural fit they need.

Reporting directly to the CEO, the CHRO is effectively their right-hand individual, included in every business decision. In fact, in terms of functional competence, they are closely aligned with the CEO, in balancing tactical and strategic decision-making on a daily basis.

Will CHROs be the next CEOs?

It’s ironic that it is high-tech businesses - focused on digitising and automating so much of what we do - that is also pushing the outsized power of people and the CHRO. We might live in a technological age, yet smart companies know that if they don’t invest in the people to build and deploy the technology effectively, then they won’t flourish.

It has taken 20 years for CHROs to secure their place in the boardroom. Now that they’re there, there’s no stopping them, and it seems increasingly plausible that in another few years, becoming a CHRO will be the natural pathway to the top.  

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