In a pandemic, a chief people officer can make or break a company
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WHEN
THE financial crisis rocked the business world in 2007-09, boardrooms
turned to corporate finance chiefs. A good CFO could save a company; a
bad one might bury it. The covid-19 pandemic presents a different
challenge—and highlights the role of another corporate function, often
unfairly dismissed as soft. Never before have more firms needed a
hard-headed HR boss.
The
duties of chief people officers, as human-resources heads are sometimes
called, look critical right now. They must keep employees healthy;
maintain their morale; oversee a vast remote-working experiment; and, as
firms retrench, consider whether, when and how to lay workers off.
Their in-trays are bulging.
Once
derided as “pay and parties” managers, by the early 1990s HR chiefs
turned to compliance, keeping firms out of the courts (and papers). A
subsequent string of corporate imbroglios elevated their status, notes
Patrick Wright of the University of South Carolina. In the wake of
executive-pay scandals at companies such as WorldCom and Tyco in the
2000s they became more involved in remuneration. A decade later bungled
successions, for example at HP, a printer-maker which sacked two bosses
in as many years, left them with a bigger say in filling top jobs. In
the past few years they have dealt with companies’ often very public “me
too” troubles.
As
recruiting and retaining skilled workers became chief executives’ big
preoccupation—four-fifths now worry about skill shortages, up from half
in 2012—HR heads’ desks moved ever closer to the corner office. Today
many reside right next to the boss. Shareholders are inviting more
outside HR chiefs to boards. In America their salaries remain lower than
CFOs’ but have risen 20% faster since 2010 (see chart).
A
higher profile entails new expectations. HR was once the domain of
history graduates and masters in labour relations; nowadays plenty hold
business degrees. Although most firms recruit them from HR jobs, more
are choosing outsiders or unconventional candidates. According to
Russell Reynolds, an executive-search firm, HR heads appointed to
Fortune 100 companies between 2016 and 2019 were around 50% likelier
than earlier hires to have worked abroad, in general management or in
finance.
Before covid-19, tight labour
markets and empowered employees pressed employers to understand how to
get the most out of their staff, says Dane Holmes, a former head of
human-capital management at Goldman Sachs, an investment bank, who now
runs an HR-analytics firm. Diane Gherson, who runs HR at IBM, overhauled
the computing giant’s performance management using big data. Algorithms
now challenge IBM managers’ instincts on pay and promotion, and alert
Ms Gherson’s team when staff are at risk of fleeing (often before they
realise it themselves).
The pandemic
makes such “people analytics” more relevant. Beth Galetti, Ms Gherson’s
opposite number at Amazon, an engineer with no HR experience before
joining the e-commerce titan, oversees 1,000 developers working
exclusively on HR software. Amazon’s pre-outbreak investment in digital
induction for fresh hires is paying off. “We on-boarded 1,700 new
corporate employees on [March 16th] alone,” Ms Galetti reports.
Covid-19
may lead more HR chiefs to adopt such systems. In the short run many
have more pressing problems. Mala Singh, chief people officer at EA, a
maker of video games, represents the c-suite on the team tasked with
pandemic response. This now occupies 60-70% of her (long) day. Her team
has been getting staff desks, computers, even noise-cancelling
headphones. A bigger concern was balancing work with child care. Ms
Singh told the caregivers on EA staff to take as much time as they need
to adapt without using up paid leave. She is digitally monitoring
employee sentiment, particularly anxiety. In a creative business like
EA’s, “having someone stressed about their family situation does not
enable productive work”, she explains.
Many
companies, especially outside the knowledge economy, face tougher
choices. HR leaders must strike a balance between a firm’s professed
purpose, which these days often involves treating staff decently, and
the bottom line, observes Dan Kaplan of Korn Ferry, a consultancy. The
instinct is to cut costs through mass redundancies, as some hotel
chains, airlines and others have begun doing. Rather than slash payrolls
indiscriminately, says Bill Schaninger of McKinsey, another
consultancy, good HR heads can use the crisis to reconfigure company
workflow: what needs to be done by whom, what can be automated and what
requires people to share the same space. Some workers who at first
appear redundant may be redeployed or reskilled.
The
most far-sighted HR-ers at the most resilient companies are already
starting to look beyond the flattened curve. Although not quite
recruiting—times are too uncertain—Ms Gherson has begun to court talent
at rival firms. Now that everyone is working from home, she says, no one
is listening in on their calls. For a savvy HR chief, “it’s the perfect
opportunity.”
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