In March 2016, Hanold Associates placed Michael Goldwasser as the chief human resources officer (CHRO) of Ferrara Candy Company, one of the nation’s largest manufacturers of non-chocolate candy. Goldwasser will report directly to Ferrara Chief Executive Officer Todd Siwak to help achieve the company’s goals through key human resources (HR) functions. Formerly the CHRO of Orbitz Worldwide, Goldwasser has extensive experience designing and implementing strategic initiatives to improve employee engagement and retention. He also redesigned investment options and guided the HR team through an acquisition while at Orbitz.
The role of CHRO is becoming increasingly critical to companies as they realize the importance of hiring and retaining the best talent. An excellent corporate strategy has no value without a skilled workforce to bring it out. The CHRO ensures that companies have access to the manpower that they need to reach their goals and that existing employees remain actively engaged and therefore fulfilled and productive. As the CHRO becomes a more central part of the management team, the responsibilities of this position have continued to expand. The following are some of the key ways in which CHROs add value to a company:
They diagnose problems.
While other C-level executives, such as the chief financial officer (CFO), are excellent at identifying when a company is no longer on track to meet certain goals, the CHRO is uniquely positioned to pinpoint the precise reason for this underperformance. Too often, CEOs turn to outside consultants rather than speaking with the CHRO to identify the root of a problem. People problems are at the heart of most business issues, and the CHRO has a more intimate understanding of the workforce and how it operates than anyone else inside or outside of the company does.
When the CEO and the CHRO work closely together, they should look beyond external factors and instead analyze the social systems in place at the company. A holistic look at how people work together can often suggest quick, effective remedies to the problem while avoiding hasty and unnecessary replacements. Sometimes, people are performing at or beyond expectations, but they are doing so in an unworkable situation. The executive management team must identify these circumstances to avoid letting people go unfairly, which can disrupt the cohesion of the rest of the team and destroy morale.
They predict outcomes.
At most companies, the CEO and CFO work together to create a three-year strategic plan and a one-year budget. The CHRO can and should weigh in on these activities. With an intimate knowledge of the people side of the business, the CHRO can assess how likely the business is to meet goals as things stand and suggest the changes that the company needs to make. The CHRO can predict, for example, how likely team members are to collaborate effectively to achieve goals, or how quickly a certain leader will be able to implement changes given other rapid shifts in the environment. If nothing else, CHROs bring these important questions to the table and ensure that other C-level executives consider them when planning for the future.
CHROs excel at identifying the characteristics necessary for success in a certain position. If a particular employee or group is unlikely to perform in the manner necessary to achieve goals, a CHRO can discuss the benefits of coaching or even propose key positional changes that will put the company on a better path. Gaps between talent and job requirements will have manifold effects throughout the company, and it is the CHRO’s duty to acknowledge these issues. When a leader is ineffective, his or her actions can cause frustration and resentment to build, which results in employee disengagement.
They allocate capital.
While financial planning is the realm of the CFO, the most successful companies ensure that the CHRO works closely with the CFO when constructing budgets. Companies that get stuck in the trap of funding inertia (getting the same budget every year with only minor adjustments) tend to stall their growth. Dynamic companies that invest money where it will have the biggest payoff tend to grow much faster and realize higher levels of success according to a McKinsey study. The CHRO plays a key role in identifying where the greatest opportunities lie, especially in terms of the talents of its employees.
Companies can also be flexible in terms of their human capital allocations. Excellent CHROs can identify when employees might perform more effectively in different roles and can make suggestions that will ultimately drive the company’s profits. Sometimes, suggestions involve developing someone’s hidden talents. Other times, the moves may strive to make more diverse teams capable of creating more robust products and services. Capital allocation may also involve investing in training from third-party organizations, especially if that additional instruction has the potential to reveal new revenue-generating opportunities.