CHROs Face Increased Pressure to Play Greater Role in ESG Matters

Chief Human Resource Officers (CHRO) are now being called on to play a greater part in addressing the environmental, social, and governance (ESG) matters, according to a new study.

The events of the past two years, including a pandemic, social strife, and the Great Resignation have upended the role of the chief human resource officer. Based on discussions with more than 100 human capital leaders at multi-national companies and regional powerhouses in Europe, Asia and the US, a new report from The Conference Board reveals the increased pressure on companies to act on ESG issues, and the expanded role of human capital leaders in doing so. CHROs will need to, among other things in the ESG sphere, help shape the corporate voice on social issues; articulate the mission and purpose of their companies; and communicate the company’s people strategy to an increasingly broad set of stakeholders.

This has become all the more urgent as companies prepare for upcoming US Securities and Exchange Commission (SEC) requirements to further disclose data on a company’s human capital resources, measures; and progress against objectives. Additionally, the report also explores the challenges CHROs must navigate to successfully lead remote and hybrid teams; and shape an organisational culture that both attracts and retains workers.

SHAPING SOCIAL ISSUES

Insights from report, The CHRO’s Role in Navigating the Future of Work, reveal five ways this will impact the CHRO’s role. They include:

1. CHROs will partner with C-suite colleagues and the board to help shape the company’s voice on social issues.

According to the report, CHROs should expect the following:

• As companies navigate the complexities of societal change and demands for transparency, CHROs will partner with C-suite colleagues and the board to help shape the corporate voice on social issues.
• The disclosure of human capital metrics and the shaping of the corporate narrative around people issues for a variety of stakeholders – both internally and externally – will become more critical.
• The ability to work closely with, and benefit from, board directors in their human capital management oversight role will be increasingly important.  

To prepare, CHROs should follow a consistent framework for their formal and informal communications with stakeholders on human capital management, the report advised. “The crises of the past few years have underscored why human capital management matters; it’s an essential part of the overall business strategy, including achieving a company’s ESG goals,” commented Rebecca Ray, PhD, Executive Vice President of Human Capital at The Conference Board. “Board oversight of human capital management will continue to grow in importance. CHROs will need to ensure that directors understand the organization’s capability to execute the business strategy.”

2. The company’s mission and purpose should underpin not only company culture, but guide decisions about the work environment.

According to the report, this will mean:

• There will be greater intention given to the overall purpose of business; as well as strategies used to deliver on that purpose.
• Strong culture – where employees feel included, valued, and respected, as well as connected to something greater than themselves – will create a competitive advantage in both attracting and retaining talent.

To prepare CHROs should:

• Clearly articulate both the connection to mission and purpose, as well as new cultural norms for creating a respectful workplace.
• Develop a playbook on why an employee needs to follow a specific work model; including clear rationale explaining requirements to be in the office.
• Give employees options for flexibility based on personal needs. By offering flexibility, organizations can meet the diverse needs of their workforce and boost retention.

3. Technology and analytics will guide CHROs as they work toward business goals.  

According to the report, this includes:

• The HR function will have a broader impact on people across the organisation (for example, workforce diversity, predictive analytics); and a sharper focus on business outcomes.
• CHROs will leverage technology to track and measure progress on metrics related to human capital.
• Roles within the HR function, such as HR generalists and specialty roles, will become more sophisticated as technology reduces administrative burdens.

CHROs should prepare by:

• Developing new and wider skill sets, including analytics, business acumen, and high-level strategic skills. 
• Leaders should show a greater connection between HR processes and business results. Increase efforts to map talent to value, prioritise strategic workforce planning, and leverage the use of technology and analytics to make better people decisions.
• Beyond simply ensuring fair and equitable treatment for all workers and alignment with organisational values, evaluate and refine programmes, policies and actions; to foster a culture of inclusion and belonging.
• Clearly define roles and responsibilities, streamline processes, and leverage technology to reduce “friction” in processes for employees.

4. CHROs will lead the organisation toward a seamless hybrid culture, offering flexibility and upskilling.

According to the report, CHROs should expect the following:

• As work-from-anywhere models expand, there will be a premium on the development of tech skills and infrastructure that support flexible teams.
• Workers will need support to be innovative, agile, and resilient.

CHROs should prepare by:

• Reimagining the physical workspace, investing in and integrating technologies that promote productivity and collaboration.
• Ensure teams are empowered to make decisions about how work gets done to maximise efficient time use and foster agility.
• Hire for specific skill sets, not specific roles, and make mining internal talent a priority.
• Assess capabilities across the workforce and fill skill gaps by investing in upskilling and reskilling. 

5. Through successive waves of “black swan” events, CHROs will need to rethink leadership development. 

According to the report, this means:

• Successful leaders will need to thrive in virtual and hybrid environments with blended teams.
• CHROs should articulate the core values and principles of the organisation to all stakeholdersl including the board, teams, customers and suppliers.
• Leaders will be required to champion agile ways of working; drive digital innovation; and shape organisational culture and talent development.

CHROs should prepare by:

• Developing authenticity, empathy and a growth mind-set; coupled with a mastery of HR-related skills such as performance management, coachin, and development.
• Increase the use of skill assessments and analytics to determine and revise criteria for advancement and succession planning.
• Leaders at all levels should be held accountable for turnover, engagement scores, DEI goals and other key metrics tied to corporate values and purpose.

The majority of companies prefer to entrust diversity, equity and inclusion efforts with their chief human resources officer (CHRO) or CEO, according to recent research. Click here to read more.

Additionally, employee wellbeing and diversity, equity and inclusion are now considered to be ‘top’ strategic priorities for HR, according to another recent study. Click here to read more.