Why HR directors don’t make it to CEO

07 Nov
November 7, 2013

According to an article in Management Today although businesses claim to have broadened their CEO selection pool, a staggering 83% of HR directors never get promoted to the role of CEO, reveal Sharon Mullen and Jo Sellwood-Taylor of research firm Mullwood Partnership.

Here’s a staggering statistic. Despite two-thirds of HR directors harbouring ambitions to become chief executive, only a fraction work for companies where the HR director has ever been awarded the top job.

The question is: why?

Story

You would have thought that HR leaders would have that specialist combination of people skills mixed with a broader commercial experience.  Given this – on paper at least – you would have thought that HR directors would have made ideal candidates for the role.  Despite this, only 17% of HR directors make that final leap into corporate super-stardom.

If you took all the chief executives on the planet and stood them in a line – and there’s a strange thought – you’d find that half of them would come from just three key backgrounds: finance, operations and marketing.  The remaining 50% come from 23 backgrounds which range from legal to IT and strategy.  Only 5% of the global CEOs are ex HR directors.

But perhaps this isn’t unexpected.  In an earlier post I talked about what CEOs hate about L&D/HR people and let’s be honest – if the incumbent CEO thinks you’re an idiot then there’s little chance of you making it into the top slot.

Business context

As a result of the economic downturn, unsurprisingly the ability to be good with numbers has become the skill most likely to get you into the top position at Britain’s leading firms.  More than half (52%) of current chief executives in the FTSE 100 have a background in accountancy or financial management, according to the annual FTSE 100 CEO Tracker from recruitment firm Robert Half.  Compare that to 31% in 2008, before the global credit crunch took hold.  In the last year alone, 10 of the 18 new FTSE 100 chief executives appointed have finance credentials.

21% of FTSE 100 CEOs have a background in engineering or natural resources – hardly surprising considering the desire for mining and engineering companies to appoint ‘people who know about the business.’  Bringing up the rear there’s 9% from retail or hospitality, 8% from marketing or advertising – which is low compared to the global trend – and 4% from technology.

The global financial crisis, coupled with a myriad of other issues, has led to the evolution of the CEO role over the last five years.  The pace of change is quicker, economic volatility is still high on the agenda, customers have a greater expectation regarding social responsibility and the need to demonstrate a ‘gold standard’ regarding personal and ethical behaviour is higher than ever.

Added to this, 20% of CEOs say that creative people leadership is the biggest change in reshaping the role of CEO.  They say that they now have to have the ability to be people focused – building diverse talent and leadership capability and inspiring and mobilising the whole organisation.  All of these qualities are inherent – hopefully – in the DNA of any decent HR director.

So on paper, HR directors would seem to be a great fit as potential CEOs, but as we’ve seen it’s just not happening, and this is because a major barrier seems to be the way the HR function is viewed.

Let’s say that again – the major barrier seems to be the way the HR function is viewed.

And let’s be honest – are we really surprised?  Study after study and article after article has painted HR in a bad light.  Returning to my previous post (CITATION) is there any wonder that HR directors find it harder to go further?  Just imagine that you are on the interview panel for the new CEO of a FTSE 100 company and in walks someone who says their background is in HR.  Does it really paint the right pictures for you?  And although an interview panel is a bit ‘old hat’, do you really think that the top headhunters will be on the lookout for HR directors?  Almost certainly not.

And this is unfair – well, if not unfair, then unbalanced.  We know that there are great people in HR and there are outstanding people who would make great leaders of large businesses – but the truth is that the history of HR lets us down.  The years of failing to talk the language of business, failing to align and of being all ‘pink and fluffy’ are finally catching up with us.  We are suffering from the legacy of our peers and it is not good news.

Despite all the bad news, 12% of HR leaders have made it to the top seat, and perhaps we should look to these pathfinders for inspiration and guidance.  These folks have got their ‘seat at the table’ and they are getting their voice heard.  Any why – why, because they were able to demonstrate accountability, appetite and commercial acumen together with a real desire to lead, combined with being fortunate enough to work in organisations which look beyond functional backgrounds and concentrate on individual ability.

Conclusions

If you’re climbing up the HR ladder and you’re looking for that top seat then you’ll need to demonstrate a number of qualities to succeed.  You’ll need a drive to succeed; you’ll need to build demonstrable experience outside of HR; and you’ll need to demonstrate that you’re a strategic thinker with a strong commercial focus.  Do all that – and behave yourself – and you could be in the running for the top seat at the table.  But if you keep whinging, talking in terms that can’t be understood by others and have the commercial acumen of the average Apprentice contestant then you’re doomed to remain outside the boardroom, let alone in the top seat.

Call to action

What are you doing to hone your skills as a potential CEO?  Remember, if you don’t act like a CEO or think like a CEO then you’ll never be a CEO.

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