Why Are so Few CHROs Promoted to CEO?
A few weeks ago I had the chance to attend my first DisruptHR-Tampa event and left quite impressed. I had the opportunity to listen to many knowledgeable speakers and one that really impacted me was John Wilson CEO @ WilsonHCG . John offered some interesting statics and reasons why so few CHROs become CEOs within Fortune 500 companies. Having sold into HR over the past 20+ years and currently selling a new HR technology solution into HR, this information was eye opening and I decided to explore further.
What does it take to become a CEO? Is it all about your pedigree? Do you have a better shot if you attended a school with an elite MBA program? Or is it all about who you know?
It turns out that none of these are correct. While they can help, they aren’t necessary and generally aren’t predictive of future career performance.
According to the CEO Genome Project, a ten-year study that gathered data on 17,000 CEOs and closely analyzed 2,600 of them for specific characteristics, the most predictive factor in reaching CEO is taking big risks.
It turns out that having a prestigious MBA isn’t nearly as important as making bold moves in your career. The study calls these “career catapults” — moments where daring decisions leapfrog a person into a higher position. Most CEOs have at least one of these at some point in their career. Many have two or more.
So why are so few CHROs promoted to CEO? Because CHROs are more risk-averse than their colleagues outside of HR. They take fewer risks overall, and big risks are the stepladder to the top. This risk adverse culture starts at the highest level in an organization and easily trickles down.
How Do We Know CHROs Avoid Risk?
In a study published on the UK HR website Personnel Today, employees across a range of companies and departments took a risk assessment. The tabulated scores placed them in one of eight risk categories. People that welcomed risk would fall into categories such as “adventurous”. Those that tended to avoid it would be assigned designators such as “wary.”
When rating HR personnel against the general population the study found that HR employees tended to rate as “prudent” or “wary” more frequently than those from other disciplines. HR natives also scored the lowest in the categories “excitable” and “adventurous.”
The authors of the study posited a possible explanation for these results. Because HR has a strong risk management component, it seems to attract personality types that are averse to risk. It’s a useful trait when you’re attempting to mitigate risks for other people. But it also reduces your chances of sitting in the big office one day.
A Real World Example:
In my early days at a start up, which is now a global Pay-Per-Click job board, I was having difficulty convincing HR & Talent Acquisition professionals to use the service. At that time it was most common to buy “post and pray” — HR & Talent Acquisition folks seeking to fill a position would post a job on one of several job sites, and then hope the right people saw the ad and responded.
This new start up company worked through what was then a novel Pay-For-Performance / Pay-Per-Click system. The system worked far better than any Post-And-Pray, but HR / TA representatives didn’t want to take a risk on this new technology. This slowed the company’s growth potential and also hurt my sales quota attainment. But more saliently, the decision to avoid what seemed like the riskier technology made finding qualified candidates much harder than it needed to be. By avoiding this perceived risk, HR & TA professionals were hobbling their own effectiveness.
Eventually, they came around and now Pay-Per-Click is a major driver in employee acquisition. In fact, some can’t get enough of the clicks – "indeed" you could say they’re addicted! This small organization I started with is now global. But in the early days, only those HR & TA professionals that took a chance benefitted from the technology, and it's certain the results they derived helped move them ahead in their careers faster than their risk-averse colleagues.
Mitigating Risk Doesn’t Necessarily Mean Avoiding It
As a CHRO, your job involves checking employee and enterprise risk. However, being too risk-averse can be just as damaging as taking too many risks. The proper approach isn’t to avoid all risk. Instead, you should take a reasoned approach that weighs the possible value of the risk. If the odds are in your favor, or if the possible benefits outweigh possible losses, then grab the opportunity.
Early adopters of the Pay-Per-Click platform did, and it paid off. This is how CEOs become CEOs. They’re decisive, and they make bold career plays. If you weren’t among those that embraced Pay-Per-Click early on, would you make the same decision if you could do it again today? Hindsight allows us to see that as a mistake. But it’s a mistake you can rectify.
Preferhired is Leading the Next Watershed in Recruitment Technology
Just as Pay-Per-Click was the revolutionary way of finding qualified candidates in its day, referral recruitment is today’s game-changing technology. Preferhired exploits the power of social networks and the gig economy to create a potent, motivated recruitment apparatus that reduces costs for employers while driving high-quality, pre-vetted leads directly to their inbox. We’ve moved Pay-For-Performance to “ PAY-FOR-SUCCESS”. It’s an entirely new way to find your next hire, and it’s exactly the sort of risk that most HR & TA professionals are afraid of. However, at the end of the day- HR & TA folks don't want clicks, they want butts in the seats (hires)!
Except that we know how that turns out. Don’t be the person that sticks with what they know. Be a risk taker. Be bold and push out of your comfort zone. If my early story is any indication, CHROs that embrace this new approach to finding candidates will be handsomely rewarded in their career. They’ll find better candidates than their timid colleagues in less time, at a lower cost.
These are the bold moves that distinguish CEOs from everyone else. If more HR & TA professionals approached risk as an opportunity instead of an impediment, you’d begin to see significantly more CHROs assuming the CEO role, and that would be an exciting world to live in.