Human Capital Management Insights For CEOs

A couple of recent posts on the McKinsey website caught our attention. If you’ve read our blog, you know we’ve written about the importance of culture, millennials, and the changing nature of leadership. So when we listened to these interviews, we found them interesting and enjoyed the human capital management insights for CEOs they provided.

On the McKinsey Podcast, McKinsey global managing partner Dominic Barton spoke on how CEOs and boards can become strategic in managing human capital. As he met with CEOs, government leaders, and social-sector leaders over the past decade, a recurring theme kept coming up. He would ask what three things they could teach their younger self, and regardless of industry or country he kept hearing, “I would have spent more time on people. I would have removed people faster. I would have pulled people up faster. And I would have spent more time with people.” It was consistent. The most scarce resource is talent. “We are awash in capital. It’s talent that you need to drive it.”

He went on to say, “There’s no business plan without a talent plan. I’ve stolen that [phrase] from Steve Schwarzman at The Blackstone Group. He introduced it into the organization when he hired Sandy Ogg, who was CHRO at Unilever, as an operating partner to come in and help think about the financial plan for a company that they bought. You have to have the people plan go with the financial plan or it doesn’t work. And be explicit about it.” The points he raises are real and the need to focus on the CHRO role is becoming critical for CEOs.

In an interview with McKinsey Publishing’s Rik Kirkland, CEO of the Dubai based Majid Al Futtaim Group, Alain Bejjani, speaks to the ability for companies to develop effective leaders for long term success. “If we want to succeed in business we have to succeed in our people agenda.” He goes on to say, “If you look at the business community today, the amount of investment in leadership is not going up; it’s going down. Yet the biggest issue [we are facing] is leadership, not technical skill set.”

He also notes two unique challenges we’re facing today at the leadership level. The first is that we have an entire generation of executives experiencing a fast moving digital transformation. “They are living in a world where the customer is becoming much more demanding, much more informed. In many cases, customers are better informed than the executives themselves about their own business because of digital technology. They are living in a world where the customer expectations are not shaped anymore by your industry. It’s not good enough anymore to be better than your direct competitor. You need to be better than the sources of inspiration who are setting the standards for your customer.”

The second challenge he calls out is the need to identify different skill sets than what we’re accustomed to. “I don’t think that the answer lies in who you hire. The reality is that whatever we know, whatever experience we have, is going to be obsolete in three to five years. So, experience is overrated. What’s important is the capabilities that you develop in your business to accompany and support your talent during their tenure with you. How do we make sure that we accompany our people in their leadership development and career development so they can face the challenges of today and tomorrow, and steer our business in the right way?”

What he’s referring to is agility. And even though it’s overused at this point, it is still one of the most important skill sets the leaders of tomorrow will need. Mr. Barton agrees, “With the world moving faster, you’ve got to be able to re-allocate the capital and the people more quickly. If you look at a lot of start-ups with 50 to 100 people, you notice they’re not on a one-year planning cycle but an eight-week planning cycle.”

Mr. Barton also believes that we need to decentralize organizations. “In a hierarchical organization, the people who are presumed to know the most are the most senior. I don’t believe that’s true. Maybe it never was. It certainly is less true now than it was. People with the right information are down in the organization. So decentralizing—flattening, allowing smaller groups of people to be able to make decisions faster—is an element of agility.”

Another element Mr. Barton thinks can help with employee engagement is building cross-functional teams that have autonomy and focus on specific challenges. They are assembled for a short term, attack and solve the problem, and then disband or regroup to solve another problem. He notes, “People like working in that type of an organization. You feel more ownership. You feel you get more decision rights. You grow faster. But you have to do it properly, obviously.”

If you’re looking for a CHRO or have questions on what skills a top CHRO candidate needs, send us a note. Our executive recruiters are here to help guide you through the process of finding your next HR leader.