What is the Role of The CHRO in Corporate Transformation?

David Lapin, CEO of Lapin International

The following is from an interview with David Lapin, CEO of Lapin International. This interview was edited for clarity.

  • Quick Takes from David Lapin on…

    Issues facing senior HR staffSenior HR leaders don’t have tangible tools to gauge their progress like other senior staff do. There’s nothing that they are delivering that is measurable enough to be able to attract the attention of the P&L guys, even though they talk the language. This adds to their disconnect.

    The need for a business philosophy

    Our strategic work is very much aligned with our human work. Our research finds that when a business develops, implements, and integrates a business philosophy, they outperform their peers by multiples.

    Challenges in implementation

    The first challenge is getting the leadership team to take time to develop the Philosophy. The willingness to invest is the second challenge. Last is getting HR people to do things other than just transacting, such as driving the strategic direction of the business into new areas.

    Why many organizational transformations ultimately fail

    That’s because there is an attempt to transform the structure and process of the business without attempting to transform the thinking. If you’re only transforming the structure and the process, I don’t call that transformation. I call that change. A true business transformation requires transformation of thinking. And that’s where the HR team comes in.

    Difficulties in implementation

    I think it’s very difficult to make that change from within. It’s hard to change the thinking of an organization from within that very organization. You need an outside force to challenge the thinking. To question the thinking. To stretch the thinking.

    Ulterior motivations

    I sometimes think that CEOs, deep down, are hiring CHROs to take care of that nuisance called people. And although the language says, “People are our most valuable assets”, it’s clearly not true. Because when things get rough, what’s the first thing that happens? You cut people.

    Self investment

    CHROs are so focused on delivering to others, that they seldom get delivered to, particularly in the areas of development. They’re worried about attracting talent, but who’s developing them? The purpose of this workshop is to offer them an opportunity, for their own development.

    Final thoughts

    I think that the redefined CHRO, the reinvented CHRO, is the key to transformation for business, and it’s the key to business growth. CHROs need to be able to see their role as going far beyond the transactional acquisition of talent and the transactions of talent planning, and actually look at it as a much more dynamic role in partnering with the business’s leaders in growing the business.

Samuel Dergel: I’m fascinated by Senior HR people. But there’s a disconnect in companies, between where they see themselves wanting to add value and what they are relied upon to add value for. They continue to tell me that they have a challenge, becoming a serious partner to the C-Suite. What do you think are the causes of that, and what can they do to change it?

David Lapin: There are a few causes. One, is the degree that people think and act in silos. When people are in their business silo they are not thinking about things such as values and culture and how we think about life. In business, we tend to live in our business silo, and exclude other parts of our experience. Then again, businesses themselves are siloed. Business outcomes are driven by the people who have the P&L accounts. So, the effort is applied to those who have the P&L accounts and those who don’t just have a transactional responsibility. The finance guy has to watch and manage the finance, but he’s not expected to have a P&L account. So when, for example, the finance guy can start showing profit, because of the way they’ve restructured something that delivers value, or the tax that they’ve managed to save because they’ve done this or that, only then do people start taking notice of them.

But HR people don’t have that ability. There’s nothing that HR people are delivering that is measurable enough to be able to attract the attention of the P&L guys, even though they talk the language. As such, part of the problem and part of the disconnect that you’re identifying is this: they talk the right language, but this makes it harder. They talk about culture and they talk about talent, and they talk about leadership and how important these things are. But then they put on a different hat and slip back into the silos. When it comes to, “Ok. Are we willing to spend the million dollars on the top levels of our leadership?”, the answer is, “Are you crazy?! What’s our ROI?” So you’ve got this funny conversation going on—yes, it’s really important, but we’re not willing to pay for it.

So, when you ask, “What can we do?”, we must help HR leaders develop a strategic case, a business case for their work. And they must start thinking like business people. There is a cost to HR. There is a cost to leadership and talent development. How do you measure the returns? How do you build a business case? How do you monitor it? That’s one of the things that we really need to help HR leaders do, because it’s a completely different way of thinking than the way that they’ve been used to.

 

Samuel: How does your organization, Lapin International, help these senior HR leaders make that change?

David: Our strategic work is very much aligned with our human work. That’s part of what differentiates us. Let me describe to you what we do and then I’ll show you how critical the HR piece is there, and how they participate.

Our research finds that when a business develops, implements, and integrates a business philosophy, they outperform their peers by multiples. It’s the difference of when they are merely operating and chasing opportunities, doing the things they’ve always done and trying to do it better and more efficiently. The three components of a business philosophy are:

  • A customer-centric strategic philosophy. How do we think about the customer and how do we align our businesses to that thought?
  • A values-driven leadership philosophy. In order to deliver to the customer, we need to build and develop a certain type of culture. We need to attract certain talents. What do we think about leading people, and what is our philosophy?
  • A stakeholder vision. What is the experience going to be like for our stakeholders, if we ultimately get all this right?

Those are the 3 pillars we use for building a business philosophy.  When we build these business philosophies, we have the HR leader present. We are building it with the operational team, the senior executive team, of whom the HR leader is usually a key player. He or she is sitting there as the person who is going to be responsible for the leadership philosophy piece.

So now, we have a customer-centric strategic philosophy, which the operational people drive. We’ve aligned to a leadership philosophy that everybody has signed off on, and then the HR team drives it and makes it happen. They are part of the design of the philosophy, and they implement and execute the leadership piece. This makes them a partner with the CEO and his team on the strategic piece. And then you’ll get leadership development and talent attraction as you take that leadership philosophy and activate it.

 

Samuel: It all sounds very logical. But what are some of the challenges in getting that implemented?

David: The first challenge is getting the leadership team to take the time to develop the philosophy. They need to be willing to take two or three days out of their time, and be exclusively focused on the thinking process to develop that philosophy. That’s the hard part. Once they’ve done that, they’re usually very inspired and they usually get it. And then there’s usually a willingness to invest, which is your second challenge. Thirdly, is that now the HR team needs to do things other than just transact. What HR people are currently comfortable doing is serving the organization. For instance, I’m the leader of a team and I need three new people, so I tell the HR team, and they find them. If I need to fire somebody, the HR people help me fire them. Basically, responding and being reactive to the needs of the executives is what they are comfortable doing.

Now we are talking about driving the strategic direction of the business into new areas, and for that, they are going to need budget and funds for leadership development, talent retention, and so on. So, the operational people need to realize the value, which they usually do after these sessions, and need to be willing to invest. But, likewise, the HR people must develop the business case for leadership development, and show ways of measuring their ROI.

 

Samuel: I want to talk more about organizational transformation. Many companies seem to be in a perpetual process of transforming, whether it’s by design or outside influences forcing that. What part could, or should, senior HR executives play in those kinds of transformations?

David: Let’s take a step back and try to understand why so many of these transformations are unsuccessful. That’s because there is an attempt to transform the structure and process of the business, without attempting to transforming the thinking. If you’re only transforming the structure and the process, I don’t really call that transformation. I call that change. You’re changing something, you’re tweaking something, you’re improving something, you’re swapping something out for something else. When I take my car for repairs, even if they take the old engine out and put in a new one, that’s not transformational, it’s just a repair. Even if they change the entire car, take out every piece of it. For example, if it was a BMW 5-series to start with, and that’s what you have when you’ve finished—then that’s not transformation, that’s just improvement. Transformation is when you put in an entirely different engine into it that has an entirely different capability.

In a business, that’s transformation of thinking. People need to think differently. And that’s where the HR team comes in. They need to be the architects of the new thinking. And that’s part of this idea of a business philosophy driving transformation. A transformed business needs to have a core philosophy and everything that’s going to drive it forward into the new place. And everything it does links back. And in this way, the HR team becomes crucial in managing the transforming of the thinking of the organization.

 

Samuel: In your experience, when does a senior HR leader understand that? Is it through trial and error? Or do they get inspired? What is it that makes them realize that they can’t do it the way it’s always been done?

David: Some of them just get it. There are very few, but some just get it. Of those who get it, some of them know what to do about it, but many don’t. To better understand what our work does, I think it’s very difficult to make that change from within. It’s very hard to change the thinking of an organization from within that very organization. You need an outside force to challenge the thinking. To question the thinking. To stretch the thinking. So, the crucial part for an HR leader is, once I’ve realized that, I’ve got to change the thinking of our organization and who can I partner with in doing that? Which are the kind of consulting companies that transform the thinking, and not just the operations? Once I’ve transformed the thinking, then I might get a more conventional consulting company to help me design the right operations and processes needed for the new philosophy. But that understanding—that we need to be thinking differently about our businesses—they need an external partner for that.

 

Samuel: How can a CHRO take their relationship with their CEO to a new level?

David: Interestingly, I sometimes think that CEOs deep down are hiring CHROs to take care of that nuisance that is called people. And although the language says, “People are our most valuable assets”, it’s clearly not true. Because when things get rough, what’s the first thing that happens? You cut people. You don’t dump your most valuable assets. You utilize them. So, I think that this lie is costing companies a lot. If you really believe that people are a nuisance, then yes, manage fewer and fewer people and get more and more technology to replace them. Then the CHRO’s job is to get the company to need fewer and fewer people. But, if you really believe that people are the company’s most valuable asset, then the CHRO’s job is to unlock their potential to impact the organization’s growth. I think that the CHRO needs to make it clear to the CEO: “Let’s understand—am I here to manage that nuisance we call people? Or am I here to unlock the resource that we call human?” If it’s the latter, then I will partner with you, because we are going to do this together. If it’s the former, I’ll take care if it myself.”

 

Samuel: What kind of questions can a CHRO ask in their final interview, to make sure then that the CEO means what he says—that people are their most important asset?

David: They could say something like, “Would you feel I’m doing my job if I take the people hassle off your shoulders? You don’t need to worry about the people stuff. Would that be success?” If they say “Yes”, then you know we have a problem. The CEO should be saying, “What? Take the people stuff?! What are we without the people stuff? I’m the leader. Don’t you dare take the people stuff off my shoulders. Help me manage them. Help me lead them.” Then you’re on the right track. And that’s the CHRO’s job, to help the CEO lead the people, not manage the hassles.

 

Samuel: Transitioning on to your upcoming workshop for executives—why should senior HR people come to this, and what should they expect when they leave?

David: We feel—and tell me if this matches your experience—that CHROs, even the really good ones, are so focused on delivering to others, that they very seldom get delivered to, particularly in the areas of development. They’re worried about attracting talent; they’re worried about attracting leaders. But who’s developing them? So, one of the purposes of this is to offer them an opportunity, for their own development. So, it’s not about sales or business. It’s a workshop—that for two full days, you can experience your own development. You can develop what I call your interiority as a human being so that you can come from a deeper place in your work, so that you are nourished and replenished at a deeper place, and can see your role from a deeper place. That would be one reason. And the second thing is they will be learning tools to increase the impact of their influence—not by using their status, because CHROs don’t have status; that’s part of the problem, because they don’t have a P&L account. They don’t have the status required to influence their peers. They will learn how to use their own human stature; how they as individuals can get the outcome and the results that they need to be effective CHROs.

 

Samuel: Have you run a workshop like this before?

David: Not for CHROs. We’ve run these workshops for everybody else. And that’s what got us thinking about CHROs. They are always our clients, arranging for it to happen. But we look at the number of CHROs who are drained and just so tired, because they are constantly giving out, and having little chance to invest in themselves.

 

Samuel: Any final thoughts that I can share with my readers that you think is important for them to know?

David: I just think that the redefined CHRO, the reinvented CHRO, is the key to transformation for business, and it’s the key to business growth, because everyone is acknowledging that talent and leadership are the key for the future. But nobody is giving to the essence of who owns that area. And CHROs need to be able to see their role as going far beyond the transactional acquisition of talent and the transactions of talent planning, and actually look at it as a much more dynamic role in partnering with the business’s leaders in growing the business. You know the famous story of President Kennedy asking the janitor at NASA what his job was? The janitor said, “Why, Mr. president, my job is to get a man on the moon.” That’s when President Kennedy knew that there was a chance at success. And so, you want the CHRO to say, “My job is to grow this business; my job is to improve our ability to deliver to our customers; my job is to deliver better returns to shareholders.” That’s what their conversations should be about. Being a CHRO is just the tool I use, and each one brings different tools. And I think that when CHROs can make that transition, which many are beginning to do, their role in the company will become absolutely crucial, and their relationship with the CEO, as well as that status they need, will be assured.

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CHRO Readers: I hope you enjoyed the opportunity to learn more about David Lapin and his passion for making a transformative difference to you and your organization. This link provides more information on Lapin International’s upcoming sessions this fall in Chicago and Toronto, specifically designed for you.

If my conversation with David resonates with you, I urge you to consider attending this conference.

If you could use an added motivator, I will be attending the conference as well and I will be looking forward to meeting you in person.

 



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