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Chief Human Resource Officers Have an Additional Focus: ESG Issues

Chief Human Resource Officers Have an Additional Focus: ESG Issues

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 (CHRO). Now, CHROs are being called on to play a greater part in addressing the environmental, social, and governance (ESG) matters—both the risks and opportunities for companies.

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 to shape an organizational culture that both attracts and retains workers.

Insights from the report, The CHRO’s Role in Navigating the Future of Work, include:

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

What to expect:

  • 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.

How to prepare:

  • CHROs should follow a consistent framework for their formal and informal communications with stakeholders on human capital management.

“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,” said 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.”

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

What to expect:

  • 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.

How to prepare:

  • 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.

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

What to expect:

  • The HR function will have a broader impact on people across the organization (e.g., 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.

How to prepare:

  • CHROs will need to develop 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, prioritize 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 organizational values, evaluate and refine programs, 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.

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

What to expect:

  • 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.

How to prepare:

  • CHROs will need to reimagine 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 maximize 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.

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

What to expect:

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

How to prepare:

  • Develop authenticity, empathy, and a growth mind-set, coupled with a mastery of HR-related skills such as performance management, coaching, 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.

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