CEOs-and-CHROs

CEOs
and
CHROs
Crucial allies
and potential
successors.
www.kornferryinstitute.com

1
A new CEO received a number of congratulatory comments
from peers and subordinates. They were impressed by his
past success and excited about future opportunities. But
three former CEOs and colleagues, after lavishing praise, also
quietly warned, “Be careful what you wish for. Your new role is
daunting, demanding, and lonely.”
CEOs today face unheralded pressures as their organizations
are met with enormous changes in general business conditions
and more demanding stakeholder expectations. Fifty years
after the inception of the Fortune 500, only 65 companies (13%)
remain independent enterprises. The half-life of technological
innovation continues to get shorter. Economic and cultural
changes are compounded by widespread access to information
and inevitable globalization. Investors, customers, regulators,
and outside communities all place enormous demands on
company performance. Talented employees are more mobile
and have more choices about where to work and how hard to
work. CEOs who don’t personally adapt and create adaptive
organizations fail.
CEOs traditionally responded to these pressures by mastering
product and service skills through knowing and meeting
customer demands, by building disciplined operational skills
through understanding systems, and by ensuring financial rigor
through implementing financial controls. The pathway to CEO
often originated in sales/marketing, operations, or finance.
For today’s CEO, marketing, operations, and financial acumen
are only the table stakes for success. The increased business
pressures require CEOs to possess an additional set of skills
that will allow them to build robust and resilient organizations.
Creating the right organization is less about structure—roles,
responsibilities, and rules—and more about capabilities—that
is, talent, leadership, and culture. Drafting an organizational
chart that lays out who reports to whom is less important
than creating a corporate identity that communicates the
expectations of the firm’s brand to customers and the
expectations of the firm’s culture to employees.
Introduction

“Succession to a CEO role requires a balance of technical and people
skills,” says Peter Goerke, group director of human resources and
member of the group executive committee at Prudential PLC. “For
all C-suite roles (and often at least one level down), there has been a
gradual shift in requirements towards business acumen and ‘softer’
leadership skills. Technical skills are merely a starting point.”
Korn Ferry research confirms his observation. Best-in-class executives
(those in the top 10% of pay for their function) tend to have leadership
styles that motivate employees, develop future leaders, and create
appropriate cultures. Executives more frequently are being evaluated on
how they treat people, nurture future leaders, and create the right work
environment. And rightly so: well-managed talent, leadership, and culture
are what enable sustainable customer, operational, and financial results.
2

Irrespective of functional background, the best-in-class senior
executives tend to be more similar than different in the way that
they lead the workforce and shape the workplace. These leaders are,
of course, technically competent, but they also tend to present an
approachable, informal, and inclusive leadership style. They ensure
employees leave meetings feeling better about themselves, which
results in a greater commitment to doing the right work. As credible
activists, these executives instill a growth mindset that enables others
to make acceptable customer, product, operational, and financial
choices. And they create a work environment in which employees feel
they have the opportunity to grow personally and professionally by
contributing value to their company.
Successful leaders recognize and appreciate the complexity of
modern business. At the same time, they are able to find patterns in
this complexity. They see around corners, envisioning future product
innovations, customer expectations, technological imperatives, or
financial requirements. But they aren’t bogged down by hypothetical
options; they recognize the importance of winnowing choices and
making essential selections that position their organization to win.
An analysis of executive profiles and assessments collected by Korn
Ferry has found that, across functions, best-in-class leaders have
higher levels of emotional awareness and competence in six key areas.
Tolerance of ambiguity. They don’t need to have all the answers
and can work in conditions of uncertainty and change. They are
comfortable surrounding themselves with people who are different
from them in order to better see the many sides of a problem or
opportunity. As such, they are change champions who can readily
initiate and institutionalize change.
Empathy. They know their personal strengths and weaknesses and
are adept at connecting with others. They are able to “read the
room,” assess the general culture of their team, and quickly size up
other people’s strengths and weaknesses. This allows them to place
people in positions that use their skills to fortify others. They are
excellent talent scouts and culture architects who recognize potential
to get the most out of their people while creating a productive work
environment.
Successful leaders
see around corners,
envisioning
future product
innovations,
customer
expectations,
technological
imperatives,
or financial
requirements.
3CEO AND CHROS
What best-in-class
leadership looks like.

Confidence. They have confidence to face and make bold decisions.
They recognize that leaders have to take smart risks and are willing
to act before all the data is in. That said, they know how to access
constantly updated data and often surround themselves with others
who enable them to make informed decisions. In today’s changing
business context, speed and adaptability are crucial to winning.
Being a change champion means taking risks, sharing credit, facing
failure, learning rapidly, and looking forward not backward.
Composure. They are emotionally steady when pressure is high.
As leaders they need to remain calm and not get easily frustrated,
which can rub off on their own teams.
Energy. Beyond just physical stamina, today’s leaders need mental
vigor and the ability to sustain analytical thinking despite long
and arduous days. The energy gives leaders tenacity in the face of
difficult situations, and they leverage that intensity to keep others
motivated as well.
Adaptability. Best-in-class leaders are able to adapt to different
situations by listening to and accommodating others’ methods.
In the global business world, it is about being able to bring together
and accept a diversity of views and styles.
Needless to say, the warning counsel of former CEOs to future
CEOs is not a surprise. With changing business conditions come
changing requirements for success. The CEO’s job is hugely
demanding and continues to become even more so with the
shifting regulatory landscape, global expansion, and constant
communication required.
And it is lonely.
4

CEOs need social and emotional support—allies who don’t just tell
them what they already know (e.g., customer, operational, or financial
expertise), but who tell them what they need to know: Are they
having the impact they intend as leaders? Do they have the right
executive talent in place? Is the culture productive and energizing,
or toxic and demoralizing? Without leveraging deep insights on
talent, leadership, and culture, CEOs may have exceptional technical
solutions that are not implemented, or implemented out of sync with
the rapid change in global markets.
It is the chief human resources officer (CHRO) who can help.
This person understands deeply “the importance of leadership,
integration, and personal skills,” says Kenneth J. Carrig, who led
HR in many global organizations (SunTrust Bank, Comcast, Sysco,
Continental Airlines). While all senior leaders need this knowledge,
such expertise is currently concentrated in HR.
CEOs increasingly seek insights from their CHROs to help them
succeed. The role of HR in organizations has evolved dramatically
over the last two decades. HR was once the administrative function
that defined terms and conditions of work and dealt with the union
landscape. It then focused on developing functional expertise
through people and organizational processes such as staffing,
training, performance management, compensation, communication,
and organizational design. In more recent years, these HR practices
have been used to help implement strategy. A growth plan centered
on product innovation, for example, requires different talent,
leadership, and culture from a customer intimacy approach. HR
leaders design practices to implement these differences.
In recent years, HR has shifted from an inside to outside focus.
Rather than “the employer of choice,” HR now focuses on being
“the employer of choice” of the employees our customers would
choose. Training programs are co-created, co-delivered, and
co-attended by people outside the company (e.g., suppliers,
customers, regulators). Organizational designs are less about role
clarity and more about governing to build customer value. External
communications to customers deliberately match internal employee
messaging. The brands that organizations seek to build outside
become the cultural expectations inside.
HR has evolved
dramatically, from
an administrative
function to one
that is integral
to implementing
strategy.
5CEO AND CHROS
The CHRO: a key ally for CEOs.

This evolution from administrative to functional, strategic, and
now outside-in thinking has expanded the mental map of CHROs
dramatically, putting them in a unique position to support CEOs. With
their business acumen, effective CHROs can accurately converse about
customers, products, operations, and financials. Further, they can help
CEOs actually transform the organization by building a high performing
executive leadership team, working with the board on issues such as
compensation and succession, and monitoring the culture.
Jean-Christophe Deslarzes, who is executive vice president for HR
and on the group executive committee at ABB, describes the business
leader role for top CHROs: “Strong CHROs are business leaders.
Business because they understand market dynamics, know the business’
key success drivers, are financially literate, and have integrated what
makes the company’s customers happy. Leaders because they need to
convince and influence with empathy and energy in order to have the
desired impact,” he says. “Indeed, the more informal authority [CHROs]
have across the organization presents them with a greater leadership
challenge than the formal hierarchical position a general manager has.
[The CHRO role], thus, is an invaluable leadership experience.”
Over 25 years of research at the University of Michigan’s Ross School
of Business and the RBL group, it has been determined that high-
performing HR professionals master six competency domains that are
also essential to CEO success:
Strategic positioner. HR professionals go beyond knowing the business
to helping CEOs focus strategic direction and align choices that create
value for investors and customers and respond to changing external
conditions.
Credible activist. HR professionals build relationships of trust with key
stakeholders outside (customers, investors, communities, regulators)
and inside (board, top team, employees) and take bold positions that
drive future performance.
Capability builder. HR professionals recognize the power of their
organization’s culture, align the internal culture with external
expectations, and transform the culture as required.
6

Change champion. HR professionals are able to both initiate and sustain
change so that the organization anticipates and responds to external
pressures for change.
HR innovator and integrator. HR professionals wisely innovate and integrate
HR practices around people, performance, information, and work to improve
talent, leadership, and culture.
Technology (information) proponent. HR professionals know how to source
structured and unstructured information from the cloud, workforce analytics,
and scorecards to make more informed decisions.
Given the pressures coming to bear today on both CEOs and CHROs, it
should be noted that their effectiveness stems from essentially the same set
of skills. Diane Gherson, senior vice president of human resources at IBM,
states that “all our successful leaders were selected (and developed) for
talent, leadership, and cultural skills since these skills are indeed required of
any general manager or leader of a major business unit.”
7CEO AND CHROS

The data in Figure 1 reports the best-in-class (top 10%) demographics and
shows that the education of the six groups is about the same, that women
make up a much higher percentage of CHROs than they do the other
roles, and that the top CHROs earn less than CFOs, but more than their
counterparts in IT and marketing. The higher pay for CHROs may be driven
by a short supply of these top-flight, strategic-thinking executives who have
the unique insights that CEOs demand.
Figure 1
Demographics by leadership role.
Position Education Mean annual base Women
compensation (USD)
CEO
COO
CHRO
CFO
CMO
CIO
1.75
1.70
1.75
1.64
1.75
1.64
$747,000
$673,000
$510,000
$555,000
$450,000
$429,000
13%
12%
42%
10%
17%
12%
Over several decades, through proprietary psychometric assessment tools,
Korn Ferry has profiled leadership styles of thousands of senior executives,
including CEOs, chief operating officers, and functional leaders (CHROs, chief
financial officers, chief marketing officers, chief information officers).
The assessments gauge how much emphasis (or importance) an individual
places on 14 attributes that have been sorted into three categories: leadership
style, thinking style, and emotional competencies. High or low scores are not
good or bad per se; emphasis on one style or another might be beneficial
depending on the role.
Best-in-class profiles—which are updated routinely to reflect changing
demands and business conditions—are an aggregate profile of the top-paid
10% of individuals in each senior executive role.
CEOs and CHROs:
cut from the same cloth.
8

Figure 2
Leadership styles by executive role.
2
Task-oriented
CEO
COO
CIO
CHRO
CFO
CMO
Social Intellectual Participative
Task-oriented Social Intellectual Participative
Task-oriented
ImportanceImportanceImportance
Social Intellectual Participative
3
4
5
2.19
5.03
4.04
4.39
5.23
3.70
4.44
2.29
4.94
3.83
4.20
2.45
4.79
3.90
4.22
2.18
4.97
3.49
4.16
2.19
5.09
4.21 4.26
2.00
2
3
4
5
2
3
4
5
2
3
4
5
2
3
4
5
2
3
4
5
These illustrate the extent to which each type of executive is oriented toward task-directive
communication, social interaction, logical or fact-based communication, and collaboration/
participation. These styles are public facing, reflecting a leader’s priorities and what behaviors
he or she finds effective in leading and influencing others.
9CEO AND CHROS

Figure 3
Thinking styles by executive role.
CFO
CEO
COO
CIO
CHRO
CMO
Action-
oriented
Flexible Complex Creative
Action-
oriented
Action-
oriented
Action-
oriented
Action-
oriented
Action-
oriented
2
3
4
5
2
3
4
5
2
3
4
5
2
3
4
5
2
3
4
5
2
3
4
5
2.54
2.14
3.77
4.18
2.82
2.15
3.37
3.95
2.19 2.38
4.38
4.20
2.53
2.32
3.01
4.21
2.70
2.12
3.60
4.23
2.50
2.34
3.96
4.13
These profiles illustrate how different types of executives approach decision making or private consul-
tations, and the relative emphasis on taking action, being flexible, embracing complexity, and creativity.
10

Figure 4
Emotional competencies by executive role.
CEO
COO
CIO
CHRO
CFO
CMO
Ambiguity
Tolerance
ConﬁdenceHumilityEnergyEmpathyComposure
Ambiguity
Tolerance
Ambiguity
Tolerance
Ambiguity
Tolerance
Ambiguity
Tolerance
Ambiguity
Tolerance
3
4
5
3
4
5
3
4
5
3
4
5
4
5
33
4
5
4.77
4.00
4.31 4.34
4.81
5.15
4.56
3.90
4.13
4.72
4.16
5.11
4.61
4.04
4.35
4.15
4.68
4.88
5.06
3.97
4.45
5.01
4.17
4.83
4.44
4.03
4.12
4.41
4.59 4.64
4.63
3.79
4.11
4.85
4.32
4.58
These charts illustrate the degree to which an executive exhibits certain personal traits that influence
leadership, including tolerance of ambiguity, composure, empathy, energy, humility, and confidence.
11CEO AND CHROS

Figure 5
Score differences on assessments by executive role.
This table reports the Euclidean Distance from the profile of the best-in-
class CEO, in which a lower number indicates more similarity. Overall, best-
in-class CHROs (distance .735) are closer to CEOs across 14 traits than are
CFOs (.82), CMOs (1.039), and CIOs (1.031).
Leadership Thinking Emotional Total
CEO
COO
CHRO
CFO
CMO
CIO
0
0.313748
0.43553
0.409967
0.225341
0.598964
0
0.541929
0.282624
0.235592
0.776315
0.743354
0
0.349363
0.52137
0.672062
0.653219
0.388151
0
0.717064
0.735792
0.82
1.039297
1.030531
Although most best-in-class executives reveal a similar silhouette, it
is clear that CHROs are cut from the same cloth as CEOs and COOs.
It is not a surprise that COOs and CEOs have similar profiles, given
that they play similar roles. What is fascinating is that best-in-class
CHROs are so much more similar to CEOs than are CFOs, CIOs, or
CMOs. Even examining nuanced distinctions, we find that the CHRO’s
profile is statistically closer to that of the CEO and COO than are the
other key functional leaders (see Figure 5).
12

As we described earlier in this article, CEOs in today’s dynamic
and complex markets succeed not only with technical
insights about customers, products, operations, and financial
performance, but through managing talent, leadership,
and culture. Because CHROs have profiles that match CEO
emotional and thinking profiles, and because CHROs have
unique insights about talent, leadership, and culture, CEOs may
turn to CHROs as leadership coaches and talent architects.
As coach, a CHRO may help a CEO recognize unintended
consequences of his or her behaviors. Most people judge
themselves by their intent, but others judge them by their
behavior. CHROs may help CEOs recognize whether their
personal behavior is actually achieving their desired outcomes.
For instance, if a CEO proposes driving for increasing
market share by creating deeper connections with targeted
customers, a CHRO may then monitor the chief executive’s
time and behavior to test for leadership hypocrisy. Is he or she
personally spending time with key customers? Asking about
customer results? Holding others accountable for customer
performance? Building a customer-focused culture throughout
the organization?
In addition, the CHRO may help the CEO identify and make
choices about creating the right organization to deliver on
stated goals. This might include addressing questions such as:
Talent:
© To what extent do our employees have the knowledge and
skills required to deliver on our expectations for customers,
investors, and communities?
© To what extent do we have an employee value proposition
that increases their commitment and engagement to the
right goals?
© To what extent do our employees find meaning and purpose
from their work so that they are self-motivated?
CHROs may help
CEOs recognize
whether their
personal behavior
is actually
achieving their
desired outcomes.
13CEO AND CHROS
CHRO role 1: coach and architect.

Leadership:
© To what extent do we recognize the importance of collective
leadership in reaching our goals, and if so, how?
© To what extent do we create a leadership brand that defines how
leaders inside our company can best serve external stakeholders?
© To what extent do we regularly assess our leadership capability to
discover areas of strength and weakness?
© To what extent do we seriously invest in developing future leaders
who will be prepared to meet upcoming business requirements?
Culture:
© To what extent have we defined our culture from the outside in,
so that our external firm brand becomes the basis for our internal
ways of thinking and acting?
© To what extent have we created a disciplined process of evaluating
and transforming our culture?
When CHROs raise and offer choices about these organizational
questions, they help their CEOs respond to the challenges they face.
Thomas Ebeling, CEO of ProSiebenSat.1 Media AG (and previously
CEO of Novartis Pharma), acknowledges how crucial it is to have
an excellent CHRO on hand. “It is almost impossible to achieve
sustainable success without an outstanding CHRO, who should be a
key sparring partner for a CEO on topics such as talent development,
team composition, managing culture, and personal feedback to the
CEO,” he notes.
Jill Smart, former CHRO at Accenture, says that the “best CEO/
CHRO relationships evolve over time, beginning long before the CEO
is promoted and creating a dynamic in which the CEO knows he or
she can trust the CHRO fully. At the same time, however, the CHRO’s
value depends on being completely candid—and even playing devil’s
advocate when necessary. Simply telling the CEO what he or she
wants to hear negates the value of the CHRO’s advice.”
14

Now we come to a more bold prediction. In the future, CEO
successor candidates may come from HR, in addition to finance,
marketing, operations, and IT.
Most failures of succession occur when an organization focuses
on people more than the requirements of the position. In
general, two or three leading candidates are identified and
monitored, maybe even coached. The evolving demands placed
on CEOs, however, aren’t rigorously discussed or defined.
If future CEOs must manage organizational challenges as
much as customers, products, and financial difficulties, then
CHROs may uniquely have the skills to move into this role. As
Figures 2-5 make visible, today’s CHRO already resembles the
CEO on leadership traits as much or more than does any other
functional executive. If the ability of an organization to change
and adapt becomes the key differentiator, then CHROs who
have mastered these skills may become excellent candidates for
CEO succession.
Of course, CHROs cannot expect to be on the succession slate
without experience and grounding in business operations. As
Ebeling states, “I do not believe that a CHRO can become CEO
without being tested as an operational business leader.”
If CHROs master those table stakes skills, however, they may
be viable candidates for CEO roles. As Goerke observes, “The
skills that help an executive climb the corporate ladder will not
be sufficient once they get near the top. Once people reach
the C-suite or close to it, technical and functional expertise
matters less than leadership skills and a strong grasp of business
fundamentals.”
If promoted to CEO, such former CHROs would bring some
specific attributes to the role.
If the ability of an
organization to
change and adapt
becomes the key
differentiator,
then CHROs who
have mastered
these skills may
become excellent
candidates for
CEO succession.
15CEO AND CHROS
CHRO role 2: successor candidates.

Good CHROs tend to be highly self-aware. They know their strengths,
weaknesses, and predispositions. They know where to focus their personal
attention and when to surround themselves with others who have
complementary skills. They generally have the interpersonal savvy
to connect with others and to engage them around a common agenda.
They also recognize which leadership style should work in specific situations.
Top CHROs excel at managing others. They deal constantly with complex
people-based situations, both in their own teams and as an advisor to
peers and other executives. Sometimes, a CEO’s ego is the thing that gets
in the way of creating an organization that is stronger than its individuals.
CHROs, whose efforts so often require working with others, are well
prepared to create teams in which success is viewed as a collective, not
individual, result. CHROs who appreciate the science and art of working
with others may ensure more employees realize their potential. They may
help employees clarify their personal values and how those values align with
the organization’s goals. CHROs may also be able to put aside ego, which
can create political gridlock, and positively engage others in accomplishing
organizational objectives.
Successful CHROs tend to have deep insights about organizations.
They understand, for instance, the power of integrated systems. They
recognize that processes surrounding customer insights, product innovation,
operational excellence, and financial controls are best integrated so that
the overall organization has a common identity. They also understand how
to foster collaboration across geographic, functional, or business group
boundaries. They are constantly checking the cultural barometer of the
entire organization, especially the interactions of the executive leadership.
Top CHROs know how to serve external stakeholders through internal
actions. They help build customer share by using HR practices to encourage
customer centric behavior. They enhance investor intangibles by helping
shareholders gain confidence in future leaders. They help foster alliance
partners or joint ventures and make sure that the complexities of alliances
work. They bolster community reputation by creating a positive work
environment inside the organization. They are advocates and ambassadors,
always conscious of the image projected to external audiences. Additionally,
increased regulation in some parts of the world have given the CHRO
greater interaction with regulators on issues such as CEO succession and
appropriate corporate governance around compensation.
16

In short, good CHROs frequently possess a blend of unique skills
that CEOs of the future are likely to require. This is not to suggest
that leaders from other functions are lesser CEO material, but
rather that boards should take another look at the CHRO when
working on succession.
Obviously, CHROs who are not CEO candidates should still provide
insights during board discussions on succession. Debra Perry,
who serves on multiple boards, recognizes how valuable such
contributions are: “CHROs can help boards identify the critical
elements of leadership necessary to deliver on the organization’s
strategy. Further, the CHRO could provide insight into how those
leadership elements can be woven into the leadership’s team
objectives. The CHRO can also provide candid feedback on the
gap between leadership potential and reality in fulfilling these
objectives.”
To date, few individuals with an HR functional background have
succeeded into the CEO role, but some with significant stints in
HR are starting to emerge, including Mary Barra at General Motors,
Samuel R. Allen at John Deere, Steven Newman at Transocean,
and James C. Smith at Thomson Reuters. CEOs who spent time as
a CHRO as part of their corporate career development frequently
comment that it made a huge impact on their growth personally
and professionally.
If HR leaders are to develop into future CEO candidates, they need
to acquire the foundational finance and operations skills first. That
requires not only formal education or training, but also primarily
job experience. Such career breadth often tops the list of desires
when CEOs and chairmen begin recruiting a CHRO, and shortlist
candidates with such experience are viewed more favorably.
Armed with that knowledge, CHROs should send HR’s high
potential talent to work elsewhere. This is not only a long-term
investment in the development of individual leaders, but also in
the leadership talent of the whole organization.
For that new CEO who was warned about the difficulties of
the job, this research also offers hope. In the CHRO, there is an
available partner who understands how the CEO works, thinks, and
leads—and how talent, leadership, and culture can be used to win
in the market. The CEO’s job will always be daunting, but it need
not be lonely.
17CEO AND CHROS
The future of the connection
between CEOs and CHROs.
If managing talent
and culture drive
CEO success,
should more
organizations
put CHROs in
the succession
candidate pool?

Dave Ulrich
Dave is the Rensis Likert Professor at the University of Michigan’s Ross
School of Business and a partner at consulting firm RBL Group. He has
published more than 25 books, including The Why of Work, Leadership
Sustainability, and The HR Value Proposition.
dou@umich.edu
Ellie Filler
Ellie is a managing partner with Korn Ferry and leads the firm’s Human
Resources Center of Expertise for Europe, the Middle East, and Africa.
Before entering the executive search profession, she spent more than
12 years in HR with some of Australia’s largest organizations.
ellie.filler@kornferry.com
About the authors.
18

About Korn Ferry
At Korn Ferry, we design, build, attract, and ignite talent. Since our
inception, clients have trusted us to help recruit world-class leadership.
Today, we are a single source for leadership and talent consulting services
to empower businesses and leaders to reach their goals. Our solutions
range from executive recruitment and leadership development programs,
to enterprise learning, succession planning and recruitment process
outsourcing (RPO).
About the RBL Group
The RBL Group helps businesses drive results by transforming human
resources, building leadership and talent, and shaping organization and
capability. We provide talent assessment, training and development, and
strategic HR consulting in the service of competitive advantage. Visit
www.rbl.net to learn more.
About The Korn Ferry Institute
The Korn Ferry Institute, our research and analytics arm, was established
to share intelligence and expert points of view on talent and leadership.
Through studies, books and a quarterly magazine, Briefings, we aim to
increase understanding of how strategic talent decisions contribute to
competitive advantage, growth and success.
Visit www.kornferry.com for more information on Korn Ferry,
and www.kornferryinstitute.com for articles, research and insights.
www.kornferry.com © Korn Ferry 2014. All rights reserved.
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