Chief people officers often fail to land a CEO role because they do not have the same level of commercial experience as other C-suite executives. They must get better at articulating why success in the people function equates to success across the entire business operation, writes Graeme Paxton.
The next CEO is almost never the chief people officer (CPO). It’s sad and often unfair, but that’s the reality for most CPOs.
In most cases, the next CEO has previous experience in running large business divisions, typically the chief operating officer, chief financial officer or someone in another senior management role. It seems unjust to acknowledge it, but the position of CPO is seen as the underdog when businesses are looking for their next CEO – why are they so rarely considered?
CPOs typically rise up the HR ranks within a business, relying on their people skills to recruit new staff, develop training programmes and improve employee retention rates to create a high-performance, happy workplace. They are highly skilled individuals, but they rarely get the same breadth of business experience as other managers.
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For marketing and business executives for example, there are often opportunities to move around internally, trying their hand at sales, operations, marketing and other areas. Whereas in the people function, managers are far more likely to stay within their department as they move up the career ladder. The lack of experience and limited opportunity to expand people skills to wider business capabilities such as overseeing financials or technology implementation is a significant roadblock for CPOs when it is time to apply for the CEO position.
Interestingly, a PwC C-suite pulse survey in 2022 revealed that three-quarters of CEOs said that hiring and retaining talent was the most critical factor determining the growth of a business. CEOs understand the value of people skills, but people skills alone aren’t enough for a CPO to make the jump into this role.
CPOs must find ways to bridge their leadership skills gap, whether it be through working in other departments as they climb the ladder or taking on responsibilities for more traditional commercial activities.
Perceptions of commercial value
Another challenge CPOs face is that the board simply does not understand the role they play in the commercial growth of a company. This is where the COO and CFO shine as typically their work directly, and visibly, contributes to a company’s revenue growth.
In reality, CPOs are integral to a business’s growth because they look after its biggest asset – its people. Too many board members have a blind spot to this reality, placing key CPO skills such as communicating, connecting and networking under the patronisingly vague banner of “soft skills”. This is a CPO needs to be good at articulating the role their responsibilities play in commercial growth.
CPOs can also come under scrutiny when a people-related event fails to achieve success. The Harvard Business Review reported that 70 to 90% of mergers and acquisitions fail to deliver due to cultural clashes and a dilution in the merged companies’ purpose. This puts a lot of pressure on the CPO to have a robust strategy in place.
A key trait of a CEO is to be strategic about the commercial growth of the business, whereas CPOs are often perceived to be strategic only about their people responsibilities.”
Growth can only be driven by innovation when employees feel psychologically safe enough to fail, without fear of punishment. This comes back to the theme of people needing to perform.
What can CPOs do to become CEO?
For a CPO to make the jump to CEO they need to round out their skills. A key trait of a CEO is to be strategic about the commercial growth of the business, whereas CPOs are often perceived to be strategic only about their people responsibilities. Too often people strategies stop at creating an environment of more engaged employees, but that misses the crucial link to the commercial success of a business.
To give themselves a chance of getting the top job, a CPO must show they can be strategic about the whole business. They need to outline their tangible impact on growth, showcasing, for example, that having more engaged employees will directly lead to an extra “£XX” profit for the business. That’s when they can truly articulate their commercial value.
Revenue growth doesn’t naturally sit in a CPO’s job description, but they can play a vital role in unlocking the power of people.
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We need to see a change in mindset from the CPO – one that will win over the other board members. The CPO must be prepared to showcase the connection between what they do and growth in wider business functions.
