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The strategic CHRO is both a leader and business partner
CHROs are walking a tightrope. They’re balancing a mandate to optimize costs today with investing in the skills needed for tomorrow, and they’re prioritizing working with other leaders to accomplish more. Meanwhile, in their own functions they’re focused on technology upskilling and developing capable leaders fit for growing the company.
Our June 2024 PwC Pulse Survey found that human capital leaders are also recommitting to building a better employee experience, but they’re missing out on key opportunities to do so, especially when it comes to listening to feedback and taking advantage of AI tools in daily operations.
CHROs build leaders while supporting the business
60%
of CEOs cite the CHRO as a highly effective business partner in driving the company’s strategy
In and out of the boardroom, CHROs are championing leadership — both as leaders themselves and by fostering a leadership-centric culture. Nearly half (49%) of CHROs say making their function a more strategic partner to the CEO is a high priority, and it seems to be working. Our survey shows 60% of CEOs label CHROs as a highly effective business partner in driving company strategy.
Separately, CHROs know they need to build effective leaders throughout their companies to drive change. The top priority human capital leaders cite is to develop leadership capabilities within teams, and they’re using new types of formal training to help build capable leaders. As a result, they’re also focusing more heavily on optimizing costs to fund growth and changing the ways they handle performance management and career development.
What you can do
Don’t just be a transactional player. Take a business strategy approach to driving HR as a business. Seek to understand the business priorities of your C-suite peers and your total cost of workforce to identify collective opportunities to optimize that cost and deliver a more aligned experience.
Invest in our future leaders. Focus on building leadership skills for people who may become key leaders in your organization. Consider a variety of tools to shape future leaders who can operate successfully in today’s dynamic environment: formal programs, collaborations with external organizations and academia, rotations around the business and even “stretch” opportunities for employees to experience new challenges outside their current roles.
Get more on this topic
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- What are the top strategic priorities for sector executives?
- What else is important to the C-suite right now?
Hiring is down, cost optimization is up
79%
of CHROs say they’re hiring fewer new employees today than they were 12 months ago
In our survey, 79% of CHROs say they’re hiring fewer new employees — slightly higher than in August 2023. The trend of decreased hiring following the pandemic boom is one seen across industries, and it goes hand-in-hand with HR leaders’ attempts to optimize workforce costs in ways other than headcount. Eighty percent say their companies are doing more to address balancing costs in HR than they were last year.
Today, 86% of HR leaders say they’re increasing investment in skills-based talent architecture, up slightly from 2023. They are more likely to use tax credits to fund investments over the next 12 to 18 months than other respondents (38% CHROs versus 29% all executives). Nearly nine out of 10 (88%) CHROs say they have a plan in place for upskilling their workforce to successfully implement AI and generative AI (GenAI), which can increase productivity by reducing time spent on manual work.
What you can do
Don’t just tighten the purse strings. The more savings you can generate from optimizing costs, the more you can reinvest in the business. Look to automation, rebates and tax credits as sources of funding for strategic initiatives.
Use technology to match the right skills to the right job. Focus on building a solid job architecture that aligns roles with the skills they require. Consider implementing GenAI to streamline data analysis and role assignment to accelerate decision-making.
Companies are reassessing performance management
57%
of companies are prioritizing manager training for better in-the-moment feedback
Companies look to performance management to make sure they’re incentivizing the right behaviors to drive their bottom line. Feedback helps drive performance within a defined framework, but a misaligned framework can potentially lead to the wrong business outcomes. To get the most out of every organization, HR leaders are rethinking their performance processes and looking to strengthen workforce performance with more effective real-time feedback. Nearly half (48%) of companies are also changing the metrics by which employee performance is measured. At the same time, 52% of companies are using new technologies to collect performance data from their employees.
But there’s a missed opportunity with all this new workforce data being generated. It only flows one way. Fifty-seven percent of companies say they're prioritizing manager training for better in-the-moment feedback, but only 36% of CHROs report having a platform in place for upward feedback — that’s a huge loss when it comes to measuring ROI for almost two-thirds of companies.
What you can do
Evaluate your performance management process. Take a critical eye to your current processes to determine if they serve the company’s interests. Are you driving business results via the performance process? Is feedback given and received in a timely fashion? Are employees recognized and rewarded for outstanding work as it happens?
Make feedback a two-way conversation. Make sure you have an effective process and understand how much time is invested in it. Identify ways to create more efficient, effective feedback and coaching conversations. Create a culture that encourages real-time feedback and listen to employee preferences to better align your policies and offerings with what your employees actually value.
Get access to the complete survey response data and future insights
View the main Pulse Survey
Finding opportunity in reinvention
About the survey
Our latest PwC Pulse Survey, fielded May 15 to May 22, 2024, surveyed 673 executives and board members from Fortune 1000 and private companies about the current business environment, the risks executives are facing and their company’s strategic plans and priorities. Of the respondent pool, 81 were CHROs.
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