“Why your startup needed a Chief People Officer yesterday”. “Looking ahead to the era of the Chief People Officer”. “Chief People Officers Have Never Been More Important: Here’s Why”. The message from recent articles is clear: a Chief People Officer (CPeO) is critical to your success and the core skillset needs to expand beyond tactical HR management to become a strategic influencer on executive teams.
There is still a way to go in educating the Tech industry on the lasting impact the right CPeO can make to an organisation. While the appreciation for the role has grown in recent years, there are many founders and CEOs who perceive the People function to be largely administrative rather than a value-add partner to the business. The lack of People talent in the market with business acumen and a blend of strategic and tactical HR experience further reinforces this challenge. Furthermore, the CPO title is symbolic of the secondary role the People function has historically played. “Product” (and not “People”) is still the priority, despite Founders spending the bulk of their time dealing with people-related issues.
As new people priorities move to the top of the business agenda, arguably the role of the CPeO and the People function is now more important than ever for high-growth tech businesses. As they prepare to scale their companies, founders and CEOs should be clear on what the ideal CPeO looks like and what critical enablers they need to align the organisation with company strategy.
Your People function and the journey to your CPeO
Let’s start with the role of the People function. Typically, it has two mandates:
- People Strategy: Define the company’s approach to attracting, retaining, and nurturing employees in support of the company’s mission
- People Operations: Carry out the day-to-day operational activities that support the People Strategy, such as hiring, onboarding, employee engagement, learning and development, people analytics, and compensation management
As Tech companies grow, the balance of these priorities will shift. When the first People lead is hired around the seed or Series A mark, their role likely sits firmly within People Operations. Their priorities will be hiring and onboarding the right people at pace and establishing best practice HR processes to build the People foundations of the business. Ideally companies would be able to hire a leader with both strategic and tactical expertise at this stage, but it’s often not possible given budgetary constraints and the small pool of candidates available with this background.
Around the Series B or C mark, founders and CEOs may then look to bring in a more experienced People leader though a CPeO or VP of People. At this point, the role still includes day-to-day People operations, but should now encompass setting and executing an effective People Strategy that supports the overarching business objectives. A successful People leader at this stage will act more as a strategic advisor to the CEO and executive team, building on the initial culture defined by the founders and aligning the organisation with the company’s strategic objectives.
At this stage, People leaders tend to have one of the following backgrounds:
- The HR Specialist: someone who has grown through the HR Business Partner ranks, likely handling classic HR activities like employee relations and performance management at a range of companies
- The Recruitment Expert: a bona fide talent acquisition guru who has likely worked in a Search business for c. 10 years or honed their skills in-house leading the recruitment team
- The Business Leader: a general manager type who has the trust of the CEO. They are a first-principles thinker who has worked elsewhere in the company before being chosen to lead the People org
Each type has its advantages and many successful careers have been forged by People leaders who fit one of these categories.
However, there’s another archetype that is rare today but increasingly sought after: The People Strategist. From a sample pool of 50 of the top Series B & C European Tech companies, People Strategists represent 10% of the leaders of the People function. This commercially minded business leader likely started their career in another function and / or worked as a strategy consultant and has spent at least five years leading the People function in a tech company. By bringing both business and HR experience, they connect the dots across the organisation and understand how to translate commercial priorities into organisational outcomes. They fulfill their role of bring deep organisational expertise to the leadership team, while also providing the commercial context and vision to drive the People organisation towards the company’s top priorities.
Strategy to Organisational Strategy
In addition to commercial and HR experience, the ability to drive organisational strategy should be requisite for People leaders who are preparing to scale companies. Often found in the People Strategist archetype, Organisational Strategy expertise should include:
- Organisation Design experience – being clear on the right size and shape of the organisation (now and in the future) and having clear organisational structures, roles and responsibilities
- Organisational Effectiveness experience – the broader governance and ways of working between teams and individuals including, clarity around decision making and communication
- Deep knowledge and understanding of the Business – being clear on the end-end mechanics of the business (everything outside of People) and the ability to be able to relate specific people & talent initiatives to longer term business goals & objectives
- Experience influencing and driving cultural change – driving organisational and culture change comes from the top. Being an effective influencer at the top table, seeking buy in and alignment from other senior leaders and being passionate about people, talent & culture will drive the necessary changes throughout the business
- Data Analytics experience – proactively engaging with data to drive decision making and predictions from comprehensive internal and external sources
The advantages of a CPeO with this experience and skillset include:
- Being able to look across the total organisational system and understand how people priorities translate into commercial results;
- Being able to connect the dots between the evolution of the organisation and the implications on the workforce, resulting in a more informed and better approach to hiring, developing, and engaging your People; and
- Having a Strategic People partner & coach on the Executive team, which will enhance the reputation of the function and enable the People leader to ‘have a seat at the table’.
A missing link for the first three archetypes, Organisational Strategy drives the People Strategist and is an important requirement for a People leader in today’s world.
Beyond the individual: The critical enablers to make the role and function successful
We spend a lot of time talking about the importance of the role and the differing views on the core skills required from a People leader, however, if the perception of the People or HR function is not valued in the right way by senior management, it will likely be very difficult for the individual to have an impact. If a ‘People Strategist’ type is hired, the chances are the CEO recognises the value that can be created from the People function. This partnership between the new hire and the business leader is fundamental, as well as the relationship between the two. In our experience, when there’s a tight knit relationship between the CEO & CPeO and the latter is a highly capable strategic advisor, the right culture and supporting environment will be in place to enable the business to deliver on its goals.
Building the “gold standard” CEO & CPeO relationship:
No matter how strong a CPeO is, they cannot be successful without the trust of the CEO. Here are a few steps CEOs can take to begin building that relationship:
- Take an interest in the subject before you bring in a People leader: you cannot rely solely on a People leader to drive cultural and organisational change singlehandedly. Change happens from the top and it is important to invest in the organisational and people foundations (eg the culture you want and the values & behaviours that are important to you) when you first set up the business.
- Do not wait, bring in a People leader early on: there’s a tendency to wait until it is too late (after Series B) and often a CPeO is not viewed as a critical hire. The longer you wait, the more likely people challenges will soon become insurmountable and from then on, the challenges become more complex. The shift from the more operational elements such as recruiting the right people (which can take up a lot of time) to building out a more complex People strategy can happen quickly post 100 employees.
- Recognise the tradeoffs in the individual: it is very difficult to find the complete People leader – one that covers off the HR Specialist, The Business Leader and the People Strategist. The idea that one person can cover all bases is asking a lot and each People Leader can’t be an expert in everything. Ensure you are clear on your people priorities over the next 12-24 months and quickly align with your preferred candidate.
- Establish the relationship and build trust: last but certainly not least, recognising the value in the partnership is critical. As a CEO, ensure you champion the People agenda and align with your leadership team. This will ensure the new CPEO has the platform to drive real change and support & influence the team in the right way.
Hiring an experienced People Strategist who will drive organisational strategy aligned with the CEO’s vision can be a significant competitive differentiator. The CPeO’s relevance has never been clearer in the post-pandemic world, and they will continue to play a pivotal role in driving organisational change and setting businesses up to scale effectively long into the future.