What does a CHRO do?
A Chief Human Resource Officer (CHRO) is one of the crucial resources that every competitive firm needs in order to reach the next level in its development. The multi-faceted, well-experienced and highly competent human capital and development head is responsible for among other things:
- Building a corporate culture, including shared values, beliefs and expectations
- Building employee relations, including a positive general state of morale, policies and procedures, overall climate and tone of the organization, intra-company communication and state of employee-employer relationships.
- Creating employee training and development capabilities and programs.
- Overseeing organizational development, which is an interdisciplinary approach to building and improving the performance and effectiveness of a company or organization. It primarily focuses on people and how they are organized, their roles and skills, how they communicate and interact, and the motivations that help them achieve personally and professionally while reflecting the values of their organization.
- Recruiting and search. Strategic and operational Information Technology talent is in high demand and represents a major recruiting, staffing and executive search challenge for startups and small to mid-size growth companies, in particular.
- Oversight of performance management initiatives. Performance management seeks to keep employees engaged and achieving optimally.
- Strategic oversight of scaling a business. Scaling a business is not focused on adding people with aggressive recruiting efforts or securing new office space, but on building processes, systems, culture, infrastructure and processes to support growth without adding costs.
A CHRO will oversee recruiting, onboarding, compensation and benefits programs, wellness programs, employee policies and procedures.
There are several models used to access CHROs as alternatives to hiring a full-time head of HR or Human Capital. These include:
- CHRO Advisory Services – Where a company enters into a consulting agreement for high-level strategy work.
- Interim CHRO – Where a company hires an acting CHRO while they look for a replacement
- Part-Time or Fractional CHRO – A CHRO contracts with the company and assists for a set number of hours per month or days per week.
CHRO Fit: The Right CHRO
What should you look for in a head of HR?
Fit – While developing a rapport with the CEO and management team is a must, a good cultural fit with the rest of the team is important too. The CHRO should have a “been there, done that” attitude, but also be creative and flexible enough to adapt to the team and its culture.
Experience – A CHRO with years of experience working with similar companies can enhance the management team, provide credibility with your board and investors and generally raise the level of professionalism at the company. Experience with your specific industry is a plus.
Leadership – The CHRO should be a natural leader and have the gravitas to slip into a leadership role, even on a part-time basis.
Can-Do – Small companies often don’t have the resources to provide a lot of support. So the CHRO must have a can-do attitude and be willing to do what’s necessary to support the company.
CHRO Services: Strategic Advisory
For those companies — typically startups and early-stage growth companies — that do not use a CHRO and have used outside firms for recruiting and manager-level support internally for human capital operations, they may choose to seek strategic advice and executive counsel from a CHRO until they get traction for their products and solutions.
Make or Break Moments
Many entrepreneurs may be reticent to add development, product and sales people so that costs don’t run opportunities. However, there also comes a time in a successful company’s lifecycle where the opportunity opens up and the team must flick the switch from conservative to aggressive.
This is the “make-or-break moment” and not many companies get it right. The decision has to be made and communicated to the entire company. A good CHRO strategic advisor will help to identify when resources need to be allocated to take advantage of the opportunity whether it’s by investing in people, marketing, sales or the next generation product. Being able to identify when that window of opportunity opens and taking advantage is the difference between a great company and a merely good one.
Delay hiring a CHRO
Startup companies are well suited to follow a familiar mantra: “Don’t invest in G&A costs until you prove you can:
- Build your product and
- Sell it.
In other words, use your scarce resources to prove the product concept and establish that you have a market.
As a result, more companies are delaying hiring staff and support functions, such as a head of HR, and taking advantage of advisory, part-time or project-based professionals with deep experience and expertise.
In the case of TechCXO partners, our HR and recruiting professionals have often worked for dozens of companies over their careers and have seen and done just about everything that a startup will require.
Where you might call on a CHRO for strategic advisory services or projects, a part-time or fractional CHRO represents a larger commitment from both parties.
Some people may not distinguish between a part-time or a fractional CHRO and often use the terms interchangeably.
A distinction can be drawn, though.
The main difference between a fractional CHRO and a part-time CHRO is that a fractional CHRO only looks at a certain number of responsibilities, whereas a part-time resource looks after all the responsibilities, but only part of the time. Business owners that are not sure how to effectively utilize a fractional CHRO can opt to hire a part-time one and have him/her identify the needs of your business.
A fractional CHRO, as the name suggests looks after a fraction of responsibilities and focuses on specific areas of requirements. Their responsibility is usually shared with other in-house resources. Small to medium sized businesses that are seeking to add employee policies, processes and systems can use a fractional CHRO to ensure timely deployment and effective troubleshooting of issues.
Fractional CHRO Responsibilities
A Fractional CHRO first and foremost, needs to understand the workings of your company. They have to be in harmony with the company’s vision, mission, objectives, and long-term goals for there to be a productive business relationship.
With employee needs, strategic objectives and operational performance metrics constantly changing, a fractional CHRO needs a steady hand, sound experience while balancing an eye on the future.
An open and realistic mind is invaluable as well. It is important to find a balance between a business’ necessities and luxuries they can do without. Minimizing cost while maximizing resources is every business’ mantra.
With a business’ objectives as a guiding map, and personal experience, insight and relevant technology as a shining light, navigating through challenges becomes much easier and manageable.
Growth Stage Organization
- Organizational development
- Talent Gap analysis
- Succession planning
- Leadership coaching
- Executive Coaching
- Performance standards
- Employee relations
- Guidance on M&A and Scalability
Organization within Existing HR
- Program Development
- Leadership Coaching
- Organizational Development
- Compensation Analysis and Pay
- Guidance on M&A and Scalability
When do you need a part-time CHRO?
When does it make sense to consider a part-time or fractional CHRO?
High-Growth or High Stress
Companies that reach an inflection point in their growth usually do so for one of the following reasons:
- Increasing number of transactions, such as more customers, more employees, more vendors n increasing complexity in the business that requires more experienced leadership and better
- Planning to develop policies and procedures
- An inexperienced HR manager or staff member who may simply need a mentor
- The company has raised or intends to raise significant ($1 million or more) funds from outside investors
- A merger or acquisition of a line of business that requires reconciliation between multiple systems.
Other circumstances require specialized skills to address a specific problem. Some accounting and audit firms are increasingly unwilling to risk compromising their audit function by providing in-house consulting services and will instead refer the company to a project-based CHRO for issues such as:
- Identify hiring needs
- Plan hiring processes, steps and communication challenges
- Intervene on difficult corporate culture and employee relations matters
- Plan employee training and development programs
- Manage fast recruiting and search efforts
While you are in the process of replacing your CHRO or choosing a new one, you may hire an interim CHRO to look after the responsibilities. In addition to running key functions, they can conduct interviews of potential candidates to ensure that the new hiring is a strategic fit for the organization.
In cases of transition or an absence of leadership, a company may have no CHRO in place and wishes to find an immediate resource to fill the gap until they can hire a permanent CHRO. This is usually a role for an interim CHRO who will commit substantially all of his/ her time to a company for a limited period.
Unlike part-time or project CHROs who generally make a living by working on an outsourced basis with a number of different companies, interim CHRO are often human capital professionals who are dedicated to one client.
Benefits of an Interim CHRO
With an interim CHRO, the company, CEO and executive team get:
- Increased credibility with Board, prospects, partners and suppliers.
- Attention/attraction of equity investors.
- Better human capital management.
- Upgrade from recruiting and HR management to a real human capital department.
- Collaboration of senior team for the c-suite to become more effective.
Managing Part-Time or Interim CHROs
A part-time CHRO will do all the things a full-time CHRO would do, but the key is to focus on the critical tasks and try to keep your total consulting costs in check.
If you find that you are using a CHRO for two or more days a week, then it probably makes sense to bring in an interim or full-time resource.
The CHRO can help identify the 5 or 6 most important priorities or metrics and ensure that these data are assembled in a timely and accurate fashion. This enables the team to focus, not just on the 100 tasks they perform every day, but on the things that are truly going to “move the needle” in the business.
Beyond these key tasks, the CHRO takes the lead on major human capital issues such as recruiting, employee development, training, policies and procedures.
Perhaps the best reason to find a part-time CHRO is the flexibility that affords you. You can have the person in a few hours per month or a day or two per week. The CHRO can partner with you and make recommendations on what skills are required in the HR team and when to bring on those full-time employees.