People are often called a company’s most valuable resource. So for a new CEO to hit the ground running, they need HR’s help.
For new CEOs, knowing where to begin shaping their company isn’t always easy. They have likely been brought into the role as an external person because their predecessor underperformed, or the company didn’t post the results its board and investors had expected.
In this situation, it’s easy for them to walk in the door with a preconceived idea about transformation. The trouble is, transformation is not always necessary. But they are new, and feel the pressure to make a positive impression on both the board and employees.
This article talks about how HR can make sure it’s a trusted advisor to the CEO and how, guided by HR, their earliest decisions about company structure are robust and sustainable.
Restructuring isn’t always necessary
It’s true: New (externally recruited) CEOs are brought in primarily because an organisation is underperforming. It’s rare for a high-performing company to appoint someone externally. Whether the organisation requires restructuring is another matter.
Often, the first priorities of a new CEO are:
- to assess whether or not the company is effective in the short term, and
- to assess whether or not the shape of the company is strong enough to carry it into the future.
As the HR leader of the company, you are in a unique position to influence the impressions of the CEO and guide their first footsteps in their new role. This is not a responsibility to be taken lightly, or a time to push personal agendas.
To give the CEO – and the company – the best chance of success, your first tasks are to:
- Provide the CEO with the necessary information. While it is important to provide the key metrics, don’t overwhelm them with data. But do make sure they have access to all the right files and sources of information (both documents and people).
- Encourage them to sit back and observe. Agree with the CEO and the leadership team to not overwhelm the CEO with meetings in their first few weeks. Provide them with opportunities to listen, learn and be visible in a variety of settings and all levels of the business.
You both have the same goal. The destination is a return to a strong business, leaving the CEO to spend more time thinking about the long-term rather than the short-term. The senior executive is then accountable for short-term results.
New leadership always heralds a time of change for the organisation, but that doesn’t necessarily mean that sweeping reform and restructure is necessary.
Remember: restructures are expensive, time-consuming, disruptive, and stressful. They’re also not guaranteed to deliver the result the CEO is after. Restructures must occur when they serve the big picture, not the short-term.
“A reorganization has to aim for something bigger,” writes John MacDuffie, co-director of Wharton’s Jones Center for Management, Policy, Strategy and Organization. “Such as changing culture, incentives, and values of the organization – and trying to get people to behave differently. If all you are changing is one lever, it won’t be very effective.”
This view is supported by BCG, whose ebook from 2016 argued that transformation is actually a full reboot, from values to culture.
Restructures – transformations – whatever you want to call them, are fundamentally about remaking the business.
Look to the leadership team
In assisting the CEO to understand whether or not a restructure is necessary, they must be clear about whether the senior leadership is robust. If this most-critical team is failing, then the company’s poor performance may simply be because it has poor leadership.
Recognise that you will need to stand up to scrutiny too. Senior leadership is often a highly political environment. There are those who are good at playing the politician, and those who are not. One of your most critical soft-skills is the ability to ascertain – political adroitness aside – whether someone is an effective leader, and what level of coaching and support you will need to provide them.
Beyond this, gaining familiarity and building trust with the CEO may take you more time than you feel you have.
Here’s something that you can do. Right in the very beginning, make sure that you are objective in the insights you provide the CEO of your leadership peers. Put aside personal opinions and anything that isn’t evidence based. If you make sure HR isn’t a source of gossip, you will gain their trust and respect if you display honesty and integrity.
Don’t be afraid to constructively challenge their views and argue your case. Your case is not flying the flag of the HR team, it is demonstrating how HR can support the vision of the CEO to drive the success of the company. If you are unable to do this the CEO will simply consider HR to be a waste of time and energy and you will have no reason to be surprised when HR is overlooked as a key strategic partner or becomes a favourite punching bag of managers and employees alike.
If the leadership team isn’t leading, the organisation will falter
To assess the leadership team, you should guide the CEO to:
- understand whether the leaders are accountable and responsible;
- be clear about whether the leadership is afraid to put disciplines in place when called for; and
- get a sense of any unnecessary, bureaucratic baggage.
If the leadership team isn’t accountable or responsible, isn’t putting disciplines in place, and isn’t streamlined, then it’s a good indication that the structure is not at fault.
Rather, the leadership team is not doing its job effectively.
As business author Ron Ashkenas wrote: “Most organisations can be made to work if leaders set the right goals, hold people accountable, streamline end-to-end processes, and put in place appropriate disciplines. In the absence of these (and other leadership actions) any structure can appear dysfunctional.”
The challenge for the new CEO is that the board may have a different view, because it is one step removed from seeing how senior leadership functions. If the new CEO plans to shake up the senior leadership team, ask for the evidence to support their plan. It isn’t just important from an HR perspective, it’s necessary if they are going to be supported by the board. HR can assist in this process, but make sure you provide all of the information, not just the evidence that supports their desired path.
One way you can do this is to help them assess the blockers in the organisation.
Four blockers that hold organisations back
There are many ways your organisation can be stopped from being effective. But at a structural level there are four primary blockers. Each one stops at the leadership team. They are:
- A structure that isn’t aligned to the corporate strategy. Where strategies change over time, and old methods of organising teams can become a hindrance.
- A structure that doesn’t match the purpose of the organisation, but has been shaped to fit personalities instead. Companies that are structured around personalities tend to bend their requirements so they don’t offend people, rather than putting people where they can play to their strengths.
- High levels of bureaucracy. Too much bureaucracy really means too many levels of sign-off, which may be symptomatic of not enough responsibility or accountability among managers.
- Poor information flow, which stops the CEO from doing his or her job properly.
Point four is one of the top three key challenges for a new CEO, according to Kissel and Foley. These authors suggest that the CEO’s job is ultimately to ensure that information flows upwards and outwards, to stakeholders and board members. They argue that this role is one of a CEO’s most critical, stating: “To manage up well, a CEO needs to translate intuitive business decisions into a logical framework that fits with the explicit knowledge that board members have accumulated.”
If the CEO is mired in unimportant details, can’t get access to information, or finds that the organisation isn’t achieving its strategy or its purpose, a transformation is probably unnecessary. What is needed is a new leadership team.
As the HR leader, this may be advice that is hard to give and/or to hear. After all, we are talking about your peers – and you. But the time comes for everyone when they are no longer able to provide the value to the business that it needs. Take this onboard with the integrity and resilience that are the trademarks of good HR practice.
Now you know what you need to do to get started with your new CEO. To be effective, “adopt an investigative and analytical mindsets” – gird yourself with the information needed to answer the CEO’s questions, and guide good decision-making.
Your key takeaway is that success depends on being unafraid of spending time in analysis. Happily, it will also help you to become visible and to stay engaging. After all, you can’t answer questions without talking to the people in your organisation!
Once you’re in this position, you’ll have the information you need to gain support and trust from your CEO and leadership peers. The decisions that you make quickly will be robust, and you’ll have the right team alongside you to carry your company forward.
Susan Sadler is the Director of Red Wagon Workplace Solutions, a commercial human resources firm that specialises in supporting balanced, outcomes-driven transformation. She is vice-president of the AHRI SA State Council and a certified HR practitioner.
Experienced HR practitioners and academics can achieve certification through one of four different pathways. Find out more here.