Beyond HR: the strategic role of the CHRO

Businesses are grappling with a new reality, one defined by constant, unpredictable change, economic and political uncertainty, and technological disruption. To survive, businesses need to evolve their leadership style and the culture of their organisations. A shift is needed from rigid hierarchical organisations and cultures towards more flexible structures with simplified processes that empower employees, foster innovation and drive resilience.

In this article we explore the challenges and opportunities organisations face today, highlighting the critical need for change and the rise of workforce cultures underpinned by a more purpose-and value-centric approach to developing and rewarding employees. This change is also driving the transformation of the Chief Human Resources Officer (CHRO). CHROs’ operational responsibilities have expanded beyond human resources and are now at the centre of more and more board strategic issues, including developing the organisation’s leadership pipeline. Transforming the role of the CHRO will be critical to accelerate leadership development and organisational culture change.

A number of forces are causing the change

• A ‘never-normal’ environment: Defined by rapid change, geopolitical instability, persistently low productivity, a weakening competitive landscape, skills shortages and flattening margins, increasingly volatile markets are forcing organisations to find new ways to cut costs and improve margins. For businesses in the consumer industry, increased sensitivities around price, dependence on volume and the constant pressure to maximise operational efficiency become even more critical. But organisations cannot simply ‘cut their way to success’. To avoid costs creeping back into the organisation and to build resilience, cost management needs to be at the centre of an organisation's operations, workforce management and strategic decision-making.¹
• The need for supply chain resilience: Consumer-facing businesses are more susceptible to global disruptions and are particularly exposed due to their complex global supply chain structures. Their procurement operations have been heavily disrupted in the past few years by war, the subsequent rise in the cost of raw materials and more recently the threat of tariffs.
• The race to improve productivity: Since the 2008 financial crisis productivity has been steadily falling, especially in the advanced economies but also more and more in emerging economies.
• Digital transformation including the integration of artificial intelligence solutions: The rapid adoption of AI and automation have redefined human resources functions, shifting the responsibilities of the CHRO towards strategic oversight of technology integration. AI tools now influence recruitment, performance analytics and workforce planning, requiring the CHRO to balance technical implementation with human-centric policies.
• The need for increased workforce agility and the bridging of skills gaps: Global competition for niche skills and the need for rapid reskilling have elevated the CHRO role to fostering workforce flexibility.
• Organisational values changing: Leaders have realised that in addition to focusing on their organisation’s purpose they also need to foster satisfaction and meaning at work for their employees. Connecting personal mission and purpose, with the customer, and with the wider society. How do you instil joy and a sense of meaning back into the workforce? How do you shift from ‘extracting value from employees’ to ‘creating value’ for employees?
• Evolving organisational culture for new workforce generations: Looking at the generational range of today’s workforce, and especially how Gen-Z and millennials have a different approach to work, has led to a culture and leadership change within organisations including a rethink on how to attract and retain their workforce.

Given these forces organisations must pursue four imperatives in their approach to human capital strategy

• Deliver growth and improve productivity through changes in leadership structure:  This requires the concept of leadership evolving from a hierarchical pyramid structure with responsibilities centred at the top, including command and control, towards an organisational culture where all employees are potential leaders with accountability across every level.
• Support the right organisational culture change: At a time where much cost cutting has left employees feeling under pressure, investing in employee wellbeing, development opportunities and a positive work environment will be crucial to attracting and retaining talent, particularly Gen Z and millennials. Empowering teams by allowing them to have their own subcultures and being advocates of that culture can improve satisfaction and motivation at work. A study by MIT showed that companies in the top quartile for employee experience are typically 25% more profitable than competitors in the bottom quartile and have double the customer satisfaction score.² A rethink of work practices is also required including continuing to explore the role of hybrid working and the flexibility it can bring. Research shows that while some employees experience benefits from returning to the office, others face negative impacts on their finances, productivity, mental wellbeing and stress levels.³ Finally, organisations should allow an element of ‘job crafting’ giving employees some discretion in making small changes to their ways of working.
• Move beyond ‘empty values’ and only rewarding financial results: Organisations must move away from generic value statements and instead define and reward specific behaviours that align with their desired culture. Clearly articulating both the desired outcomes and the behaviours that will drive those outcomes is essential for success. Reward systems must go beyond financial incentives and recognise and reward the desired behaviours that contribute to a high-performance culture.
• Simplify work: The growing complexity of large organisations is calling for simplifying work processes especially the use of multiple technologies to improve productivity. Dealing with multiple technologies on a daily basis can both enhance and hinder productivity. Streamlining processes, policies and technology can significantly reduce friction and free up employees to focus on more value-adding activities. The right technology, including the use of AI, allows employees to organise their time better. However, the ubiquity and proliferation of technologies promote an ‘always on’ culture that has blurred the boundaries between work and life outside of work. Standardisation of processes to reduce complexity allows employees to focus on tasks that require critical thinking rather than operating on autopilot. Artificial intelligence has already started to reshape the workplace. Organisations must invest in upskilling and reskilling their workforce to thrive in an AI-driven world. This includes focusing on uniquely human skills, as highlighted by organisations like the OECD and World Economic Forum who acknowledge that future workforces will be doing very different jobs because AI will do tasks that today are done by humans.⁴ In the future some tasks might be automated freeing humans to focus on more rewarding tasks at work and be more productive as a result. AI can bring down some barriers to entry, bringing new people into the labour market and into organisations that previously would not have been able to. However, there will always be a gap between what AI can do and what a professional or individual with expertise can do. Implementation across public services has demonstrated the efficiency gains of implementing digital technologies that accelerate delivery of work.  His Majesty's Passport Office (HMPO) has been actively implementing automation to streamline UK passport applications and improve the customer experience. This includes making the application process ‘digital by default’, automating processing for renewal applications and transitioning to in-house developed IT systems. HMPO uses AI to analyse application data and automatically coordinate actions across different teams, such as background checks and document verification.  Online applications and automated processing streamlined the application process, making it easier for individuals to apply for passports. Paperless operations have led to reduced paper handling costs and potentially lower overall processing times. Removing repetitive tasks through automation freed up staff to focus on more complex and strategic work.  Automated systems can also reduce the risk of human error in data entry and processing.

Transforming the Chief Human Resources Officer

The need to change the leadership structure, to implement the right organisational culture or reward the right behaviours and simplify work, together represent a moment in time for the transformation of the role of the CHRO.

• CHROs are at the centre of more and more strategic issues for boards. CHROs increasingly partner with CEOs and CFOs to align human capital strategies with financial and operational goals. CHROs now operate as core strategic partners alongside CEOs and CFOs, influencing decisions on digital transformation, global workforce strategies and organisational agility.
• Increased CEO turnover and board-level scrutiny have made leadership pipeline development a top priority. CHROs now play a central role in succession planning and fostering adaptive leadership capabilities.
• CHROs’ operational responsibilities have expanded beyond human resources. The role now encompasses non-traditional areas such as workplace design, hybrid work policies and employee wellbeing programmes. CHROs are also taking ownership of facilities management and productivity strategies. 
• A top priority for CHROs is to accelerate leadership development and organisational culture change. This strategic focus positions CHROs as potential CEO candidates, mirroring the CFO-to-CEO trajectory observed in earlier decades.

Organisations that successfully navigate today’s human capital challenges will be those that embrace a human-centric approach, cultivate a culture of resilience and empower their workforce to adapt and thrive in the face of constant change. By focusing on leadership, employee experience and a clear articulation of values and behaviours, organisations can unlock their full potential and achieve sustainable success in this dynamic environment. CHROs have become the natural leaders of organisational transformation, and their role will be critical for the long-term success of their organisation.

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References

1. Cost resilience: What is it and why is it important? | Deloitte UK

2. Building Business Value with Employee Experience | MIT CISR

3. The Advantages and Challenges of Hybrid Work

4. WEF_Future_of_Jobs_Report_2025.pdf