HR Viewpoint: Pat Wright on why some CHROs will thrive and some won't survive post pandemic

In the second of a series of interviews with future of work and HR experts, we ask Patrick Wright, director of the Center for Executive Succession in the Darla Moore School of Business at the University of South Carolina, about leadership post COVID-19 and why he believes some CHROs and CEOs will thrive and some will not survive

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Edited transcript

We started our survey of chief HR officers about two weeks before everything shut down in the US and so we were sending our reminders out to people and somebody came back and said, we're working like seven days a week, 16 hours a day, and it seems tone deaf to keep reminding us about this survey. So we shut the survey down, during that time, but we were conducting a lot of Zoom meetings with executives. through the Center for Executive Succession, around how they were handling the pandemic, the things that they were doing, and challenges that they faced. And then we brought the survey back after about three months and finished it out.

Also, during that time, we did a quick survey of a number of chief HR officers specifically around how the pandemic had changed their succession practices. One of the themes we heard from a number of CHROs is that this experience had exposed leaders who froze versus those who stepped up. There were some leaders that really weren't viewed as high potentials prior to the crisis and the way they stepped up quickly and made decisions, moved things forward, got things done, suddenly they looked at that leader and said, it's just amazing, we didn't think that person had it in them, but they've demonstrated they have in the middle of a crisis.

And there were some that dropped off that list, that were viewed as high potentials. But once they got into the crisis, they almost froze. Or if they made decisions, they weren't making decisions from the right value system. They were making decisions based on fear or from the focus of delivering, operational results and not around protecting employees, not from the espoused values of the organisation. I think somebody referred to them as wanna-be-heroes that tried to manage the impression that they were doing a great job but actually when you looked at the results that they were delivering in terms of both their employees and the overall results, they really weren't delivering nearly as well.

Lucien Alziari, who is the chief HR officer at Prudential, had the best statement. He said that what happened is that what would have normally taken us probably two years to observe behaviour among leaders was condensed into about two months. In those two months we gained two years-worth of information about leaders. And again, some of it was great – someone we thought was a great leader stepped up. Some were people that we didn't think of as the real leaders but who did step up. And some of them were people we were thought were leaders that didn't step up. We learned a lot through the crisis.

In terms of what the pandemic taught us about future, I think that it focused on the importance of the people orientation of leaders. We've interviewed board members who we've asked the question about what's going to be the new competency of a CEO that we're not talking about now. And a lot of times we'll hear that, in the past, it's the very task-oriented, financially-driven; I want to say narcissistic, very non people-oriented CEO that could develop great strategies and execute those strategies. that was the norm and that was fine.

That’s not really the case anymore. It's hard to be a leader who employees don't value and trust. And so I think that's one of the things that you've seen. Where were the leaders' priorities as they had to make decisions quickly? It's so true that it’s a crisis that reveals who you really are when under pressure, not what you can say when everything's okay.

So I think what you saw is that people orientation, which I think is critical going forward. Do you really view people as an important asset, but not just an asset like a financial asset, but as a human being who has inherent value and dignity, and to whom you owe ethically some responsibilities beyond simply a paycheck?

I think that's probably one of the things that we'll see going forward because, no matter what the next crisis might be – it might be an economic crisis, it might be an environmental crisis – that crisis will pressure people to make decisions and to make decisions quickly.

And what we've learned through this is the importance of the prioritisation of people, safety, mental health, physical health, all of those things. Firstly, over simply financial results – and, I don't want to de-emphasise financial results because no one that we've worked with said that. But they said that there's a time for that and in the midst of a crisis, the priority is people. And then once you've got the people secure, you can start thinking about how do we come out of this and how do we now shift to focus on making money, delivering value to our shareholders and so on? So it's, not a matter of, we're forgetting about shareholders, we're forgetting about profitability, but what I'm saying is that in this moment, people become more important than profits and that if we do that right then profits will come down the road.

So I think that's the thing to keep in mind. I think what this has done is that in the next crisis, whatever the crisis is, hopefully it will direct leaders to be thinking about people first. And I think that's new because it was a health crisis. If you look back at financial crises in the past, the layoffs came quickly, nobody cared about this, it was just a given. It was all about the financials, but because this was a human health crisis, that changed the perspective. It's not simply a headcount, it's actually a human count. Suddenly we have to think about humanity as opposed to simply headcounts. I hope that lesson’s not lost and that, in the next crisis, leaders will not revert back to the formulaic headcount reduction mentality. But instead, remember that it is actually humans that are going to be impacted by these decisions.

In terms of whether or not the investment community has recognised the importance of, these kind of human-oriented behaviours, I couldn't speak for the investment community but close to this are board members. We've done a number of Zoom meetings with CEOs, talking about their boards and we've done meetings with board members. I think the board sees this going forward. The board, and I was really surprised by this, but it was boards that were entirely behind the idea of don't worry about finances right now, worry about people. As this crisis hit, I would have expected that the board would be focused on, let's do a little bit in the safety area, let's also keep track of how much we're spending, because we do need to turn a profit, , we need to have a return for our shareholders.

Yet the words that we heard from our board members and from the CEOs were that their boards were not at all worried about finances. The CEOs had the entire support of the board to do what whatever it took to provide a safe environment for their employees.

Again, it was in the short term. We need to deal with this right now. And so we need to focus first on a safe space environment. safety for our employees. Down the road we'll worry about profits, but right now it's not about finances. It's about people.

So I, think that at least having gone through this, hopefully there will be a change in the board community. And I think, if this works, in the investment community as well. The reason I say that I think it will happen in the investment community is that I have two predictions that will come from this.

One is that this crisis is going to result in turnover of CEOs, because those CEOs who didn't handle it well – who didn't gain the faith of their employees, who really lost the trust of the workforce –. I suspect they're not going to succeed; their companies are not going to succeed as well as the leaders who stepped up. Because if engagement leads to organisational citizenship behaviours and doing the things that are above and beyond the call of duty, then the leaders that made the right decisions and gained the trust will begin to see employees step up and excel in how they deliver value to the customers going out of the crisis.

The leaders who didn't gain that trust are going to find employees do not step up. They'll probably see significant turnover among those frontline employees and that's going to create a difficulty in delivering operational and financial performance – operational performance to the customers and financial performance to the shareholders. So I think you'll see an exit of some CEOs that didn't do it well because their companies are being outperformed by the CEOs and the competitors that did it well. And that will get the attention of the investment community.

The second prediction is I suspect you'll see turnover of CHROs because I think there were some CHROs who probably froze in this process and CEOs who looked and said ‘that's not what I need. I need somebody who can step up to the plate, that can deliver in the midst of a crisis, that can do the right things, that can challenge us, that can make sure that all of this stuff gets executed and that we're all acting from the right values’. So I suspect we'll see, turnover among CHROs. And you won't know which is which. So I know CHROs that will leave because they saw a CEO who didn't focus on people and we'll probably see CEOs who leave because the CEO didn't see the CHRO doing a lot.

So you'll see a lot of turnover coming out of the crisis. It won't say anything about any one of them, but I think you'll see that going forward.

Investors are beginning to see the importance of a good CHROs. Again, my hope is that between seeing the companies that led well outperform the companies that didn't lead well, and seeing CHROs who stepped up and helped deliver versus CHROs who didn't, the investment committee will down the road begin to recognise that ‘people are our most important asset’ is not simply words on the wall but that companies that truly believe this take actions that reflect it and deliver performance that is far superior to their competitors.

Patrick Wright is Thomas C Vandiver Bicentennial Chair and founder and faculty director of the Center for Executive Succession in the Darla Moore School of Business at the University of South Carolina.

This is one of a series of interviews The People Space is conducting with HR leaders and futurists in advance of the release of new research into leadership behaviours in disruptive times by our Brand Partner 10Eighty on Wednesday 14 October, 14.00- 15.30 BST. In this interactive session, you’ll also have the opportunity to take part in a small discussion group to explore the identified themes and what these mean for businesses. If you're interested in attending the event and receiving your copy of the white paper, please register here.

Published 17 September 2020
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