Do CEOs need HR experience to be effective leaders?

A CEO’s position is one of the most critical within an organisation. As such, the qualifications and experience necessary to become a CEO have been the subject of much debate in recent years. While there seems to be no definitive answer to this question, many experts believe that having a few years of experience in human resources (HR) can be an invaluable asset to any aspiring CEO.

To understand why HR experience is so important for CEOs, it is necessary to first understand the role of HR within an organisation. The primary function of HR is of course to manage the people within the company, including hiring, training and managing employees.

Prasanth Gulur Bhyranna, group CHRO, First Steps Babywear, believes that CEOs play a crucial role in setting the vision and strategy of an organisation. They are responsible for a firm’s overall performance and success. While expertise in their professional domain is undoubtedly valuable, the role of a CEO requires a different set of skills, particularly in people management.

He feels that CEOs can be effective leaders only if they possess the ability to inspire and guide a diverse team of individuals towards a common goal, while ensuring their engagement, productivity and motivation.  

“Experience in HR can be beneficial for CEOs, as it can help them better understand the needs and expectations of their employees. It can also enable them to develop and implement effective people policies, which can improve employee satisfaction, retention and productivity,” says Bhyranna.

“Experience in HR can be beneficial for CEOs, as it can help them better understand the needs and expectations of their employees. It can also enable them to develop and implement effective people policies, which can improve employee satisfaction, retention and productivity,”

Prasanth Gulur Bhyranna, group CHRO, First Steps Babywear

According to Bhyranna, HR experience can help CEOs create a positive organisational culture that values diversity, inclusion and innovation. Such a culture can help attract and retain top talent, which is crucial for any organisation’s success.

People management

One of the key skills that a CEO must possess is the ability to manage people effectively. This means, not only hiring the right people for the job but also providing them with the training and support they need to succeed. Additionally, a CEO must be able to manage conflicts and develop strong relationships with their employees. All of these skills are closely tied to the HR function, making HR experience a valuable asset for any aspiring CEO.

Understanding of culture and values

Experience in HR can provide CEOs with a deep understanding of the company’s culture and values. After all, HR is responsible for creating and maintaining a positive work environment, which is critical for employee engagement and retention. As such, HR professionals are intimately familiar with the company’s culture, values, and mission. This knowledge is essential for CEOs, as they must be able to align their own vision and goals with those of the company.

Finance management

“A CEO needs to be a multi-dimensional leader who can bring balance to the firm’s customers, stakeholders and employees”.

Richard Lobo, EVP and head – HR, Infosys

Having HR experience can also be beneficial for CEOs when it comes to managing the financial aspects of the company. The HR is responsible for managing employee compensation and benefits, as well as ensuring compliance with labour laws and regulations. This experience can be invaluable for CEOs, as they must have a solid understanding of the financial implications of any decisions they make.

As Richard Lobo, EVP and head – HR, Infosys, rightly says, “A CEO needs to be a multi-dimensional leader who can bring balance to the firm’s customers, stakeholders and employees”.

The CEO has an important role “in setting the strategy of the firm, aligning the organisation with the strategy, leading the top team, inspiring employees, working with the board and shareholders, as well as articulating a clear vision and direction”. 

Sharing his expertise, Lobo says, “While CEOs tend to spend a large part of their career in one function, over a period of time they do develop expertise in other functional areas. This helps them lead”. Amongst the various dimensions a CEO needs to succeed, the ‘people dimension’ is definitely one of them, feels Lobo.

Of course, it is important to note that HR experience is not the only qualification necessary to become a successful CEO. Strong leadership skills, strategic thinking abilities, and a deep understanding of the industry in which they operate are also essential for CEOs.

Shantanu Banerjee, chief human resources officer, Bajaj Allianz Life, believes that while having HR experience can be beneficial for CEOs in managing people and driving the business forward, it is not a mandatory requirement for taking on the leadership role.

“They gain insights into effective HR practices and philosophies while working closely with HR professionals or by observing how other successful leaders manage their teams,”

Shantanu Banerjee, chief human resources officer, Bajaj Allianz Life

Many successful CEOs manage to develop HR acumen during their career journey, either from their trade or by simply learning on the job, points out Banerjee. “They gain insights into effective HR practices and philosophies while working closely with HR professionals or by observing how other successful leaders manage their teams,” he explains.

Chief executive officers often bring a unique perspective to HR management, as they tend to look at things from a macro level or through a business lens, rather than at the micro level that HR professionals tend to focus on. As such, their approach to HR management may differ from traditional HR practices, leading to innovative and effective strategies.

Banerjee goes on to enunciate that in the context of Indian corporations, while some companies may have an option for a person to go through an HR stint, it is not a requirement for becoming a CEO.

In his words, “A considerable number of CEOs leading major corporations in India have a background in business or finance, and they have developed their leadership skills through years of experience in those areas”. He goes on to point out that in India, companies such as LIC, State Bank of India, and other large organisations, which make up a significant portion of the country’s companies, do not require their top executives to possess previous HR experience.

Bhyranna has a similar observation that HR experience is not a mandatory requirement for becoming a CEO. Many successful CEOs have come from various backgrounds, including finance, marketing, and operations. In some cases, CEOs develop HR expertise as they move along their professional journey, which they can leverage to improve their people-management skills once they assume the top leadership role.

“Some experience in HR can be highly advantageous for CEOs in effectively managing personnel and propelling business growth. It enables them to acquire the necessary skills and knowledge to manage the workforce efficiently, comprehend the organisation’s values and culture, and handle financial matters adeptly,” concludes Bhyranna.