Why the Tech Industry Has Embraced the Chief People Officer With Open Arms
The Chief People Officer job title started to emerge in the tech sector just over a decade ago. As an industry on the edge of change, with a pioneering focus on talent and innovation, the need to make sure companies fostered an attractive culture for employees has become paramount to success.
With the heightened focus on people, the CPO title has become increasingly common in the sector over the more traditional Chief Human Resources Officer. According to The Org data, 156 Information Technology and Service companies now have CPOs compared to 113 with CHROs.
Evolving trends in HR and leadership now demand a more personal and strategic approach to traditional human resources than ever before. And in the age of fierce competition for skilled workers and high expectations from employees, providing a positive experience has become fundamental.
That’s part of the reason why ‘people leaders’ have become key company decision makers across many different sectors.
In Deloitte’s Global Human Capital Trends 2016 report, 92 percent of participants said their organization needed to be redesigned to build employee engagement, retention and a meaningful culture, with 82 percent saying culture was a competitive advantage.
Now, many companies are elevating CPOs or equivalent HR leaders to c-level, responsible for much more than just hiring, firing, and payroll.
The need for a people-focus is seen across the company size spectrum, with many start-ups investing in people leaders early to keep the creative culture through growth, and big companies hiring to innovate and develop or fine-tune a culture to retain and attract top talent.
And in places like Silicon Valley, CPOs are in high demand. So what exactly does a CPO do?
The expectations with modern people management
The CPO is the highest rung of the human resources ladder, responsible not just for staff, but for company culture and creating an environment for employees (and the company) to prosper.
This means the CPO is largely responsible for laying out and communicating company values, ethics, and mission, on top of the more traditional HR functions of recruitment, compensation, and benefits. And while the employee experience is vital to success, so too is a top-notch recruiting process, with the CPO being a key brand and culture ambassador for the company.
Cockroach Labs CEO Spencer Kimball said its CPO held an integrated role, encompassing multiple departments under a unified division. “The best analogy would be a Chief Revenue Officer (CRO), who owns not just Sales, but Customer Success, and Support as well,” he said.
He said in both cases there was a unifying theme that makes grouping multiple functions under a single leader advantageous. “For Revenue, it’s selling to and supporting customers in their respective journeys with our database; for People, it’s hiring, retaining, and providing growth opportunities for our employees in their respective career paths while at Cockroach Labs.”
The CPO role came as the logical evolution of the Head of People Operations position—both held by Lindsay Grenawalt. That evolution, he said, was driven by company growth and the eventual need to form an executive team with C-level leadership.
“We didn’t start with a CHRO role because Lindsay’s preference and past experience suggested that an overarching, integrated people function was more effective at recruiting and retaining the best employees.”
LinkedIn's former SVP of Global Talent, Pat Wadors, said around 80 percent of a company’s operating expenses were talent-related, and as engaged and happy employees are more likely to be productive, fostering an inclusive culture where employees want to work is good business.
The CPO differs from most c-suite roles, seeing business growth coming from a thriving workforce, rather than solely from recurring revenue drives. But that doesn’t exclude them from playing a fundamental role in business strategy. CPOs must ensure people-strategy is aligned with the company’s growth and supports the bottom line, and they work directly with the CEO to make that happen.
A people manager will inform the CEO about the benefits of investment in the workforce, analyze data and industry trends to guide company policy, build relationships to tap into new talent pools and lead change management in relation to human capital.
According to Allegis Partners Managing Director John K. Anderson, core competencies of a CPO include: Business acumen, organizational leadership, culture influencer, talent architect, data/technology advisor, emotional intelligence, and authenticity.
With the diversity of the role, many companies are now looking to hire CPOs with business experience outside of HR — Slack, Facebook, Square, and Google all being examples. Because of the need for business acumen, clients are looking for candidates who have worked in client-facing business partnership roles.
But does a CPO differ from a CHRO?
The answer to that is yes and no, depending on how the role is interpreted. The CPO can also be known as the CHRO, Chief Talent Officer, or, as Airbnb has, Chief Employee Experience Officer. And all of those roles can be relatively similar or rather different depending on where their focus lies. Broad cultural and contextual changes are affecting human resources, with shifts from administrative management to people management. Sometimes a name change goes along with the evolving role, but in other cases, HR leaders retain the CHRO title.
Andy Dunn, the former chief executive of Bonobos, told Business of Fashion rebranding the CHRO title to emphasize people signaled a philosophical difference, saying a CHRO seemed concerned with benefits, whereas a CPO valued “culture and human beings.”
CPOs can often be thought of as gimmicky rebrands of CHROS, as PR agency DCI explained. But compared to traditional CHRO positions, the job is much more strategic. Although policy and process are still fundamental to the role, people and culture are now at the center.
Kimball said the CPO role at Cockroach Labs encompassed more than a CHRO’s typical duties. “Traditional HR activities are likely the most critical component of the broader people role, but are additionally informed and enhanced by culture, office--and remote work--experience, onboarding, and employee engagement, among others.”
He said the decision was also a result of Cockroach Labs CPO Grenawalt having both interest and significant experience across all of these functions.
“Culture has been a top priority from before Cockroach Labs was incorporated and it continues to be a primary focus of every department, but especially people,” Kimball said.
The new people-focused role is no longer thought of as a back-office function, with leaders being seen as key decision makers. So the difference between roles is not in the title, but whether workplace culture or administrative functions dictate workflow. And any HR role with a seat in the c-suite most likely has people-strategy at its core.
In modern times, HR leaders need multi-market and multi-regional experiences, Global HR Director at Diageo, Mairéad Nayager said in a 2017 KPMG report. The report said experience with big changes within a company and having a broad external network are now fundamental to people-strategy roles.
TrueCar CPO John Foster told Protocol there had been a recent paradigm shift in the way businesses saw people. "Traditional HR heads may see people more as costs, and they're trying to avoid risk, manage costs and keep them down,” he said. “I think in a more modern, growth-oriented, consumer-driven company, a CPO is thinking more about people as investments.”
He added a CPO helped people to do more and increased engagement with their job and the company to deliver their best effort, rather than just trying to get them to comply.
The value of the position
Increasingly, investors, boards, and executives are seeing the importance of investing in employees and company culture early on as a way to ensure business success.
The hope of installing a CPO at the beginning is to avoid the turmoil often associated with rapid growth and to allow the company to grow in a designated direction and attract top talent.
As millennials continue to enter the workforce, they have placed an increasing demand on career development and, according to Forbes, 87 percent expect individual growth and learning on the job.
Scott Kehoe of Launch Search Partners said in Medium a few years ago a head of talent was the crucial senior people-hire for a company expecting hypergrowth. Now, he said, CPOs were more requested to ensure an organization can both hire and develop employees.
For example, Anna Binder joined Asana as CPO in 2016 and continued to grow what was already a coveted company culture by expanding leadership programs for all staff and identifying metrics to track early on so the company would have the data at the ready, exemplifying the impact a CPO can have.
The 2017 KPMG report showed both CEOs and chairs looked at senior HR roles as a catalyst for change. By developing strong ties with the CEO, especially one who sees people as the company’s greatest asset, and exchanging management perspectives and philosophies, CPOs can make transformative company change.
The CPO’s decisions around hiring, strategy, diversity, and inclusion influence all levels and sectors of a company. Often they even coach the CEO in leveraging their talents as a business leader.
The CPO talent pool is more gender diverse than for other c-suite roles, with 73 percent of HR professionals being female and 55 percent of CPOs being female, according to a 2016 Korn Ferry study.
CPOs often operate behind the scenes unless a major scandal occurs. If that does happen, they are tasked with handling the response externally and internally, being seen as a partner to everyone in the company. An adept CPO is as much needed in times of unrest as much as in times of growth.
When Lorraine Vargas Townsend was hired as Mendix CPO in 2019, Mendix CEO Derek Roos said the company was on a tremendous growth trajectory and Townsend would play an instrumental role in creating and executing a “world-class” talent strategy to continue that growth into the future.
At the time, Townsend said in a perfect world of leading top employee talent, the company would create leaders and structures hat unleash people to bring their passion and genius to their work.
"We can't do that with over-engineered HR programs and processes that stifle the creativity and desire for accomplishment every team member covets. We do that by creating a culture where personal growth is well rewarded and where team achievement is celebrated across the organization.”
Ensuring success in a CPO
CPOs need to move across business boundaries with ease in order to be successful. They need to leverage alliances and build relationships, and the expectations placed on them can be unfairly lofty.
It is not solely the role of the CPO to scale and ensure a positive company culture, but of all employees especially the c-suite team. If expectations aren’t in line with reality for the CPO, both them and the CEO will feel dissatisfied.
The goal of a company hiring a CPO should be to set it up for success, and it should be ready to embrace a long process to find the right person, and then follow the recommendations they have for changes within the company.
It’s no real surprise that investing time, effort, and resources into employees through people-strategy results in a company more people want to work at and don’t want to leave.
Having a dedicated person to oversee that makes smart business sense, while helping employees further themselves professionally - which can’t be a bad company investment.
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