As the times are changing, more and more companies continue to see unprecedented growth – they have slowly, but gradually come to realize the importance & impact of human capital. Gone is the era when the only role of Human Resource Managers was administrative.

Today in 2020, HR has moved beyond the one way monotonous transactions like scheduling interviews, coordinating, rolling out offer letters and other admin responsibilities. Human Resource Management has a LOT to do with technology, future planning, making strategic decisions, talent management & engagement.

CEOs and business leaders agree more than ever, that investing in human capital is as important, urgent and necessary, as watching the top line and bottom line of any organization.

Concepts like work-load analysis, work-life balance, market trend analysis, keeping a tab on the new upcoming roles, proper enforcement of labour laws and implementing employee friendly policies are instrumental in success of any organization.

For a CEO to shape a company’s vision and foreseeable future, discussions about its people / employees needs to be on the table. This is only possible, if the Head of HR or the CHRO reports directly to the CEO. This reduces the “middle men” or rather multiple layers of middle management and allows the business leader to directly connect with their employees.

Top three reasons why the people in charge of Human Resources & people management must report to the CEO are as under:

1. Direct Connect with Employees

As mentioned earlier, having a direct connect with the workforce is the best way a leader can function. It allows them to get an instant pulse of its people and get first hand feedback on company policies, process and platforms. Fewer the middle men, lesser will be the chances of a message getting distorted. Hence it makes absolute sense for the Head of HR to be in constant close connect with the CEO.

Are the employees over worked? Are the employee under paid? What is their happiness quotient? Is your company a great place to work in? How productive is the environment at work? Is there disguised unemployment? These are some of the important issues, a futuristic leader must have satisfactory answers to.

2. Expectation setting and Employee morale

When a CEO says, that employees’ performance is directly indicative of company’s performance, employees feel valued and this instils a stronger sense of responsibility in them.
 
Studies have shown that when employees know they have access to the CEO or top management and are able to get first hand downloads from them about where the company is headed – it boosts their morale like nothing else.

3. Employees are the first customers

Employees prove to be great first customers. Companies today, are launching newer products, new versions of existing product/service, platforms, digital entertainment zones, mobile applications and what not. Any new venture will need beta testing and focus group discussions. And what’s better than engaging in a dialogue with their employees?
 
This way – employees are sure to feel pampered and company will also get first hand honest feedback at zero additional cost and promotions.

Having said all the above points, if a business leader decides to put their thoughts together and implement these suggestions – intertwining the business and HR strategy, then they will easily see a spike in employee productivity and a highly engaged workforce.

If an organization’s plan is to expand, then HR plan would be to increase relevant hiring. If an organization’s plan is to reduce its size and presence, then HR plan would be cut down on its manpower count.

If the organization’s plan is to stay ahead of its competition, then HR plan would be to support employees in learning new skills, build new age platforms and integrate technology in HR transactions.

If an organization has done exceedingly well, then HR plan could be 100% pay-out of Performance linked Incentive. If an organization is reaching the maturity stage of business operations, then HR plan would be to start succession planning. It is as simple and directly proportional as that!

Valuing human capital is not a one-time activity. It needs to become a part of our culture and everyday dealings. Unless the top leader doesn’t echo the same thoughts, it will not trickle down in the organization structure.

Most of the leading MNCs and Fortune 500 companies, such as Mercer, Pepsi, Facebook, Google, Reliance, Capgemini, Delloitte, L&T and leading NBFCs have their CHROs and HR Heads reporting to the CEO.

May it’s time to follow suit, and see the difference for yourself?