Ep 820: What Strategic HR Really Means

0:00Almost every HR leader claims to be strategic, and most CEOs say that's exactly what they want them to be. The trouble is, ask them both what the word means, and the answers rarely match. One side is talking about programs and processes, the other is thinking about revenue, margin and risk. So what does operating strategically actually look like in practice, and why does so few HR professionals get there? Keep listening. to find out. Support for this podcast comes from Cyber, the professional network for cybersecurity. If you're hiring for cybersecurity roles, you'll know that they are more complicated and time consuming than more generic requisitions.

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2:00Hi there, welcome to episode 820 of Recruiting Future with me, Matt Alder. The gap between claiming to be strategic and actually operating strategically has real consequences, and nowhere are they clearer than at the top of HR. CHRO turnover is unusually high at the moment, and it also spikes sharply in the first year under a new CEO. A change at the top usually brings a new thesis about what the business needs, and what the CEO needs from HR shifts with it. Many CHROs find themselves running a system built for the previous mandate, which creates a gap that seriously erodes trust. The problem is structural rather than personal, which means it can be fixed.

2:47So what separates the HR leaders who thrive in the role from those who don't? My guest this week is Jackson Lynch, founder of TalentSherpa and a former CHRO who works with CEOs, CHROs and boards on connecting talent systems to business strategy. In our conversation, Jackson shares why mandate misalignment drives so much churn at the top of HR, what operating at the top level means in practice, and why AI is making the redesign of work urgent. Hi, Jackson, and welcome to the podcast. Hey, thanks, Matt. I'm glad to be here. An absolute pleasure to have you on the show. Please could you introduce yourself and tell us what you do.

3:29Yeah, my name is Jackson Lynch. I'm a human capital architect. And the simplest way to describe my work is that I help organizations treat talent the same way they treat any other form of enterprise infrastructure. And Matt, I think my analysis is that companies, most companies manage talent reactively. They hire when something breaks, they develop when they have a budget, they revisit the org chart when a crisis forces their hand. But I end up working with CEOs, CHROs, and boards to build talent systems that are thoughtful and deliberate, connected to strategy, anchored in outcomes, and designed to sustain performance.

4:05Fantastic. I'm going to dive into your work with CHROs. So CHRO turnover is sort of unusually high at the moment, particularly in the first year under a new CEO. What's driving that? Give us your thoughts around what's going on. Yeah, I've done a lot of work on that, Matt, and I appreciate the question. The short answer is mandate misalignment. And what I see, and the data, by the way, backs up everything you just shared. Have 50-50 if you have a new CEO that comes in and you're a sitting CHRO, or if you are first joining a new team, you're in that same ballpark as to whether you're going to make it the first 18 months.

4:42And what I've seen over and over again is the new CEO arrives and they bring a thesis about what the business needs to do differently. And sometimes it's growth, sometimes efficiency, sometimes a fundamental repositioning. And what they need from HR then shifts accordingly. And the sitting CROs that sit there and they're built for the previous mandate and they're focusing on doing the work that they've been rewarded for. And they may be excellent, but the incoming CEO needs a talent system that drives transformation. And the CRO is running a system built for stability. Then you have a structural mismatch and it's not really anything to do with the personal performance.

5:22But here's what I think makes the first year especially dangerous. There's almost never a explicit mandate conversation at the start. The CEO assumes the CHRO is going to adapt. CHRO assumes that they're doing the right stuff because they haven't heard anything else. And by the time that gap's visible, the trust is already eroded. So my advice to first-time CHROs are if you're a sitting CHRO and you get a brand new boss. Like you have to have that conversations in the first 90 days. You have to make the expectations explicit. You have to discover the mismatch in the moment because if you figure it out 18 months later, you're probably not doing it on your own terms.

6:01So a lot of CEOs say they want HR to be strategic, but it's a term that gets used quite loosely. What does strategic HR actually look like in practice and where do most HR leaders end up actually operating? Yeah, I think you nailed it. Strategic HR is, in my view, a self-congratulatory label. Everyone claims it. Very few are doing it. And if you ask five CEOs and CHROs to tell you what it means, you're probably going to get 25 different answers. So here's the test that I use with my clients. Can you explain the value of what you're building in revenue, margin, speed, risk, language? And can you connect that work directly to the metrics the business is measured against?

6:46Not HR metrics, not the things that we put on there that are largely in the rearview mirror in our process and oftentimes vanity metrics. The reality, from what I've seen, is many HR leaders can't. And the reason is, I think, institutional. They've been rewarded for functional excellence, for running great programs, for managing processes well. And, you know, that work is probably excellent and technically sound, but it's not legible to the business in the way the business works. So strategic HR, as an alternative, looks like this, I think, in practice. So I call this, Matt, high-altitude HR. And it's all about being constraint-focused.

7:27So you need to understand the two or three things that are going to make the business run or break over the next couple of years. You're looking at the business strategy through a talent lens, and you identify where the talent decisions are going to be most sensitive to those outcomes. And then you build it around those. Targeted investments in the right roles, capabilities, and structures. That's different from trying to be one size fits all HR and being excited about being at the table, which in my view is a participation trophy in corporate lingo. It's kind of so much more than just a promotion than it's a sort of an entirely new way of thinking.

8:07Yeah, I would tell you that it's a completely different role. And the promotion implies continuity. And can't believe with every other C-suite executive, they are a more senior version of the roles that they had done previously. I think the CHRO level is just different. You're now accountable for the organization's capacity to execute strategy. That is not a mandate below you in the organization. It's an enterprise architecture job. And most people who take it arrive with a functional operating model and they keep doing what worked, which is usually running programs and optimizing processes. And when the CEO is waiting for someone to show up as a co-architect to the business and they're like one's high altitude, the other is low altitude.

8:53That's why the mandate conversation is so important. So what I ask my clients to do is just when you get there, understand what does the enterprise need to execute? And if you can answer that question through a talent lens, where you're predicting outcomes, you're identifying root causes, and you're prescribing next steps, that's the job. And it's not a continuation of any job you've had before. Everything else is functional management with just a bigger title. Support for this podcast comes from Pebble. I know that many of you listening are hiring internationally, and you'll be all too familiar with the wall of paperwork, rules and approvals, and you know just how much this red tape can slow things down.

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10:24Go to HiPebble.ai before it's gone. That's H-I-P-E-B-L.ai. Terms and conditions apply. And does that cause a bit of a trust problem with the rest of the C-suite? Yeah, I'm not sure if that's the root cause, but there absolutely is a trust issue with the rest of it. I think it's largely because they run on different logic systems. So hear me out on this one. This is a little bit of a round robin on how this works. But C-suite operates on business logic, revenue, margin, speed, risk. Most HR leaders grew up in a world, if they grew up in HR, of compliance logic. What is defensible? What's consistent?

11:08What's fair? What reduces liability? And those two lenses produce different answers to almost every consequential question. And over time, it gets read that HR is being a blocker. Now, HR people will sometimes say, well, we have to say no, but you know who says no more than anybody else? The finance guys. But they're not seen as compliance-based. They have a business logic to what they do. And so every HR world looks at it through three hats. First hat is the talent maven, and that's making sure you have the right people in the right roles, and you really made sure that the talent systems are driving outputs.

11:46The second is employee advocacy. And I mean that in the world of the original Dave Ulrich, which is that the employee views get included in decision-making, not that you're a shop steward of the organizational talent. And third is the company defender lens, which is the compliance lens. And you grow up in HR, you're usually looking at it from the second and third. When you get into the top chair, it shifts dramatically and you're almost all looking at things through a talent maven. And so the problem is you have trained everyone else in the organization for years to work around your compliance lens.

12:27And they're looking for it when you get into the C-suite. And if you lead with the compliance lens, not the business lens, then that's going to reinforce what they think they expect from you. And that's where the trust It just becomes very, very difficult to overcome. And we are living through a kind of a fascinatingly disruptive time. AI is sort of reshaping how we think about work. It's shaping the way that people think about organizational design. You know, there's kind of a lot going on. And the CHROs are sort of becoming the de facto sort of leader of this kind of shift. How should they be approaching that?

13:06Yeah. So first off, AI is making really longstanding problems impossible to ignore. And I think the most important one to start with is how we design the work to begin with. Most roles have been defined by activities. Take a look at almost every job spec that people recruit against, any job description that people are managed against. and it's primarily activity-driven, which means it's hard to measure contribution clearly. It's hard to differentiate performance meaningfully. And equally important to this moment, you can't really determine what a machine should handle versus what a person should.

13:41So AI, I think, is forcing a conversation because you have to decide which ones are worth automating and which ones should a person do instead, which means I think the smart play is to start with outcome-based role definitions. and do a complete work redesign because technology up to this point has been a bolt-on to whatever you are running. And AI, if you don't redesign, it will just rapidly accelerate everything that is currently in your system. So if it hits fog, it's going to scale the fog. So what I coach my HR clients to do to get ahead of this is you got to go just back to the fundamentals of role design.

14:21What is this role accountable for producing? What outcomes justify its existence? And then think about what decisions require a person and human judgment. And I think that's the work. The biggest problem, Matt, is that people are talking about AI as a technology implementation. It's not. It's a talent infrastructure redesign that AI is making urgent. And the organizations that do that well are going to be meaningfully more advantaged as we move forward. And a final question for you around that. It's obviously creating a situation where, you know, HR as a whole can genuinely become strategic. What needs to happen for HR leaders to make sure they don't miss this opportunity as we kind of move out over the next few years?

15:11Yeah, look, I think we're in an inflection point. And the question is whether HR leaders are going to make the same move that our CFO brethren did in the 70s, or if we're going to continue to optimize the function that we already have. And I think three things need to happen. First is HR needs to build the data infrastructure that makes talent decisions on a forward basis as analytical as financial decisions. Most of the time, our data is backwards looking and it's activity oriented. That's got to change. I think second, it has to develop leaders who operate at enterprise altitude. And we tend to have really strong functional leadership.

15:49And we need to be able to build people who can lead with that talent maven hat first, not the compliance lens. And I think we need to make the connection between human capital decisions and enterprise outcomes much more explicit and much more measurable. So the leaders who sees this, who treat talent with the same rigor as financial capital and allocate it accordingly, I think they're going to redefine what the function is. And the window is open. I don't think it's going to stay that way. And I think we really need to decide, do we want to be an enterprise lever or do we want to be a service organization?

16:25and our leadership is going to determine which of those two outcomes you see. Absolutely. The time is now. Jackson, thank you very much for talking to me. Oh, it's been an absolute pleasure. Love the pod, listen to it all the time. And it's been a joy to join you. Thank you. My thanks to Jackson. You can follow this podcast on Apple Podcasts, on Spotify, or wherever you listen to your podcasts. You can search all the past episodes at recruitingfuture.com. On that site, you can also subscribe to our weekly newsletter, Recruiting Future Feast, and get the inside track on everything that's coming up on the show.

17:02Thanks very much for listening. I'll be back next time, and I hope you'll join me.

17:14This is my show.

17:20Bye.