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When Is It Time to Add a CHRO to the Payroll?

Hiring a head of human resources might not be priority number one when starting a new company, but it also can’t be ignored for too long. How can you tell when it’s time to bring in someone as a dedicated Chief Human Resources Officer to keep your franchise brand running smoothly?

 

What Does a CHRO Do?

The Chief Human Resources Officer (CHRO) is the top “people” person at a company: a C-suite executive who oversees an organization’s human resources strategy. They are the primary authority when it comes to areas like talent management and HR recruitment, compensation, performance management, and employee development. More recently, CHROs have also found themselves often leading the way in terms of cultural initiatives, including those related to diversity, equity, inclusion, and belonging.

 

While a CHRO’s main duties involve the people function, their high level in the company means they also must have a big-picture view of the organization’s overall strategy, including aspects like financials, and how HR fits in with those goals. CHROs bring the “human” aspect into these conversations about strategy, often serving as a communications conduit to help the CEO and others in the C-suite understand what is really happening– what employees’ priorities and concerns are, what motivates them, what might be retention risks, and so on.

 

In a franchise company, the CHRO fulfills a critical function: ensuring that the human factor maintains a steadiness while still ensuring that each individual franchise can fulfill the unique needs of its market. The franchises that succeed aren’t just the ones with a great product or service – they’re the ones that are able to balance the varying demands of individual franchises with an HR strategy that focuses both on recruiting top talent and ensuring they will want to stay in the long run.

 

CHROs in Today’s Workplace

Over the last few years, CHROs have taken on an even greater importance for many companies. Organizations are facing a marketplace that is more volatile and complicated than ever, and they need strong leadership at every level to successfully navigate it.

 

Talent is the top priority today, and it’s also one of the most challenging aspects for any franchise right now. In a tight labor market, top talent has their choice of job offers, and previous recruitment and retention strategies may no longer be as effective. A savvy CHRO can help develop an HR strategy that takes into account these new factors, is flexible enough to meet the moment, and can help their organization stand out in a sea of competition.

 

Work looks different now, and employee priorities are different. There are obvious, visible shifts, like the move towards more hybrid and remote work, and related aspects like employees prioritizing work-life balance and avoidance of burnout. Employees are also looking for reskilling opportunities to stay competitive in a world where technology moves faster than ever.

 

Meanwhile, there are also social aspects to consider. Issues of social justice, equity, and culture are taking on greater importance for brand, employees, and consumers alike. DEI initiatives are growing rapidly, but there has to be buy-in from the C-suite, or even the best-intentioned efforts won’t have the intended impact. A CHRO can champion these efforts to the rest of the C-suite while also laying out how they are part of a larger picture (culture development, employee experience, and so on) that have a major impact on a brand’s success or failure.

 

When It’s Time to Add a CHRO

Franchises often tend to focus on expansion and on finding the right people to lead new franchise locations; it can be tempting to focus on that, rather than on the “big picture” or “home brand” parts. Still, it’s a mistake to put an exceptional CHRO too low on the priority list. After all, figuring out how to find talent should be at the top of everyone’s minds, and a CHRO can make a difference in strategy to do just that!

 

A designated HR expert is also highly relevant in the franchise world, especially in the wake of labor decisions that have shifted the relationship between franchisor and franchisee. The complexities of joint employment, and the circumstances under which a franchisor is (or isn’t) considered a joint employer, require an HR leader to understand the level of involvement that might trigger such provisions. An experienced CHRO can help ensure that the company’s overall HR practices allow franchisees sufficient control to maintain the necessary separation while navigating the nuances of individual practices under the HR umbrella.

 

At the beginning, whoever is in charge of HR might be someone who isn’t solely dedicated to HR, and that can work for a little while, at least. When the business grows to the point that the HR/people function is too much to handle for someone who has multiple roles, then you need an experienced executive to take charge of it exclusively. That CHRO must have a well-rounded understanding of business and be able to articulate how the people aspect impacts the business as a whole. Having a strong relationship with the CEO and other executives is crucial; a CHRO in that position can then represent the HR function to executives who might not fully understand. A C-suite of experts, with complementary skills and focuses and with positive working relationships, must always be the goal.

 

Here are a few questions an organization might consider when deciding if it’s time for a dedicated HR head:

  • If there’s a crisis (hiring, retention, labor-related, etc.), who deals with it? Do they feel equipped to do so, or is it more surface-level?
  • How does HR tie into your company’s current strategy, and how big is their “piece” of the strategy?
  • Is there already clear communication to leadership about people issues/on-the-ground aspects, or is it getting lost in the shuffle?
  • What role is DEI playing in your organization, and who is spearheading it and/or advocating for it?
  • What relationship does your “home base” HR have with the HR function of individual franchisees, and does it reflect your plans regarding the risk of joint employer status?

Ultimately, adding a CHRO is a signal that your brand is ready to grow and understands that its people are the key to that. The Franchise practice at Blue Rock Search is here to help you find the leader you need to drive a strong people function and exceptional culture, even across diverse franchise locations. With strong leadership in place, the sky is the limit!

 

About the Author

Nancy Estep-Critchett is a founding Partner of Blue Rock Search, with oversight of the Franchise Practice. She has 30 years of successful working experience as a business advisor and executive recruiter in the franchising space. Nancy has built solid relationships which have spanned decades with industry professionals and internationally recognized brands.

 

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