Pivotal position: the evolving CHRO

September 2025  |  FEATURE | LABOUR & EMPLOYMENT

Financier Worldwide Magazine

September 2025 Issue

In a period marked by significant global economic instability, companies face mounting pressure to enhance productivity and competitiveness. This objective increasingly depends on business transformation and the strategic use of resources.

Among the most critical of these resources is a company’s workforce, often referred to as its talent, and the organisational framework that enables this talent to thrive – the human resources (HR) function. This function plays a central role in recruitment and development, serving as a vital component of the business infrastructure.

At the core of the HR function is a role that is rapidly gaining prominence and becoming integral to corporate leadership: the chief human resources officer (CHRO). This position provides a strategic perspective on people, culture and long-term organisational resilience. It extends beyond administrative policies and structural oversight to influence how a company operates through its people.

“As a key driver of strategic decision making, the CHRO should be positioned as a thought partner to the chief executive and a counterbalance to the chief financial officer (CFO),” says Şükran Tümay, managing partner at Stanton Chase. “Their influence matters more than their title or reporting line. It is their ability to steer the organisation’s direction that truly defines their impact.”

Historically regarded as operational leaders managing a cost centre focused on compliance, benefits and recruitment, CHROs are now situated at the intersection of business strategy, workforce planning and talent development. They collaborate closely with senior executives to shape strategic initiatives and lead organisational transformation.

A 2025 survey conducted by the Conference Board, titled ‘The Evolving Role of the CHRO in the Boardroom’, highlights the growing visibility of the CHRO across corporate environments. The survey reveals that CHROs are increasingly influential in corporate governance and strategic decision making, with greater involvement in board activities. Seventy percent of companies reported increased CHRO engagement with the board over the past three years, and CHROs attended most or all full board meetings at 59 percent of surveyed firms. The data also show a rise in the number of directors with expertise in human capital at publicly traded companies in the US.

“Today’s CHRO role is about unleashing the potential of the workforce, and increasingly that means humans and artificial intelligence (AI),” points out Anna Penfold, partner and leader of the global human resources practice at Russell Reynolds Associates. “Beyond being strictly responsible for HR policies, CHROs now spend 80 percent of their time working alongside senior stakeholders on high-level issues including C-suite succession, the future of work and broader business transformation.

“Ultimately, CHROs are responsible for leading people strategy in order to power business strategy,” she continues. “As a result, the CHRO role is becoming increasingly important at global listed organisations, and the CHRO should be seen as a business leader sitting at the top table, helping shape organisations’ futures.”

Further evidence of the CHRO’s rising importance is found in Sheffield Haworth’s global survey, ‘Future Trends in People Leadership 2025’. The findings underscore the expanding scope of the CHRO role, particularly in response to rapid shifts in talent management and workforce expectations.

“The role of the CHRO is evolving beyond traditional HR responsibilities,” adds Alex Cormack, chief executive of Sheffield Haworth. “They are now instrumental in shaping organisational culture and strategic direction. Based on our insights and market research, we believe that CHROs should report directly to the chief executive. This direct reporting relationship ensures that their strategic input is integrated at the highest level of the organisation.”

Mr Cormack argues that such a reporting structure enables CHROs to align talent strategies with overarching business goals, thereby driving long-term organisational success.

Well-positioned

Tasked with integrating people, technology and outcomes, the CHRO is uniquely positioned to lead an organisation’s business transformation agenda. This role is foundational to value creation and comes with a range of strategic priorities.

“The CHRO has a 360-degree view across the entire organisation, from people and systems to infrastructure and leadership dynamics, both good and bad,” affirms Malvika Jethmalani, founder of Atvis Group. “That cross-functional view, coupled with a deep understanding of business priorities and human behaviour, puts CHROs in an ideal position to lead transformation.”

Ferguson Partners, in its analysis ‘The Rise of the New CHRO’, outlines the qualities that make the CHRO well-suited to drive change and growth across an organisation. The report describes the evolving nature of HR leadership and the expanding influence of the CHRO.

CHROs now hold a strategic seat at the leadership table. They work closely with the chief executive and CFO, acting as trusted partners with a vested interest in the organisation’s long-term success. The era of HR as a back-office administrative function has passed.

To be effective, CHROs must understand and contribute to business strategy. They must assess the organisation’s long-term direction, anticipate challenges and ensure that employees are empowered to execute strategic goals. This includes evaluating whether the company has the right mix of talent. Regular engagement with the chief executive and the board is now a standard expectation.

CHROs are also expected to embrace technology. By leveraging analytics, data and metrics, they can influence innovation, support diverse working styles and foster collaboration and engagement. In this data-driven environment, HR leaders play a central role in shaping the future of work.

Financial literacy is another essential competency. People-related issues are closely tied to financial performance, and CHROs must maintain a strong, ongoing relationship with the CFO. A quarterly check-in is insufficient; continuous dialogue is necessary to align financial and people strategies.

In addition, CHROs must lead change. The modern workplace is shaped by disruption and complexity, requiring HR leaders to not only adapt to change but also drive it. With increasing scrutiny from stakeholders and evolving expectations, HR has become a key force in shaping both the present and future of organisations.

“In terms of priorities, investing in HR data and analytics is critical to creating a world-class HR function of the future,” highlights Ms Penfold. “Getting to grips with the organisational implications of AI and selling a vision that the workforce is excited by is another. Leaning on HR business partners in particular to lead change in different divisions and regions will also help CHROs succeed in their future of work plans.”

Ms Jethmalani highlights additional priorities, including building AI fluency across the workforce, rethinking leadership and operating models for agility, and ensuring that organisational culture evolves in step with strategy. “It is becoming increasingly clear that AI transformation needs to be cross-functional, and because transformation is a behavioural endeavour and not just a technological one, CHROs are uniquely equipped to navigate that intersection between technology and humanity,” she adds.

Rising to the challenges

In a business environment defined by volatility, uncertainty, complexity and ambiguity, CHROs face a range of critical challenges – developmental, financial, technological and personal.

“Prioritising employee wellbeing, leadership training and strategic workforce management is an absolute priority,” asserts Mr Cormack. “This enables CHROs to shape cohesive and resilient organisational cultures, effectively guiding chief executives and leadership teams through continuous transformation and market change.”

The Society for Human Resource Management’s 2025 report, ‘CHRO Priorities and Perspectives’, identifies leadership and manager development as a top concern for HR leaders. More than half of CHROs consider it a critical focus area, likely due to the need to address talent gaps and build leadership pipelines to support sustained growth.

However, 40 percent of CHROs report that establishing effective leadership development programmes remains a significant challenge. Succession planning is also a concern for 37 percent, highlighting the importance of preparing for leadership transitions without disrupting operations.

Economic pressures present another major challenge. According to the SHRM report, wage inflation is the most pressing macroeconomic issue, cited by 61 percent of HR leaders. Rising wages, combined with increasing costs of goods and services, place financial strain on organisations. CHROs must balance competitive compensation with budgetary constraints.

Navigating workplace politics is also a concern for 25 percent of CHROs. Whether resolving conflicts among senior leaders, advocating for HR initiatives or managing competing stakeholder interests, HR leaders must demonstrate diplomacy, influence and strategic acumen.

In addition, the growing demand for hybrid and flexible work arrangements has introduced new complexities. CHROs must now design policies that support productivity while maintaining employee engagement and wellbeing. This requires a nuanced understanding of workforce dynamics, digital collaboration tools and evolving employee expectations.

Ms Jethmalani identifies the pace of change as a further challenge. “Transformation is happening faster than most operating models can absorb,” she explains. “AI is pushing us to rethink leadership capabilities, reskill at scale and redesign employee experience to meet this moment of hyper-personalisation. We are being asked to build agile, skills-based organisations while also stewarding ethical AI adoption across everything from hiring to performance feedback.

“For CHROs, this means leading with a future-back mindset while balancing ethical responsibility, workforce anxiety and business urgency,” she continues. “We are being asked to create both economic and human value simultaneously. That dual mandate is complex, but it is also where great CHROs shine.”

For Ms Penfold, the greatest challenge is guiding organisations through uncertainty. “With organisations consistently facing new challenges, including geopolitical uncertainty, technological disruption, supply chain disruptions and environmental concerns, CHROs must be equipped with an ever-growing roster of skills to ensure they can support chief executives and leadership teams in driving performance,” she asserts.

Connective tissue

The CHRO role is evolving rapidly. According to Ms Jethmalani, the CHRO of the future will be part futurist, part operator and part storyteller. As complexity increases – from AI to geopolitics to generational shifts – leaders who can interpret signals, shape culture and mobilise the workforce at scale will become indispensable.

“I see the CHRO becoming the connective tissue between business strategy, technology and the social contract of work,” she continues. “If we do it right, CHROs will not simply support transformation; they will drive it with clarity, compassion and a relentless focus on making organisations fit for the future. In short, the CHRO is mission-critical to advance the next chapter of work and workplaces.”

Ms Tümay similarly envisions the CHRO as a central force in shaping how organisations operate and adapt. “As business models shift and external pressures, such as economic changes, technological advancements and evolving expectations, continue to redefine success, leadership, trust and capability have become essential,” she suggests. “With a broad organisational perspective, CHROs can identify misalignment in decision making, engagement and ways of working before they impact outcomes.”

This expanded role also requires CHROs to become champions of inclusion and sustainability. As stakeholders increasingly demand ethical governance and social responsibility, CHROs must ensure that people strategies align with environmental, social and governance goals. This includes embedding diversity, equity and inclusion into the fabric of the organisation and fostering a culture of accountability.

“The most effective CHROs do not just implement strategy; they influence its design, execution, and the organisation’s ability to navigate an uncertain future with resilience and agility,” stresses Ms Tümay. “Their leadership ensures businesses remain adaptable, forward-thinking and equipped for transformation.”

In an era defined by rapid transformation and mounting complexity, the CHRO has emerged as a strategic linchpin in shaping the future of work. As organisations navigate disruption, the CHRO’s ability to align people, technology and purpose will be essential to building resilient, forward-looking enterprises.

© Financier Worldwide

BY

Fraser Tennant