After a two-year decline, the number of requests for chief learning officer candidates is beginning to climb again. A renewed interest in talent management, succession planning and organizational effectiveness represents more than a “flavor of the month” tactic at many companies. Enterprises that value learning and development invest in CLOs—not merely to run the learning function as a business, but to shape and drive organizational culture and to ensure that the workforce enacts company strategy.
That shift is ratcheting up the pressure on CLOs and other top organizational effectiveness executives, who are being held accountable for generating measurable returns from growing learning and development investments. Although the exact role and hierarchical station of the CLO remains in flux, best practices and a new mandate are emerging. If CLOs are to take a seat at the executive table, they must actively shape their new role, seek out opportunities to boost key organizational metrics and embrace the accountability that more CEOs are foisting on them.
Demographics-Driven Demand
The emergence of the CLO reflects the recent evolution of the human resources function, which typically has been the last area in the organization invited to the C-suite. In recent years, requests for compensation and benefits executives have represented a large portion of the 250 high-level, global HR searches that Korn/Ferry International conducts annually. That emphasis is shifting. Requests for organizational effectiveness executives have increased and now comprise about 20 percent of the HR searches conducted in the past year. Those requests include CLOs, as well as “CLO-lite” titles, such as vice president of organizational development.
These searches contain a broad set of specifications. Companies want HR generalists—veterans seasoned by successful stints leading recruitment, compensation and benefits, development and other functional disciplines. Process-improvement experiences—Six Sigma credentials, for example—also figure prominently in the client’s search specifications. Talent management, succession planning and organizational development experience top the list of specifications on most searches for CLOs and organizational effectiveness executives.
A looming war for talent—driven by the demographic crunch that HR analysts have been warning will commence once baby boomers begin to retire from the workforce—has greatly increased the demand for talent-management and succession-planning expertise.
‘C’ Is for Commitment
The recent decline in CLO hiring corresponded with the recession for familiar, if unsound, reasons.
As with most economic downturns, the demand for compensation or total rewards experts increased as the economy suffered. Companies typically react to recessions by furiously paring costs while clinging to top performers. As economic turnaround begins to take hold, companies tend to shift their focus to talent management. Recruiting activities, management-development programs and training activities that were abandoned during the downturn are resurrected.
Companies with leading learning functions eschew an inconsistent approach to talent management and succession planning by committing to those investments over the long term. Rather than pulling the plug on recruiting trips to universities during recessions, for example, these companies maintain their presence at top business schools and undergraduate programs through up and down economic cycles. These companies also are inclined to attach a “C” to the title of their leader in charge of organizational effectiveness or organizational development.
Retail and banking companies generally tend to “get” the value of learning and hire CLOs to run the function as a business. Wal-Mart, Home Depot and Bank of America are all recognized for their sophisticated learning and development capabilities. So, too, are several companies that have transformed from manufacturing products to providing products and services—General Electric and IBM are prime examples. Organizations that have demonstrated sustained growth also represent a type of company that regularly assigns strategic status to its learning function.
Chico’s, for example, has placed learning and development atop its strategic agenda. The national retailer of women’s attire has posted 34 consecutive year-over-year quarterly earnings increases, and the executive team believes an enterprise-wide development initiative will help propel the company to the next level.
Elevating a learning and development vice president to a C-level title qualifies as a major leap for any organization. Creating a CLO position communicates to the workforce, customers and shareholders the clear message that the company is committed to learning and development. At companies with top-notch learning and development capabilities, CLOs usually have direct access to the CEO and, in some cases, to the board of directors.
The CLO position rarely exists without the blessing of the CEO. By naming a chief learning officer, the CEO communicates to internal and external audiences that the organization is making a long-term investment in organizational learning.
Wanted: A Translator for the CEO
Although the exact role of the CLO varies from company to company, organizations that hire chief learning officers seek out similar core characteristics.
The position’s responsibilities are broad. The learning activities the CLO conducts are highly integrated with business functions, especially sales and customer service, and perhaps most importantly, the CLO plays a leading role in aligning the workforce with high-level strategy. Top CLOs are highly active in defining, shaping and driving organizational culture. To do so, they need a talented staff and the support of a strong head of HR who has a close relationship with the CEO.
The most crucial of the CLO’s multiple roles is that of the CEO’s translator. Chief executives frequently encounter difficulty with the practical aspects of aligning their workforces with their message. More CEOs are handing that responsibility to their CLOs, who are charged with putting the CEO’s vision into action among different levels of the workforce through a combination of training, development and performance management disciplines.
Chief learning officers often take responsibility for the organizational development and effectiveness functions, which include recruitment, training, succession planning, most aspects of retention and enterprise-wide process improvement initiatives. Post-recessionary budget growth and fears of a demographics-fueled labor crunch have spurred most organizations to seek greater expertise in talent management, which encompasses succession planning and retention.
Enterprises that ask their learning functions to conduct little more than “Management 101” programs rarely hire CLOs. Executive teams that expect more from their learning functions demand that training and development activities occur very close to the actual work of the business. Action learning marks an increasingly popular instrument in most CLOs’ toolboxes. CLOs must find a way to influence all levels of the organization and all of the business units and functions within the organization—they are being held accountable for properly training and developing the entire workforce.
On the factory floor, that might mean developing a cadre of Six Sigma Black Belts and lean manufacturing experts. Among sales teams, it might translate to the creation and delivery of highly tailored training modules, the outcomes of which are measured against specific sales metrics, such as increases in pipeline volume or even revenue. Similarly, precise training is delivered to customer service centers, where other metrics, such as first-call resolutions, cross-sell opportunities and customer retention rates, are used to measure success.
In the executive suite, CLOs take on succession planning responsibilities and weigh in on C-level compensation and benefits: Who will be groomed to succeed the CEO or to step in for the COO, CFO or CIO when a sudden departure occurs?
According to recent executive search specifications, technological savvy also ranks as an important CLO capability. Learning executives are expected to implement and use performance management tools that automate the tracking of individual and workforce training and development through desktop scorecards and similar applications.
A November 2004 Accenture survey of 285 companies supports this summary of CLO specifications that crop up in executive searches. The Accenture report identified seven capabilities that leading learning organizations deliver and measure:
- Aligning learning initiatives to business goals.
- Measuring overall business impact of the learning function.
- Extending learning to customers, suppliers and business partners.
- Supporting the organizations’ most critical competencies and jobs.
- Integrating learning with functions such as knowledge and talent management.
- Using technology to deliver learning.
- Delivering leadership development courses.
Finding the Right Fit
Once companies find a CLO with skills of sufficient breadth and depth, they need to figure out where the position fits within the executive pecking order. To date, there has been very little consistency in CLO reporting relationships. Some organizations have the CLO report to the head of HR; others count the chief learning officer as a direct report to the CEO. Still others institute dual reporting relationships in which the CLO reports to both the CEO and the company’s top HR executive.
The variability in a C-level title’s reporting relationship is not unique to the HR function. Other functions and their top executives have taken ample time to iron out their reporting relationships. Fifteen years ago, chief financial officers were typically called controllers. They reported to the COO, not the CEO. Today, the CFO is widely considered the CEO’s primary adviser and in many industries occupies the on-deck circle when the chief executive leaves the company.
Chief information officers used to be called data-processing directors, and they tended to report to a vice president of operations. Thanks to the critical nature of data and the technology systems that control the information flow, many CIOs now report directly to the chief executive.
The evolution of functions and executive reporting relationships can take years, unless external events accelerate the process. For example, a much more vigilant regulatory environment in the United States, crystallized in the Sarbanes-Oxley Act, has greatly increased the demand for chief compliance officers. Searches for CCOs and, to a lesser extent, chief risk officers have served as an executive search firm staple during the past 24 months. The emphasis on corporate regulatory compliance, the growing need for CCOs and the high cost of complying with Sarbanes-Oxley may have siphoned dollars that otherwise would have flowed to learning and development investments. Yet the recent spike in demand for compliance officers is instructive, as it may soon be surpassed by the demand for CLOs as baby boomers begin to leave the workforce in droves.
New Opportunities to Leverage
The specifications companies list when conducting CLO searches and the mandate top learning officers accept highlight several opportunities that other learning executives can leverage to advance their functions’ contributions and improve their viability as CLO candidates. The following areas also serve as a road map of challenges the current breed of CLOs will address as they seek new ways to deliver and measure value:
- The pay-for-performance debate: Companies and their HR departments face a difficult question: Should 360-degree reviews be tied to performance and linked to compensation? Wading into this debate requires answers to other questions, as well. If an employee receives poor 360-degree reviews year after year, should the company continue to invest in that individual’s development? What tool is used to measure performance? CEOs are generally held accountable for their organization’s performance based on scorecards such as the profit-and-loss statement and metrics like earnings per share—so why shouldn’t the workforce be held accountable for its contributions to those measures? Correct answers require strategic vision, a sensitive touch and a firm grasp of compensation and benefits, organizational development, workforce alignment and succession planning—disciplines that top CLOs are expected to bring to the table.
- Serving as the CEO’s partner: Boards of directors have grown much more interested in their companies’ talent-management strategies and succession plans. CEOs often need assistance in articulating answers to tough questions from board members on these topics: Do you have a pulse on the developmental needs and progress of the top 100 people in the company? Where are we vulnerable from a succession-planning standpoint, and what are we doing about it? What are we paying our top performers and why are (or aren’t) we paying them less (or more) than the market rate? How do we define great leadership, and how are we grooming great leaders?
- Sustainable regulatory compliance: Most companies have met, or will soon meet, their initial Sarbanes-Oxley Section 404 deadlines. Yet the deadlines and the ensuing audits mark a beginning rather than an end to compliance. Enterprise-wide compliance efforts must trickle down to the far reaches of the organization if companies are going to remain in compliance in the face of continual change. It only takes a few uninformed or poorly trained employees in key positions to invite unwanted attention from the U.S. Securities and Exchange Commission. Sustainable compliance depends on effective training. It also depends on ensuring that a compliant and ethical “tone at the top” is disseminated and translated into practice throughout the workforce. Once again, CEOs will require assistance from their CLOs to align the workforce’s performance and actions with their interpretations of tone at the top.
- Extending the enterprise through training: Market leaders, such as Bank of America, are extending their processes and technology beyond the four walls of the organization by training suppliers and customers on those processes and systems. Bank of America has established a commitment to continually improve the way it works with suppliers. Those types of trading alliances deliver greater efficiencies and knowledge gains to both parties—but only if they are supported by innovative training and development initiatives.
- Strengthening customer service: Thanks to the cost-reduction benefits of business process outsourcing, companies are turning over larger portions of their call centers to outside vendors. Yet few companies are relinquishing all of their customer service operations, preferring instead to develop smaller, more talented squads of customer service representatives who can resolve the problems of the company’s most profitable customers as effectively and cost-efficiently as possible. Developing that capability requires highly specialized training that can be measured through specific customer-service metrics.
- Stronger links between training and the top line: The days of “back-office functions” cutting costs as a means of contributing to the bottom line are drawing to a close. Leading CLOs and learning functions already have begun to conduct highly targeted training projects to sales teams. The success of those efforts is determined by precise before-and-after measures of specific sales goals.
“Measure, measure, measure,” serves as an appropriate mantra to guide CLOs as they strive to master the challenge of assuming a more strategic role. That mantra has not sounded through as many learning functions as it should have in recent years, when the prevalence of the CLO position was susceptible to larger economic forces. In the near future, the CLOs who make good on their new mandate will have a stronger hand in elevating the bottom line and a more prominent role at the executive table.
George Bongiorno, Greg Coleman, Gregory Hessel and Wendy Murphy are senior client partners in the Human Resources practice of Korn/Ferry International, an executive search firm. E-mail the authors at kornferry@clomedia.com.
