CEOs as makers and shapers of human resource management

An analysis of the role of CEOs in human resource management (HRM) suggests they retain a strong influence over the implementation of policy, and their actions or omissions can make or break successful adoption.

Jordi Trullen

A new analysis by Atieh S. Mirfakhar (former PhD student at Esade, currently at Instituto Universitário de Lisboa), Jordi Trullen (Esade), and Mireia Valverde (Universitat Rovira i Virgili), published in The International Journal of Human Resource Management explores in depth the ongoing role of CEOs in HRM policies. It covers factors ranging from the beliefs of CEOs; their influence on human resource management (HRM) implementation (which is seen as a process with three stages of adoption, formulation and execution); their influence on the strategic role of the HR department; and the impact of action and omission.  

The result is a map of CEO influence on HRM that challenges the widely accepted belief that the CEO role is limited to strategic decision-making. 

Information on the CEO role

The researchers adopted a case study methodology, using information-rich cases in which the role of the CEO could be clearly observed. Iran was chosen as the setting for the organizations studied, thanks to its culture of strong work hierarchies and highly influential CEOs.  

The influence — or lack thereof — of those in authority can shape the HRM policy of an organization for better or for worse

Two companies were selected for examination, each similar in several relevant aspects to provide a good basis for comparison (including the number of employees, sector and corporate culture). One of the CEOs assessed for the study had moved from one company to the other, which allowed the researchers to examine the actions of three CEOs in relation to two companies and examine four detailed case studies

Data was collected through a total of 24 semi-structured interviews with a series of stakeholders in each company. Interviewees included managers (senior, middle and line), employees, the head of HR and other HR specialists. After coding the interviews, they revealed the strong influence of CEOs on HRM in several key areas: 

A positive opinion of HRM has an impact on business success

The researchers found that a remarkable number of interviewees declared, unprompted, that the CEO’s view of HRM was important for the success of the business. The CEOs who saw HRM as an unnecessary cost favored investment into alternative areas of the business. Companies with a CEO who expressed a strong favorable opinion of HRM and invested accordingly experienced a strong workforce and a better workplace.  

CEO beliefs directly impact HRM adoption

The beliefs of the CEO directly impacted the actions and decisions regarding the implementation of HRM. A passive stance adopted by a CEO resulted in stagnant and outdated policies, while a CEO with a positive view of HRM and a belief in its strategic relevance resulted in progressive changes to performance management policy

CEO views are pivotal to cultural acceptance

CEO endorsement of new HRM initiatives was pivotal in the policies being embraced and adopted. Supportive CEOs who offered resources such as external consultants, and who personally encouraged management teams, were important elements for company-wide adoption. 

CEOs can make or break a policy

A meticulously prepared HRM policy proposal can be derailed by the CEO in a last-minute intervention. Even when the involved managers have previously agreed upon introducing a certain change, CEO decisions and communication can break crucial deals within the organization. On the contrary, the CEO can also be a facilitator by endorsing or incentivizing a particular policy. 

CEOs influence HR strategy

The senior HR leadership team may have responsibility for strategy in theory, but the researchers found that CEOs were able to subtly influence its direction in several ways. Influencing senior leadership recruitment decisions, reinforcing or downplaying the role of the HR department in the organizational structure, and allowing or preventing direct communication between the CEO and HR team all had an impact on the strategic direction of HR. 

Influence by omission

CEOs were able to influence HRM strategy and policy with positive endorsement, but the research team found that omissions carried equal weight. CEOs who were passive in their support for new initiatives or actively avoided decision-making altogether had a significant impact on the attitudes, beliefs and behaviors of other key players within the organization. This challenges the assumption that a passive CEO who plays no part in the formation of HR policy has little impact on its delivery: apathy in relation to HRM can permeate the core of an organization shaping its culture. 

Culturally significant 

The CEO is an essential figure in shaping all aspects of an organization, but surprisingly little research has been conducted into the impact of this influence on HRM policies. The research from Mirfakhar, Trullen and Valverde illustrates that rather than focusing on driving strategic goals, the beliefs and practices of a CEO have a strong influence on the culture of an organization.  

Shaping the organization through HRM

While the research focuses on the role of the CEO, its findings apply to other senior leadership teams and managers. The study reveals that the influence, or lack thereof, of those in authority can shape the HRM policy of an organization for better or for worse.

The model identified by the research team maps out the influence of CEOs in HRM implementation. However, the team concludes that a thorough examination of how CEO influence permeates at different levels and the resulting impact on how HRM policies translate into practice is ripe for exploration. 

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