The Rise of the Portfolio Company Chief People Officer

Over the last two and a half years, Chief People Officers (CPOs) have been infectious disease control experts, authors of return-to-work and hybrid policies, and facilitators of race relations in the US. Today, CPOs are leading organizations through a global labor shortage, and shepherding companies through macro-economic headwinds while trying to keep culture afloat. Additionally, global M&A volumes reached an all time high of $5.8 trillion in 2021, up 64% from 2020 and private capital markets have boomed, driving growth and the need for more sophisticated people leadership as a result.

Companies are taking note. In fact, over 30% of the 100+ chief people officers Russell Reynolds Associates has placed over the last three and a half years are for organizations that never had a senior HR leader on their leadership team prior. In particular, private equity (PE) funds and portfolio companies now see CPOs as key value creators, enabling growth and leading change, as opposed to functional leaders who drive HR compliance.

The recent rise in the importance of this role at portfolio companies is a function of the clear impact on financials and business growth by CPOs.

Talent Partner
PE Fund

Once companies see what strategic HR leadership looks like, it is hard to go back. I do not see the bar getting lower, even if the economy slows.

Talent Partner
PE Fund 

To better understand the uptick in portfolio company CPO appointments, and what makes them successful, RRA analyzed:

• The past experiences of 104 CPOs we placed at portfolio companies across all industries since January 2019
• The Leadership Span^TM results of 42 CPOs at portfolio companies, comparing them to the profile of 247 public company CPOs to identify key differences
• Interviews with 20 CEOs, CPOs and Talent Partners

In our report, we outline:

• What leadership competencies make CPOs successful in a portfolio company environment
• What experiences these portfolio company CPOs have had that differentiate them from others
• How PE firms and portfolio companies can find – and keep – their next CPO

Executives we interviewed, in addition to the hundreds we have worked with in the market, shared their perspective on what makes these CPOs successful, and noted that the recent rise in CPO appointments in portfolio companies reflects the enhanced value PE funds place on leadership, culture and engagement. As a result, the skillset and experiences required of recent hires have also evolved. We hope these findings help portfolio company CEOs, boards, and PE operating and talent partners identify exceptional CPOs and ensure their success.

Authors

Lilly Lin is a member of Russell Reynolds Associates’ Leadership Advisory group with a focus on the Human Resources Officers capability. She is based in Chicago.

Ted Moore is a senior member of Russell Reynolds Associates’ Human Resources Officers capability. He is based in Chicago.

Anna Penfold leads Russell Reynolds Associates’ Human Resources Officers capability. She is based in London.

Harsonal Sachar leads Knowledge for Russell Reynolds Associates’ Human Resources Officers and Legal, Regulatory & Compliance Officers capabilities. She is based in Toronto.

Jack Thompson is a member of Russell Reynolds Associates’ Human Resources Officers capability. He is based in Chicago.

Annabel Toren is a member of Russell Reynolds Associates’ Human Resources Officers capability. She is based in New York.