Competencies, leadership, and organizational capabilities in the face of today’s competitiveness challenges

For decades, the Human Resources function has sought to establish its recognition as a strategic business function. The importance of human capital to business performance has become almost universally acknowledged, and the Chief Human Resources Officer (CHRO) participates in senior leadership decisions in many organizations. Yet there is an important distinction between recognizing a function as strategic and demonstrating its contribution to business results.

Artificial intelligence, pressure to improve productivity, demographic shifts, evolving professional expectations, and changing business models make this distinction increasingly relevant. Organizations must adapt their capabilities at the pace of change, and the HR function must help make that happen.

The challenge today is not simply to secure a greater role for the CHRO at the decision-making table. It is to connect the CHRO’s actions, competencies, and judgment to the organization’s ability to execute its strategy, transform itself, and create sustainable value.

Complementary Perspectives on an Ongoing Transformation

Executive Search and Leadership Advisory firms observe the evolution of the CHRO role through the lens of leadership requirements, competencies, and succession processes. Heidrick & Struggles, Egon Zehnder, Spencer Stuart, Korn Ferry, and Russell Reynolds offer complementary perspectives on the CHRO’s mandate and the growing interdependence of people, technology, and strategy.

Heidrick & Struggles highlights the expanding expectations CEOs have of CHROs: beyond functional excellence, organizational design, transformation, strategic counsel, and technological understanding are becoming increasingly important. Spencer Stuart examines how the scope of the role is expanding beyond the traditional boundaries of Human Resources. Egon Zehnder emphasizes that AI-driven transformation depends on leadership, trust, and behavioral change, rather than merely implementing tools. Korn Ferry reinforces the shift from a narrow focus on talent shortages toward a broader concern with capability gaps and adaptability.

Strategy consulting firms, particularly Bain, BCG, and McKinsey, shift the discussion toward organizational effectiveness and value creation. Bain highlights the gap that may exist between leaders’ confidence in a reorganization and the experience of the people responsible for making it work. Changing an organizational chart is not the same as transforming decisions, processes, and collaboration. BCG emphasizes the importance of building capabilities and combining human work with technology. McKinsey questions whether HR’s own operating model is structured to meet these demands.

Multidisciplinary consulting firms add further dimensions. EY and PwC examine AI adoption, employee expectations, and the cultural conditions required to translate new tools into results. Deloitte highlights organizational adaptability. Mercer, Gartner, IBM, and other specialized institutions broaden the discussion around skills, data, employee experience, and the evolution of work.

These publications do not constitute a single study, nor do they reach identical conclusions. Their value lies precisely in the convergence of different perspectives: competitiveness depends on organizational capabilities, and the CHRO must contribute to developing and mobilizing them.

Five Dimensions of CHRO Competencies

1. Business Acumen and Results Orientation

The CHRO must understand the company’s economic model, competitive drivers, financial and operational dynamics, and mechanisms of value creation. This enables meaningful participation in strategy formulation, the identification of critical capabilities, and the connection of people-related decisions to productivity, growth, innovation, and risk.

Traditional HR metrics remain necessary, but they are not sufficient. What matters is understanding how they relate to business performance.

2. Organizational Architecture and the Transformation of Work

In an environment of continuous change, filling positions within existing structures is no longer enough. Organizations must examine how activities, responsibilities, decisions, and forms of collaboration should be organized across the entire business, including operational teams and employees who work directly with customers.

The CHRO must contribute to operating models that enable the organization to execute its strategy with agility, efficiency, and clarity, without creating a divided workforce in which some groups receive development opportunities while others remain confined to execution.

Bain’s contribution is particularly relevant here: reorganizations are justified only when they effectively change how the organization operates.

3. Technological Fluency and Human Capital Intelligence

The CHRO does not need to be an expert in developing AI systems but must understand how technology changes tasks, competencies, productivity, learning, and risks at every organizational level.

Implementation cannot be limited to senior leadership, corporate functions, or groups with greater access to digital tools. It must include employees in operations, administration, sales, and customer service, with solutions, training, and support suited to their respective activities.

This does not mean providing identical tools to everyone, but rather ensuring equitable opportunities to participate in the transformation. Otherwise, AI may deepen internal divisions between those who gain access to new capabilities and those who remain excluded.

The CHRO must be able to interpret evidence, integrate people, operational, and financial information, and distinguish technology adoption from actual business impact.

EY, PwC, and BCG help demonstrate why tools alone do not create competitive advantage: results depend on the combination of technology, competencies, and organizational transformation.

4. Leadership Development, Succession, and Culture

Talent development must anticipate the needs of businesses undergoing transformation rather than merely ensuring replacements for existing positions.

The CHRO must identify critical capabilities, create meaningful development experiences, and support the succession of leaders who can succeed in environments different from those in which they previously achieved results.

In this context, culture is not simply a set of stated values. It is reflected in decisions, behaviors, trust, learning, and the willingness to change.

5. Executive Judgment, Influence, and Governance

A close relationship with the CEO requires credibility and independence, not constant agreement.

The CHRO must challenge assumptions, anticipate risks, and provide well-founded assessments of performance, succession, organizational structure, and culture.

The CHRO’s contribution to the Board of Directors can expand to encompass critical competencies, technological transformation, organizational adaptability, and human capital risks.

This requires a systemic perspective, clear communication, and an understanding of governance responsibilities.

These five dimensions do not replace the fundamentals of the HR profession. Employee relations, compensation, organizational development, talent management, and compliance remain essential. The differentiating factor is the ability to integrate them into a broader understanding of the business.

The HR Function Itself Must Also Change

The expanding demands placed on the CHRO lead to an unavoidable conclusion: the function responsible for supporting organizational transformation must also transform how it operates.

Fragmented structures, predominantly administrative processes, backward-looking metrics, and limited integration with business units constrain HR’s ability to contribute to business results.

This does not mean abandoning operational discipline. It means using technology, data, and new organizational approaches to free up capacity and focus efforts on decisions that genuinely affect competitiveness.

McKinsey’s discussion of HR operating models is particularly relevant here. The question is no longer simply how to make HR more efficient, but also how to make it more effective in building the capabilities the business needs.

CEO, Board, and CHRO: Interdependent Responsibilities Productivity, digital transformation, culture, leadership development, and organizational design are not the exclusive responsibility of any single function.

They depend on coordinated decisions involving the CEO, CHRO, CFO, CIO and/or CTO, depending on the company’s technology governance structure, and other executives.

The CHRO brings a specialized perspective on people and organizational capabilities, but that contribution becomes tangible only when these dimensions are embedded in the company’s strategic choices and reach every organizational level.

For Boards of Directors, this also broadens the agenda. Executive compensation and CEO succession remain fundamental, but they do not encompass the full scope of oversight required to ensure that the organization has the capabilities needed to execute its strategy.

Critical competencies, cultural risks, technological adaptation, and leadership quality deserve attention proportional to their impact on business continuity and performance.

Boards should also monitor whether the benefits and opportunities arising from technological transformation reach different groups of employees, avoiding disparities that could undermine trust, inclusion, and productivity.

From Strategic Intent to Value Creation

The transformation of the CHRO’s role is not merely an evolution of the Human Resources function. It is a response to changes in the factors that determine organizational competitiveness.

Technology, productivity, talent, culture, and leadership are becoming increasingly interdependent.

The CHRO must demonstrate the ability to combine business acumen, organizational architecture, technological fluency, analytical intelligence, leadership development, and executive judgment.

More important than possessing these competencies individually is the ability to mobilize them in an integrated manner to strengthen strategy execution and sustainable value creation.

Perhaps the decisive change is not in recognizing that people are strategic, a statement that has long become widely accepted, but in translating that recognition into concrete decisions, investments, metrics, and accountability.

Author’s Note

The reflections and interpretations presented in this article are solely my responsibility.

This article is based on my reading and synthesis of studies, research, and analyses published by various organizations through digital channels.

Its purpose is to identify areas of convergence, differences in perspective, and practical implications for the CHRO role and organizational competitiveness, without seeking to evaluate, rank, or assign methodological superiority to any particular report or institution.

The conclusions expressed here do not necessarily represent the views of the organizations cited.

About the Author

Dominique Einhorn is Managing Partner of DXE CONSULTING, a firm specializing in Executive Search, Leadership Advisory, and Board Advisory, and a member firm of the global AltoPartners alliance.

He has more than 25 years of experience in executive and board search and assessment, following a career in business management.

He also serves as a Board Director and a member of people and governance committees.