Whether Chairs of the Board, owners, or CEOs, I believe everyone agrees that HR is important; the values "people first" and "our most valuable asset is our people" are shared and voiced in meetings. Yet when we ask leadership, "Which output from the HR team last quarter directly changed a business outcome?", can we actually see that impact? Of course we believe in the value of HR — and as someone with an HR background, I do too — but where that value lands matters greatly. In my view, the real issue between the CEO and HR lies in creating and demonstrating that value.
This expectation is, in fact, a measured phenomenon. It is striking that CEOs who see human capital as their biggest challenge rank HR only as the 8th or 9th most important function in the company. I think there is a connection between believing in the value and actually seeing it.
When a CEO evaluates HR, what are they really thinking — and where has this expectation shifted in recent years?
How has the expectation evolved?
For many years HR was measured by being "a well-functioning function": clean records, accurate payroll, on-time hiring, regulatory compliance. These are still necessary; an organization cannot maintain a healthy structure without them. But the center of gravity of what the CEO expects from HR has shifted — from the process running well to the outcome changing.
Dave Ulrich's long-standing "outside-in" logic provides a sound foundation for this expected shift in HR: the value HR produces is defined not from the inside — how many trainings were held, what the survey score was, how many open positions remain — but from the outside.
Whether a practice is good or not is determined by what it adds to what the customer buys and to the outcome the investor backs. In Ulrich's framework, when HR becomes a leading indicator of outcomes, it earns a real voice at the leadership table.
Only 11% of companies build their HR as an integrated system rather than a collection of fragmented activities. But this 11% is the group that is twice as likely to exceed financial targets and twelve times more likely to achieve high workforce productivity.
The three contributions expected of HR are: anticipating the outcome of people decisions, diagnosing people-driven problems that drag down performance, and identifying and activating actions that create value. Charan and his team describe this as a "C3" partnership of CEO, CFO and CHRO — a structure in which HR speaks at the same level and in the same language as finance.
So what does a value-creating HR look like?
I would like to show you, with examples, where value can be created in three main themes, how you can look at the relevant data, and which approaches can be applied.
Connecting talent to value. When a CEO looks here, I think one thing comes to mind (it would for me): what did this talent move add to revenue, margin, resilience? Value-creating HR moves beyond posting ads and waiting for applications and builds a magnetic field that attracts the right people — companies that invest in talent and in the culture that manages it show both lower attrition and a level of financial resilience that surpasses competitors; these companies are at the same time talent magnets. The same HR also knows the value of placing the right person in the right role: top performers in critical roles deliver many times more output than the average employee in the same role. What is distinctive in talent management approaches is connecting Talent to Value — linking talent to revenue creates a measurable and visible difference beyond the slogan.
Reading the future from today. The second theme is foresight. From the CEO perspective mentioned above, there is a serious difference between an HR that notices the skills gap only after the annual training budget — or aims to raise total annual training hours from 50k to 70k — and an HR that, with a 3–5 year vision and tracking, maps in advance which skill will fall short and where. The latter can act before the business slows down. The same foresight applies to leadership: spotting the leader of the future before the competition is a matter of succession discipline. A contrasting piece of data — Bersin's research shows that more than three-quarters of CHRO appointments are made from outside the company, which indicates that in most organizations both succession planning and trust in top HR are weak. Turning the exit interview from a formality into market and competitor intelligence — converting "why are they leaving" data into insight — is also part of this theme; my observation is that very few companies do this systematically.
Making the hard call on time. The third theme may be the least discussed dimension: fast and clear decisions on low performance. In an organization, distinguishing value-creators from value-eroding employees and acting accordingly directly affects engagement and productivity; when no distinction is made, those who get most demoralized are the good people carrying the load. Value-creating HR does not delay this decision; but it makes it with a fair and transparent performance system, preserving fairness.
These three themes are the concrete form of what the CEO means by "value-creating HR." None of them requires building a new system; they require connecting existing work to business outcomes.
Can HR do this?
I would like to stay on the comfortable side of this, but for an honest picture, the debate also needs to be put on the table. In 2014, Ram Charan proposed splitting HR in two. The administrative side (payroll, benefits) would report to the CFO; the leadership and organization side would report to the CEO under a separate executive. While Charan's rationale is open to different views, it is stated as "most HR leaders don't know how the business wins, and therefore cannot be a strategic partner."
Dave Ulrich did not agree with this proposal. He framed it as "the problem is not the existence of HR but its readiness," and added: "Instead of splitting, we need to equip." CHROs can offer a great deal to the CEO, but for this they must be re-equipped with business literacy.
This debate has not closed in a decade and, in my view, is current for Türkiye too: an HR team that is good at administrative excellence does not automatically become a strategic partner. They are two different muscle groups, and the second requires deliberate investment and focus.
The conclusion is not, of course, to belittle administrative work. My observation is that a solid operational foundation is a precondition for strategic credibility. It is hard for an HR function whose payroll constantly errs to present a talent strategy to the board. The point is not the list of things done in what we call "core HR" but being able to build the strategic layer on top of it.
Where the gap really lies
The gap between the CEO's expectation and HR's output sits in concrete places. Only 12% of HR leaders say they do strategic workforce planning with at least a three-year horizon; 26% of employees say they have received no feedback in the last year, and only one-third of critical roles are reported to have a succession plan. When the CEO asks about the future organization, HR often only has a snapshot of today.
The gap arrives at a time when the CEO's attention has shifted. Workforce is still in the top three priorities after Growth and Technology, but I see that the share of CEOs planning to increase investment in people and culture dropped from 69% to 57% in a year; the pressure on HR to prove its value in the priority ranking continues to rise.
For the third year in a row, the number one priority for HR leaders is the same; three-quarters of managers say they are crushed by their responsibilities and 69% say leaders and managers are not ready for the role. This is a gap directly tied to business outcomes, because the manager alone explains 70% of the variation in team engagement.
It is worth looking at the expected competencies. Both SHRM and CIPD, leading HR authorities, have purpose-built HR competency sets. SHRM expects the HR professional to develop across three clusters; one of them is directly the BUSINESS cluster — Business Acumen, Consultation and Analytical Aptitude. In CIPD, the knowledge areas include Business Acumen, Analytics and Creating Value — and among the core behaviors, Commercial Drive. The value-creating HR the CEO is looking for is largely about how well these areas have developed.
The Türkiye picture
From both my prior experience and the consulting work I conduct, along with the observations I have gathered from client visits and meetings, many HR teams in Türkiye already do core HR work well — operational discipline, regulatory compliance, and personnel records are strong. The real opportunity in companies sits on top of this solid foundation. Turning the exit interview from a formality into competitor and market intelligence; turning succession from a box on the org chart into a real risk map; talking about the skills gap not after the annual training budget but while the business plan is being made — these are the important perspectives and actions for the transformation we are describing. None of these requires building a new system; they require translating existing work into the CEO's language.
An observation exercise for top management
Rather than theory, I suggest a practical observation. At your next management meeting, when you look at the HR agenda, how many items are in the "this work was done" format and how many are in the "this changed a business outcome" format? If the ratio is entirely close to the first, what is missing is not HR's effort; you can read it as the way that effort is connected to business outcomes.
This connection we speak of is in fact an integrated way of working, and it begins in the HR processes themselves: from hiring to performance, from succession to development, whether each process is connected to a business outcome — just as with OKRs or KPI-based goal setting, how many of them influence company outcomes and how many do not…
In conclusion
In the end, I think the issue is of a foreseeable scope: the CEO wants to see that the activities and work HR does touch the company's outcomes. Most of the time, this expectation does not require new technology or a new team; it requires translating existing work into the CEO's language — the language of outcomes. HR that can do this earns a lasting seat at the leadership table when business results are discussed; HR that cannot, even if it produces valuable work, continues to be seen as a cost item.
If you would like to see the state of this connection in your own organization, you can start with the observation above; for a more structured picture, you can use IC Consulting's HR Check-Up tool.
In your view, what do CEOs expect most from HR — what would you add to this picture?
IC Consulting | İlhan Çağlar — HR and Management Consultant