Where does HR stand in the C-suite? The Future of Work Research Lab at SAP surveyed and interviewed more than 500 C-suite leaders (CHRO, CEO, CFO, CIO, and COOs) to get a sense of how other C-suite executives feel about their partnership with the HR function.

The results were illuminating, but only part of the story. There are psychological underpinnings that may also help explain how HR can shift from collaborative partnerships to strategic relationships and drive C-suite success. Let’s dig in.

Where HR is succeeding—and has room to grow

First, the good news: Research showed that most C-suite executives meet regularly with their HR function, are satisfied with their interactions, and view their relationships with HR as positive and collaborative.¹

While it’s validating to hear executives use words like “essential” to describe HR’s role, there’s a big difference between being seen as a crucial collaborator and being seen as a strategic partner. Being vital to members of the C-suite is not the same as being equal. And the research backed that up, with 45% of leaders saying they don't think HR is highly involved in executive strategy.¹

As the CFO of a large telecommunications company told researchers, “I do view HR as an essential partner in the C-suite. However, I believe there’s room for HR to be perceived as an equal partner, particularly when it comes to identifying and executing business priorities.”

Social Exchange Theory in the C-Suite

What explains the limited view of HR’s value that some C-suite executives hold? Psychology’s Social Exchange Theory (SET) may shed some light. One of the most influential theories in social sciences, SET proposes that people weigh the potential benefits and risks of their social relationships and invest in these relationships in ways that maximize benefits and minimize risk.²

In a business setting like a C-suite, this means executives build relationships strategically—they invest time and resources only if they think the long-term value of that relationship is greater than what they could achieve without such investment. This investment results in a “strategic partnership,” as opposed to a simpler and short-term “collaborative relationship.”

SET explains the differences between “collaborative relationships” and “strategic partnerships” by examining:

How colleagues interact

• Collaborative relationships focus on specific tasks and last only for the duration of those tasks.

• Strategic partners focus on creating value beyond immediate tasks and strengthening long-term relationships.

How colleagues share resources

• Collaborative relationships are limited in commitment to help and share resources, often with the expectation of immediate reciprocity.

• Strategic partners are willing to share resources, risks, and rewards without expecting reciprocity.

How colleagues rely on each other

• Collaborative relationships tend to have lower levels of interdependence and less trust built up between each party.

• Strategic partners are more likely to engage in interdependent work and opportunities to build trust.

How colleagues align goals

• Collaborative relationships can be misaligned on fundamental vision and less invested in shared outcomes.

• Strategic partners share a vision and are mutually invested in outcomes from both parties.

Some of those scenarios may sound familiar to HR leaders. Understanding where each C-suite function is focused helps explain where “collaborative relationships” and “strategic partnerships” diverge.

The priority paradox

When asked to pick their five most important business priorities, it’s normal for different C-suite personas not to align—even people in the same role don’t always agree on what rises to the top.

However, the research showed that CHROs’ priorities are the least aligned with other C-suite functions. HR leaders see employee engagement, talent acquisition, and leadership training as their top priorities. Meanwhile, the rest of the C-suite said they prioritize other areas far more, including innovation and product development, growth and expansion, financial performance, and digital transformation.¹ And nearly half of C-suite executives said HR is somewhat or not at all successful in supporting these priorities.¹

Some interviewees even suggested that inconsistent priorities are a major issue. But every enterprise function sharing the exact same priorities is not essential to success—given the diverse responsibilities of C-suite leaders, it’s not even feasible.

So, HR leaders shouldn’t feel the need to change their own priorities in an attempt to align with the rest of the C-suite. After all, HR’s distinct priorities all support a high-functioning C-suite and business at large.

How HR needs to show up now

Recruiting and retaining top talent, improving employee engagement, and facilitating career development—no business function is better equipped to understand how it positively impacts an organization than HR. But it’s beneficial for HR leaders to understand other C-suite priorities better.

Thankfully, other C-suite leaders welcome HR’s involvement. More than half of C-suite executives said working on a project within their own function alongside HR (as opposed to collaboration on HR or technology projects) would most improve their relationship.¹ And 70% think they would benefit even more than HR would from a better-quality partnership between their functions.¹

To build stronger relationships across the C-suite, HR leaders should:

• Integrate people and business performance data to demonstrate alignment and help CHROs and the rest of the C-suite make more informed decisions.
• Collaborate on improving AI literacy and adoption, especially with C-suite leaders who don’t feel like they’ve gotten the most out of their organization’s AI integration.
• Get involved in projects outside HR to gain firsthand insights into business-critical objectives.
• Put HR priorities in the context of other C-suite priorities when advocating for employees.

The future belongs to HR leaders who forge new partnerships and gain the knowledge they need by combining the right people data with the right performance data.

With SAP Business Suite, you can transform HR from an operational function to a strategic enabler of workforce engagement, productivity, and insights—results the rest of the C-suite can’t help but recognize.