HR as a Performance Function: How PE Firms Are Rewiring the CPO Role

Private equity is rewiring one of the most overlooked seats in the portfolio company: the chief people officer. The push comes from a clear expectation — boards want HR to move numbers like retention, engagement, and productivity. But Heidrick & Struggles identifies a structural problem that defeats that expectation: many CPOs are flying blind, accountable for outcomes but lacking the levers to deliver them. For any portfolio company operating partner focused on talent as a value driver, closing this gap is essential.

The diagnosis is precise. Outdated systems, weak analytics, and unclear authority block execution. CPOs are accountable for outcomes but don't own the levers. This is a setup for failure: holding someone responsible for moving numbers while denying them the data to see the numbers, the systems to act at speed, and the authority to make the decisions that would move them. The result is a people function that everyone wants to be strategic but that is structurally prevented from being so.

TR · 01Accountability without levers

The core dysfunction is the mismatch between accountability and control. A CPO told to improve retention but without clean data on why people leave, without systems to act on attrition signals at speed, and without authority over the decisions that drive retention is being asked to produce an outcome they can't actually influence. This mismatch isn't unique to HR, but it is especially acute there, because the people function has historically been treated as administrative rather than operational — and administrative functions don't get the data, systems, and authority that operational ones do.

TR · 02Wiring HR like a performance function

Heidrick's prescription is to wire HR like a performance function, which means giving it the same three things any performance function needs: decision rights, clean people data, and systems that operate at deal speed. Decision rights mean the CPO can actually make the calls that move the numbers, not just advise on them. Clean people data means the function can see what's happening with retention, engagement, and productivity in real time rather than through lagging, unreliable indicators. Deal-speed systems mean HR can act at the pace the business moves rather than the pace of annual cycles.

TR · 03Why this matters for value creation

The reason PE cares about this is that talent is a primary value-creation lever — the McKinsey research on how PE CEOs win puts talent first among the behaviors that drive outperformance. But talent can only be a lever if the function responsible for it is equipped to pull it. A CPO flying blind can't drive the retention and productivity gains the value creation plan depends on. Wiring HR as a performance function is what turns 'talent is the primary lever' from a slogan into an operating reality.

This is the same transformation happening across the C-suite, where functions historically treated as administrative — finance, HR — are being rebuilt as performance functions with data, systems, and authority. It mirrors the finance-as-a-platform shift: the same logic of pushing insight to the edge, automating the administrative, and equipping the function to drive decisions rather than just process them. HR is simply earlier in that transformation than finance, which makes the opportunity larger.

For the operating partner, rewiring the CPO role is a concrete, high-leverage move. It takes a function the board already expects to drive value and equips it to actually do so, closing the gap between accountability and control. The CPO given decision rights, clean data, and deal-speed systems can move the numbers boards want moved; the CPO denied them will keep flying blind no matter how capable they are. The difference is structural, which means it's fixable — and fixing it converts the people function from a source of frustration into a genuine value-creation lever.

TR · 04Accountable for outcomes, denied the levers

The CPO sits in a structural bind that Heidrick & Struggles names precisely: boards want HR to move numbers — retention, engagement, productivity — but many CPOs are flying blind, accountable for outcomes they don't have the tools to control. Outdated systems, weak analytics, and unclear authority block execution. The CPO is held responsible for people-driven value while being denied the decision rights, data, and systems needed to actually drive it.

This gap between accountability and authority is why HR so often fails to deliver the value boards expect from it. A function measured on outcomes it cannot influence will underperform regardless of the talent in the seat. The problem is not the CPO's capability; it is a role designed to be accountable without being equipped — and no amount of effort closes a gap that is structural.

TR · 05Wiring HR like a performance function

The fix Heidrick prescribes is to wire HR like a performance function: give it decision rights, clean people data, and systems that operate at deal speed. Each element addresses part of the bind. Decision rights resolve the authority gap. Clean people data resolves the analytics gap, turning HR from anecdote to evidence. Systems that operate at deal speed resolve the tooling gap, letting HR move at the pace the value-creation plan requires rather than lagging it.

Wired this way, HR becomes a genuine value lever rather than an administrative function. If culture and talent are to drive value — and in an operational era where talent is the primary lever, they must — then the function responsible for them has to be equipped like any other performance function. Rewiring the CPO role is the structural change that lets the people agenda actually move the numbers boards are asking it to move, closing the gap between what HR is accountable for and what it can control.

TR · 06Wiring HR like a performance function

The transformation of the CPO role mirrors what happened to the CFO: a function once seen as administrative is being rewired to move enterprise numbers. Boards now want HR to affect performance directly, but many CPOs are flying blind — lacking the data, the metrics, and the operating connection to the value creation plan that would let them function as a performance lever rather than a support service. Wiring HR like a performance function means giving it the same rigor finance has: clear metrics, accountability for outcomes, and a direct line to the thesis.

This matters because, as Egon Zehnder's work underscores, execution problems in PE-backed companies often trace back to organizational design, talent gaps, and accountability misalignment rather than to strategy. A CPO operating as a performance function — assessing leadership risk, designing the organization around the thesis, and closing talent gaps before they break execution — addresses the root cause of many stalled value creation plans. Sponsors that treat talent architecture as a support function leave value on the table; those that wire the CPO role as a performance lever turn HR into part of the operating system that compounds value.