HR as a Driver of Transformation: Why CHROs Are Now Crucial in the Industrial Sector

Germany’s industrial companies are under immense pressure to transform. Decarbonisation, digitalisation, rising costs and more fragile supply chains are forcing organisations to adapt faster than many workforces can keep up with. The key insight of this era is clear: transformation is not simply a technological endeavour. It is fundamentally about people, leadership and cultural conditions.

As a result, CHROs are moving into a new position within the power structure of organisations. They are no longer administrators of the workforce, but strategic co-pilots to the CEO. Their contribution is at least as critical to the success of transformation as any technological decision or new production setup.

An Industry in Transition: Between Uncertainty and Renewal

Hardly any industrial sector has been untouched by the changes of recent years. Since 2022, sharply rising energy prices have weighed heavily on energy-intensive industries and forced adjustments that run deep into technologies and processes. Geopolitical risks add further complexity, making global flows of goods harder to predict and shortening planning horizons.

The technological side of transformation is no less demanding. The use of AI, robotics and automated production systems is expanding rapidly. Many jobs are changing significantly in terms of required skills or disappearing altogether, while new roles emerge that demand higher levels of digital and analytical capability.

Demographic change is equally significant. According to calculations by the Federal Statistical Office, around 13.4 million working-age individuals will reach retirement age over the next 15 years – including many with industrial and technical qualifications.

This means that transformation confronts workforces that are older, smaller and more strained than ever before. Many production areas have been operating at the limit for years, often under intense efficiency and cost pressure. Pride and a strong sense of belonging remain, but the willingness to carry further waves of change is visibly declining – a pattern seen across numerous industrial companies.

For leadership and organisational structures, this means: technological change can only succeed if the cultural, structural and capability-based foundations are in place.

The Evolving Role of the CHRO: From Administrator to Architect of Change

Against this backdrop, the profile of the CHRO is expanding rapidly. Decisions about energy supply, site strategies or automation initiatives can no longer be made without understanding which skills are available, how teams are organised and how leaders carry change through their areas. The CHRO thus becomes a strategic co-pilot to the CEO – the person leadership turns to when transformation is not only designed but actually implemented.

Leadership development plays a central role. Culture is the bottleneck of transformation. In many industrial companies long optimised for efficiency, it is difficult to introduce new patterns: experimentation, open communication, cross-functional decision-making. The ability to tolerate mistakes and discuss setbacks openly is still emerging. HR designs the conditions for psychological safety and develops leadership systems that motivate employees rather than overwhelm them.

At the same time, capability building is becoming more important. Traditional job profiles no longer suffice when roles are reshaped by automation. Internal labour markets gain value: talent must become more mobile, learning paths more dynamic, careers more flexible. Reskilling and upskilling are becoming a permanent feature of industrial reality rather than occasional exceptions.
Data-informed decision-making is fundamental. Many transformation programmes fail not because of a lack of will but because of a lack of transparency: Which skills exist? Which roles are critical? Which locations are under strain? Predictive people analytics and workforce planning models provide clarity where intuition once dominated. HR thus becomes a steering mechanism that co-defines the path of transformation.

How HR Drives Transformation in Practice

Experience shows that HR has the greatest impact when change is complex, sensitive or conflict-laden. During crises or restructuring, the way communication is handled determines whether workforces maintain trust or shift into resistance. HR prepares leaders for difficult conversations, clear messaging and avoiding unnecessary uncertainty.

Organisational design, too, requires new thinking. Where silos were once tolerated, interconnected decision-making is now needed. Roles must be redesigned, responsibilities sharpened and interfaces clarified. Transformation offices that closely involve HR have proven to be effective mechanisms for coordination and maintaining momentum.

Equally critical is the ability to monitor the organisation’s sentiment and resilience. Employee surveys, qualitative interviews and cultural diagnostics help identify early where transformation risks stalling. A workforce that does not feel heard will struggle to engage with new processes, technologies or strategies.

Talent and performance management are also evolving. Companies increasingly understand that future capability is not defined by tenure but by skills. Skill-based development paths are replacing rigid career ladders. Employees who can learn and adapt become the key drivers of transformation.

Why the Right People Leaders Matter Today

Despite HR’s rising influence, many CHROs still face structural obstacles: outdated IT systems, unclear boundaries between HR, Operations and IT, or competing global and local governance logics. In some organisations, years of continuous change have created fatigue that can derail even well-designed programmes.

Here, my view is clear: the quality of people leaders determines how fast, how deeply and how sustainably transformation takes hold. Finding leaders who can navigate organisations through this kind of change – professionally and personally – has become one of the most critical tasks.

People leaders today need a combination of strategic foresight, analytical strength, cultural sensitivity and the ability to offer stability while inspiring change. They must guide teams through uncertainty, build trust and actively explain transformation – while bringing enough ambition to shape technological progress.

Odgers approaches executive search with a focus on leadership impact rather than credentials alone — identifying those individuals who can guide organisations through an era of deep transformation.

Conclusion

Transformation does not succeed through machines, systems or processes alone. It succeeds through people who are willing to learn, take responsibility and shape change constructively. CHROs in the industrial sector now hold more influence than ever. They determine whether companies can master technological, regulatory and societal shifts – or fall behind.

Those who recognise HR as a strategic lever, and place the right people leaders in the right roles, strengthen the resilience and future viability of their organisation.

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