CEO and HR: Building a Strong Company Culture Together

Key takeaways

• Strong CEO-HR partnerships reduce safety incidents and boost profits through better employee engagement.
• HR managers must transform from administrative roles to strategic partners who understand business objectives.
• Cultural transformation succeeds more often when CEO commitment aligns with company values.
• People-focused manufacturing companies achieve higher productivity without major capital spending.

Today’s manufacturing leaders face unprecedented workforce challenges: high turnover, changing employee expectations, and growing skills gaps. A distant or purely administrative relationship between CEO and HR no longer works. For forward-thinking business leaders in Vietnam’s manufacturing sector, building a strategic CEO-HR partnership has become essential for creating the resilient company culture needed to succeed in today’s competitive landscape.

Why a weak CEO-HR relationship undermines your business

Four critical vulnerabilities emerge when the CEO and HR operate as separate entities rather than strategic partners. These gaps create ripple effects that ultimately compromise performance, retention, and competitive position.

HR becomes tactical, not strategic

Without direct CEO engagement, HR departments typically handle only implementation, with little input on strategic design. In order for HR to be true business partners, they can’t be put in the role of simply executing on initiatives. This prevents HR from applying their workforce expertise to core business decisions when these insights matter most.

Many HR directors only perform administrative work rather than truly doing HR work. They are not close to employees, cannot provide advice on career paths, and fail to be a mental support for employees during crises. If employees still feel hesitant to visit the HR director’s office, that person will be the last to know about an employee’s decision to leave.

The financial impact is significant. According to research, manufacturing companies in Vietnam face a 24% average annual employee turnover rate, rising to 36% in labor-intensive manufacturing. About 65% of manufacturing companies now cite employee retention as their biggest challenge, with each lost worker costing roughly 3-5 months’ wages to replace. When HR remains tactical rather than strategic, these human capital costs often go unaddressed at the leadership level.

CEOs lose touch with employee realities

CEOs who keep HR at arm’s length risk becoming dangerously disconnected from what’s really happening with their workforce. HR should function as “the eyes and ears of the organization,” providing the CEO with the pulse of what is going on. Without this crucial insight, CEOs often make decisions that look good on paper but are very poorly received by the workforce.

HR managers must always be the bridge between the CEO and employees. They must be proactive and clearly demonstrate this function through effective work. When HR proves their ability to connect leadership with employees, they will certainly receive respect and recognition from the CEO, eliminating the lack of common voice between the two sides.

This disconnect becomes especially problematic during major changes. A 2024 PwC survey found 60% of CEOs cite their CHRO as a “highly effective” business partner in driving company strategy. Companies where HR has direct access to the CEO often create more unified culture initiatives and talent strategies. In contrast, organizations where CEOs operate without HR’s strategic input frequently implement changes that face unexpected employee resistance.

Company culture deteriorates

A weak CEO-HR connection directly undermines the ability to build and maintain a strong company culture, which is essential for attracting and keeping talent. Companies with a strong relationship between HR and the CEO have a better handle on their culture. Without this partnership, opportunities to use culture as a competitive advantage are missed.

The consequences are measurable. According to Gallup, business units with high employee engagement see 70% fewer safety incidents, and engaged frontline workers are 78% safer and 44% more profitable than disengaged colleagues. These figures show how a strong culture—created jointly by aligned CEO and HR leadership—directly impacts safety and financial performance, especially critical in manufacturing environments.

Globally, effective culture change is difficult – only about 34% of organizational change initiatives succeed, while 50% clearly fail. Many failures stem from neglecting people and culture issues. This highlights why a strong CEO-HR partnership matters: leadership alignment can make the difference in navigating change successfully. In fact, change management experts estimate success rates can improve by up to 70% when initiatives align with culture and values.

Critical conversations and problem-solving falter

A poor CEO-HR relationship creates “surface-level, facade-like conversations,” preventing honest discussion of real organizational challenges. When HR leaders feel unable to deliver difficult but necessary feedback, underlying problems persist, preventing timely, effective solutions.

This communication breakdown is particularly problematic in Vietnam’s manufacturing sector, where only 41% of Vietnamese businesses have started major transformation initiatives in the past three years—significantly lower than the 66% rate among foreign companies. Without open CEO-HR dialogue, Vietnamese manufacturers risk falling further behind global competitors in necessary cultural and operational changes.

Building a future-ready organization: Your CEO and HR leading together

The CEO-HR partnership is the foundation upon which resilient organizations are built. Industry leaders have identified three specific domains where this collaboration creates measurable competitive advantage.

Strengthen your company’s identity: Purpose, values, and talent

Companies that operate with clear purpose create more long-term value, leading to stronger financial performance, increased employee engagement, and higher customer trust. This purpose-driven approach begins with CEO and HR alignment on what the organization stands for.

CEOs and HR leaders should jointly define and embed a clear company purpose that guides strategic choices and daily work. HR can help translate this purpose into specific leadership behaviors and employee norms, identifying key moments in the company culture. 

Together, CEOs and HR should strategically place top talent in roles critical for value creation. Organizations that align talent with strategic plans are more than twice as likely to outperform competitors. This means moving beyond traditional hierarchical placement to focus on where talent truly drives the business agenda, like Tesla’s innovation culture or Apple’s user experience focus. HR can develop analytics to identify and develop these key individuals.

CEOs and HR should also jointly create an exceptional employee experience. According to McKinsey research, companies where HR facilitates a positive employee experience are 1.3 times more likely to report organizational outperformance. This includes building team morale and ensuring employees feel connected to the company’s purpose.

Heineken Vietnam demonstrates how top leadership commitment to HR-driven programs can reshape company culture. Through its “Accelerate Your Talents” initiative, Heineken sends Vietnamese employees on international assignments across the company’s global operations. Importantly, Heineken’s leadership backed this cultural transformation with significant investment – about VND 31 billion (≈$1.3 million) dedicated to people development in one year – clearly signaling that the CEO and HR view talent and culture as top priorities.

Enhance organizational agility: Speed, simplicity, and adaptability

The manufacturing landscape demands unprecedented responsiveness to market shifts, technological disruption, and talent dynamics. Companies that excel in this environment have mastered three critical capabilities through CEO-HR collaboration.

CEOs and HR should champion new organizational models that empower teams and break down traditional hierarchies. HR can help lead the shift toward more agile structures by developing new career paths and performance systems suited for flexible teams. 

Together, they need to build a flexible, skills-focused workforce ready for future demands. With technology rapidly changing job requirements (85% of companies accelerated digitization during the pandemic), HR must lead strategic workforce planning, identifying skill gaps and driving reskilling efforts. The World Economic Forum warns 51% of surveyed companies identified ‘technological literacy’ as a core skill required in the general workforce by 2025.

CEOs and HR should foster a culture of quick, high-quality decision-making by empowering employees. HR can design systems that reward appropriate risk-taking and ensure sufficient coaching. McKinsey research shows that employees who are empowered to make decisions and receive adequate coaching from leaders are four times more likely to report that their companies’ delegated decisions were both high quality and fast.

Drive scalability: Learning, innovation, and HR transformation

“An effective transformation strategy must stem from the company’s purpose and needs… I believe the key is to maintain consistency in purpose but remain flexible in approach.”

– As Tiêu Yến Trinh, CEO of Talentnet Group – 

Sustainable growth in manufacturing requires systematic approaches to scaling learning, innovation, and capability throughout the organization—areas where CEO-HR collaboration is indispensable.

CEOs and HR should create a “learn-it-all” culture by championing continuous reskilling. This means supporting learning journeys that combine traditional training with peer coaching and modern learning platforms, as Microsoft has done by shifting from a “know it all” to a “learn it all” mindset, incorporating open learning days, informal social learning, and new platforms.

Gentherm Vietnam, a high-tech automotive manufacturer, aligns its CEO and HR strategy to build a strong culture of growth. The company conducts systematic talent reviews to identify future leaders early and invests heavily in their development. Gentherm uses a 70:20:10 learning model (70% on-the-job training, 20% coaching, 10% formal training) to develop employees. “We apply the 70:20:10 model for talent development,” notes Gentherm’s HR Director, ensuring employees continuously grow through hands-on experience and mentoring.

CEOs must ensure HR transforms into a data-driven, strategic function. Talent is consistently ranked as a top three priority for CEOs, yet many lack confidence in HR’s ability to deliver. HR is often overwhelmed with administrative work and not equipped to create strategic value. CEOs need HR to move beyond transactions, using people analytics to provide insights that link talent decisions directly to business results.

CEOs should lead by example and visibly champion cultural change. Companies are five times more likely to succeed in transformation when leaders model the behavior changes they ask employees to make. Regular, visible CEO involvement in cultural initiatives, alongside HR, is essential.

Leaders should clearly define “why” the culture is changing—a purpose the CEO and HR both champion—while staying adaptable in “how” they implement changes.

The CEO-HR partnership directly drives business success and cultural health in Vietnam’s manufacturing sector. When manufacturing companies fully commit to people-centric improvement, aligning HR with operational strategy, the results are impressive—74% of manufacturers who implement these principles report productivity gains exceeding  without major capital investment. Evaluate your company’s performance in identity, agility, and scalability. Is your HR leader a true partner in these strategic conversations? Commit to co-leading at least one initiative in these areas. Your company’s future depends on the cultural foundation you build together.