Why Companies Should Include a Strategic Human Resources Executive in their Boards of Directors

Because of the disruptive changes impacting  business, the very nature of the employer-employee relationship has changed.

Ever since businesses have been employing people, employers have had the upper hand in the relationship. For the most part, the company dictated the terms of the relationship.

That reality has now flipped in an era of huge labor shortages. The Great Resignation is here.

Service companies are closing because they can’t staff the business. Today’s workforce has different expectations about the experience they desire. They are now in the driver’s seat. Companies that are still living in the old reality are losing people and having difficulty replacing them. They become employers of last resort, or worse, unsustainable as businesses. But there’s also the other side of the coin: Companies that effectively adapt to these new realities have a distinct advantage in the marketplace for talent.

Most boards of directors lack strategic-minded human resources executives in their ranks, leaders who bring a deep understanding of today’s unique challenges around talent. This is an error no CEO should overlook. Strategic human resources executives possess three skill sets that boards need in this new business environment:

1. Talent Management

This includes the entire employment cycle, from recruiting, onboarding, and compensation to development and coaching. Companies that fall behind in this fast-changing element of the business will simply not be competitive in the search for talent.

2. Leadership Development

Many companies have managers who are equipped to manage as if it were 2008. It isn’t, obviously. Upskilling managers at all levels will be essential to retaining and developing talent that wants to be part of the company. Recent studies from Gallup, Udemy, and Predictive Index all indicate that the number-one reason people quit their job is their manager. That has been true for decades, but now it is happening much more often as employees have more choices in the labor market.

3. Culture

A healthy workplace culture has always been an advantage in the competition for talent. Now it is a requirement. In 2017, the National Association of Corporate Directors (NACD) Blue Ribbon Commission Report stated that “culture can no longer be considered as a soft issue by management and boards. Its strength or weakness has a lasting impact on organizational performance and reputation. The oversight of culture must be a key board responsibility, as it is inextricably linked with strategy, CEO selection, and risk oversight.” It can be easily argued that the position of the NACB is more true today than in 2017. Thus, finding board members who understand the power of a strong culture is more vital now than ever.

Given recent changes in labor market dynamics, people and culture issues must now be part of both the strategy and risk conversations at the board level. Savvy human resources executives can bring an important voice within the board. Consider whether your board has the insight it needs in this area—and if not, seek it right away.