Why Companies should include a Strategic Human Resources Executive in their Boards of Directors

• November 8, 2021

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

Ever since businesses have been employing people, they’ve had the upper hand in the relationship. For the most part, the company dictated the terms of the relationship.  That reality has now flipped. Labor shortages exist. 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. The other side of the coin is equally true; 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 that bring a deep understanding of the today’s challenges. Strategic Human Resources Executives possess three skill sets that BODs need in this new business environment.

1. Talent Management. This includes the entire employment cycle from recruiting, onboarding, compensation, and development. 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 that are equipped to manage as if it were 2008. It isn’t. Upskilling managers at all levels will be essential to retaining and developing talent so they want 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 faster as people have more choices.
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.

Given the changes in the 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.

Mark Hinderliter, PhD, CPC is a former Human Resources Executive for a billion-dollar global enterprise.  Currently, he owns a Veteran-Owned Business that helps companies develop leaders and workplace cultures to provide a competitive advantage in the competition for attracting and retaining talent.