Staffing.org Research Library Article

10/7/2016

How Boards of Directors can Drive Talent Excellence

David Earle

BoardroomSummary
Three worldwide consultancies and an independent research group examine the changing role of Boards of Directors in managing organizational talent, explain what is driving those changes, review best practices, and provide tools to help boards drive talent excellence. 

Description
Successful HCM programs are the products of successful cultures. This makes them, by definition, top down affairs, because strong cultures start at the top. The full support and understanding of senior executives and boards of directors are prerequisites.

 

From organization to organization considerable research, including ours, shows that support varying considerably, particularly at the board level, where discussions of talent are often limited to compensation and CEO succession. In fact, it’s one of the areas where surveys show the greatest gap between leading and lagging HR performers. Collectively, these four research papers offer guidance on closing that gap.

 

The first report, Adding Value, from Ernst & Young, looks at the historical function of boards of directors and how they are evolving, asking the question: “Are we seeing evolution or revolution?” Their research finds that while boards still differ on whether they should share responsibility for talent oversight with the CEO and his leadership team, the clear relationship between human capital risks – twenty-one of them are listed – and business risks in today’s business environment suggests that they have little choice. Any significant business risk should lie within the purview of a properly focused board. 

The report also offers a set of tools including a sample charter for the HR committee, an annual meeting agenda, a compensation committee approval process, and a framework for gender diversity reporting.

 

The second report, The Board and HR, from Creelman Lambert Research summarizes interviews with successful companies in the U.S. and U.K. where shortcomings in board involvement have been addressed and at least partially resolved. Senior executives describe how their boards assess human capital, where they get their information, and how their committees and processes work. 

 

The third report, The Talent-Intelligent Board, from Deloitte’s Global Center for Corporate Governance, draws on the experiences of their worldwide organization to describe the business factors driving increased board involvement in corporate human capital. These include riskier business environments, rising public scrutiny and stakeholder expectations, and the changing demographics of workforce talent pools. There is also a section on the special needs of family owned companies.

 

The fourth report, HR in the Boardroom, from KPMG, stresses the importance of strategy. Companies differ, and benchmarking one against another without considering organizational, strategic and operational differences, can easily lead to false conclusions and ineffective programs. KPMG strongly advocates spending whatever time is necessary up front to be sure which HCM programs and metrics will add measurable value and support to each company’s unique business strategy.

 

All four reports agree that talent matters a great deal, and because it does it needs to be a major topic of board discussion. Creelman Lambert reports that in companies that “get” talent, these discussions can take up to 25-35% of a board’s time.
 

Research  Sources

Creelman Lambert, The Board and HR

Deloitte, The Talent-Intelligent Board

Ernst & Young, Adding Value

KPMG - HR – How well do we measure up in the boardroom?

 



 

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