Transformation, Innovation, Culture, and Crisis: Why Your CHRO Belongs On Your Board

CHROs and other relative roles such as CPOs deserve a spot on your Board – particularly given the immense focus on talent attraction and retention currently.

| July 1, 2022

Written by: Zach Charles

I’ve been having the same conversation repeatedly for the last few months. Our clients are focused on changing economic conditions and the cutthroat war for talent. They’re investing in diversity, grappling with new kinds of automation, and changing expectations for workplace culture and values. And I find myself making the same recommendation to all of them: get an experienced HR lead onto your Board of Directors. It doesn’t matter whether they worked as a Chief Human Resources Officer (CHRO) or occupied a newer role like Chief People Officer (CPO); regardless, they have the expertise your Board needs. 

I want to start by pointing out how rare it is to have an HR executive on the Board. One major consulting company estimated that only about a few hundred directors for all Fortune 1000 companies were HR execs—about 3%. If you broaden the criteria to any executive with HR skills, two years ago, that still only included 11.3% of directors across all S&P 1500 companies. As of six months ago, that number is up to 19.4%. Across industries, 80% of directors say that talent strategy has gotten more important in the last few years, but almost half have no consistent input from HR leaders. 

So, there is a problem here. Boards are increasingly grappling with HR-specific concerns—compensation, culture, retention, supporting employees during crises—without the HR expertise to manage them. If that doesn’t motivate you to start thinking about getting your CHRO or CPO onto your Board, let me try to persuade you.

The Four Top Reasons HR Leaders Should be on Your Board

The most obvious reason is the current competition for top talent. Compensation has gone through the roof for all skilled positions over the last three years, and only senior HR staff bring the depth of market expertise required to steer big-picture policy on how best to leverage packages for recruitment and retention. This is becoming more important as many companies approach the ceiling for their payroll spend, and face the need to get creative about how to attract leading minds. 

Another advantage to having a CHRO/CPO on the Board is to leverage their experience with hybrid and remote work. Hybrid work is a critical draw for new hires, and the vast majority of recruitment processes since 2020 have been conducted through videoconferencing. A PwC survey reports that 61% of Board members feel that Boardroom culture is suffering as a result, 43% feel their colleagues are less engaged, and 39% say they are less effective overall. No one in the company can match the HR lead when it comes to managing the challenges of hybrid and remote work. 

A broader version of this point involves the linked challenges of growth and transformation. Organizational transformation is the core domain where HR heads should be taking the lead on big-picture strategy. These include the transformations required to deliver digital services, adopt a hybrid work setup, and shift workflows (e.g., to move to agile, cross-functional teams), as well as the complications involved in scaling a company from a few dozen people to several hundred. 

Finally, there’s growing recognition that corporate culture is critical to performance. Long-term operational and financial goals can only be met if workers are highly engaged. And a positive, welcoming culture allows for faster transitions, reduced costs for onboarding and training, better teamwork, and faster results. Board members without significant HR experience typically are not well-positioned to guide company leadership in creating and maintaining these kinds of environments. 

Changing Times

There are other advantages to adding a CPO or CHRO to your Board, of course. One is diversity: only about 20% of Directors are women, but among HR executives, that number is 80%. In addition, there are only 211 HR leaders on Boards of Russell 3000 companies, but of those, 89% are women or people of color. Another advantage is easier compliance with the recent SEC decision to begin requiring greater transparency on workforce issues. And then, there’s the need for rapid crisis response and the challenges involved in smooth succession planning. 

Taken together, these reasons have begun to carry real weight for many Directors. In one survey, 34% said that their Boards should spend more time on talent management, while 28% think more time should be spent on succession planning. A majority—52%—now feel that compensation should be tied to diversity initiatives. 

So the winds are changing. I’m not alone among search professionals in pushing clients toward HR-focused Board recruitment, and I’m glad to help lead the charge on what I see as a vital issue. I can be reached through my email below if anyone wants to discuss!

To discuss this topic further, we invite you to contact Zach Charles.

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