The debate: should HR give up on a board seat?

21 January 2016

Author: Kirsty Tuxford


The debate: should HR give up on a board seat?

A place at the top table has long been HR’s holy grail. But is genuine influence more important than status? Four experts mull it over

Not only should HR professionals have a role on the board, they should be considered more often for the CEO role itself
 
HR should have a seat on the board. The function has long been seen as lacking ‘weight’ and ‘equality’ in the eyes of management and the C-suite. But simply ‘counting the numbers’ of chief HR officers (CHROs) to ascertain their effectiveness may not be that useful: it is who they are and what they do that counts.
 
HR’s opportunity to influence the board can vary between cultures. For example, in Germany and Korea, CEOs are more likely to be open to CHROs’ ideas, because they emerged from, and operate in, business and employment systems with long-term planning and decision-making policies. HR might find it harder to get its voice heard in the US and the UK, where CEOs commonly have finance backgrounds.
 
It is often said that accountancy-trained CEOs tend to hold sway in recessions, and marketing-trained CEOs in times of expansion. HR people are conspicuous by their absence. Not only should HR professionals have a role on the board, they should be considered more often for the CEO role itself, given the importance of people and their management to the success of all organisations.
 
Professor Chris Rowley, Cass Business School, London, UK; Korea University; University of Nottingham, UK
 
For HR to contribute effectively at board level, it must have business acumen
 
HR should be involved in strategic decision-making, and therefore it must form part of the board. As with all commercial businesses, the aim is to run a profitable operation. Human capital is essential in making this happen, as it ensures sufficient resources to achieve the operational, strategic and contingency aspects of a company. HR can provide the human capital perspective, as well as helping to position the human capital plan to drive organisational goals.
 
For example, during our hotel’s pre-opening, the HR director played a key part in positioning leaders in the organisation, shaping the talent-sourcing plan and mapping out the short- and long-term resources requirement and development strategies.
 
The key is whether the organisation has the right structure and the HR calibre for the function to secure a spot on the board. If the business’s HR department follows the traditional ‘personnel’ function, executing administrative tasks and following instructions, it will be redundant on the board. For HR to contribute effectively at board level, the HR representative must be up to speed on the latest HR trends, be exposed to industry practices globally and have business acumen. Otherwise, they will not be able to participate actively or champion any cause or decision.
 
Josephine Chua, Director of human resources and quality, Ramada Hotel, Singapore
 
HR can win a place on the board by combining solid research and data with business knowhow
 
While HR is used to being a senior management team member, board priorities tend to be different and broad. If HR is managing these priorities, it will be welcome at the board. If not, any board seat will be ineffective.
 
My priorities for the board have typically covered high-level compliance and identifying and mitigating risks from labour law, unions and people, from an organisational perspective. Boards are also keen on culture. HR must be able to show that it can optimise people cost, as well as understand the dynamics of senior leadership succession, team effectiveness and key gaps in leadership. HR also has to be the voice of the employees. Boards are usually more open if HR’s argument is based on solid research and data, presented with business knowhow and financial acumen, and if proposals are objective and fair.
 
Not having a seat often results in HR’s priorities diminishing in importance, and key HR programmes getting cut, as board discussions are primarily finance-driven. In the spirit of balance, all four perspectives are important: finance, customers, learning and growth, and internal processes.
 
Another important debate is whether HR should be split into administration and strategy [as advocated by US academic Ram Charan]. If strategy is split from operations, the organisation will have very good philosophers or consultants – but I wouldn’t call that leadership. A good leader must know how to drive operational excellence so that administrative distractions are minimal. I strongly believe strategy, operations and people are a must for any leader.
 
Deepak Goyal, Senior HR leader with 18 years’ experience at Fortune 500 companies, spanning six continents
 
HR will only be offered a seat when the board appreciates the value it brings, and when the function scales up and delivers on its promises
 
I firmly believe that HR should be on the board. In today’s uncertain and complex world, it’s not enough for the board to focus solely on CEO and senior management compensation and succession planning. It must consider the entire gamut of human capital opportunities and risks. It is important for the board to gain a deeper understanding of the talent and culture issues facing both the company and the industry to be able to support the executive team in the delivery of the business strategy. This is where HR comes in.
 
HR’s role has become critical from a talent, culture and leadership perspective, and is essential in driving business growth, innovation and organisational transformation. HR also helps mitigate many of the risks to organisations that result from either a poor alignment of talent and business strategies (such as talent gaps and shortages) or from an organisational culture that does not support the desired behaviours.
 
If invited to the board, HR can offer support in transformation initiatives such as downsizing, restructuring, upscaling for growth, employee engagement, key hiring decisions and dealing with regulatory or government issues. Ultimately, though, HR will only be offered a seat when the board appreciates the value HR brings, and when the function really scales up and delivers on its promises.
 
Sanjay Srivastava, HR director, Boehringer Ingelheim, India