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Board Consideration of HR Strategy

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No matter what it is called, most boards annually receive a report from management regarding “human resources strategy.” To date, these reports have been predictable.

But things are changing.

Earlier this year, Larry Fink, Chairman and CEO of BlackRock, wrote: “Attracting and retaining the best talent increasingly requires a clear expression of purpose. With unemployment improving across the globe, workers, not just shareholders, can and will have a greater say in defining a company’s purpose, priorities, and even the specifics of its business. Over the past year, we have seen some of the world’s most skilled employees stage walkouts and participate in contentious town halls, expressing their perspective on the importance of corporate purpose. This phenomenon will only grow as millennials and even younger generations occupy increasingly senior positions in business.”

This fall, we saw thousands of employees stage walkouts to protest climate change. At one company, employees protested the company doing business with US Customs and Border Protection. Employees at several large financial institutions raised concerns about their employers’ loans to gun manufacturers. Notably, a November 5, 2019, Wall Street Journal article was headlined “Young Workers See More Discrimination.” Whether or not the observed behavior is legally considered to be discrimination, how a company communicates to employees about expectations and unacceptable behavior, and how it handles complaints and training could have significant implications for recruiting and retention.

What’s a board to do? Here are a few thoughts:

Make clear where responsibility for oversight of human resources strategy lies. It could be the full board or the human resources or compensation committee. But responsibility should be assigned. If to the human resources and compensation committee, capture that delegation in the committee charter.

Make sure that the board’s or the human resources committee’s annual agenda includes at least one report on human resources strategy.

Then, ensure the report is meaningful in the context of the company’s circumstances and workforce. Among the topics that management could address in the report and the board or committee could discuss are:

  • engagement survey results
  • turnover statistics
  • learnings from exit interviews
  • trends in employee complaints
  • use of temporary employees
  • current hiring lags (i.e., length of time from posting to filling a post)
  • projected labor and skill needs based on the company’s approved business strategy — and what the company is doing to reskill existing workers as the company transforms itself
  • diversity and inclusion – going beyond the basics of policies and procedures to how the company is creating a culture of inclusion and evidencing that at all levels of the company
  • how the company’s compensation program identifies and rewards those who contribute meaningfully to implementing the company’s human resources strategy. (This could mean becoming more open to non-financial metrics.)

This report could also address how the company is communicating about its human resources strategy to key stakeholders beyond employees. This is a topic of great interest to investors, communities, organized labor, NGOs and, obviously, employees.

Want to learn more?

Our board governance software solution, FORESIGHT, helps companies better manage how their board and committees use their valuable time through effective meeting and agenda planning.  This deliberate planning capability supports freeing up time for these impactful discussions of human resources strategy.

Click here and we’ll show you how you can get started.

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