Creelman Lambert recently undertook a detailed study, sponsored by Kenexa, on how boards oversee human capital. Their findings shed new light on what's expected of the HR function and HR leaders in ensuring their organisations are well governed. They provide tips about how practices in well-run companies are changing.
The context is dramatic. There is an urgent need for the public and private sectors to improve both performance and the management of change, while at the same time eliminating the bad behaviour that has triggered economic crisis. The concern to improve governance is largely about better people management at the top – tougher expectations about reward, capability, selection and assessment, performance and development review – and yet ‘HR’ is scarcely mentioned in the regulatory debate.
Behind the scenes, however, things are changing. In this presentation we discuss the methods better boards use for addressing 'people factors', and also the enlarged role of a CHRO and his/her senior HR colleagues in working with governing boards and top teams.
The role of the HR professional can be especially challenging because, unlike finance or law, board members rarely have expertise in human capital. Also, because the CHRO is seen as a 'people person' they get thrown into the middle of the personality issues that can derail good governance. We explain how CHROs deal with these challenges.
Furthermore, the evolution of the HR function didn't stop with the shift from "Personnel" to "Human Resources". Human capital management is slowly but relentlessly coming to the attention of boards and investors. Savvy HR leaders need to understand the mechanics of how this actually works in practice – and their part in developing governance processes that both inspire performance and manage risk. Also, specific action needs to be taken to develop ‘board-capable’ talent within HR.