Human Capital: How HR Leaders Benefit Your Boardroom

For today’s companies, human capital has become just as precious a commodity as cash or investments. That’s all the more reason business leaders are concerned about the present talent shortage, and 4 in 5 executives (81%) worry about losing top performers due to burnout or disengagement. 

Similarly, companies face logistical challenges as they adapt to (or from) remote/hybrid work schedules. Is it time for HR to take a seat at the boardroom table?

HR in the C-Suite

The C-suite has been historically dominated by strategic and technical roles such as the CEO, CFO, and CISO. But another class of executives is bringing a human-centric focus to the board and in increasing numbers. Here’s a quick look at two of the top HR-related executive titles

Chief Human Resources Officer

A growing number of boards are appointing a chief human resources officer (CHRO) to ensure that decisions align with workplace culture. 

According to a study from Equilar, the number of new directors with CHRO experience increased from 1.1% to 2.7% between 2020 and 2022. Rather than focus on the minutiae of personnel management and administration, CHROs are bringing a valued perspective to help the leadership team refine their business strategy.

Chief People Officer

Modern challenges have accelerated the need for another kind of leadership role — the chief people officer (CPO). The distinction between CHRO and CPO is subtle but significant. 

While CHROs continue to play a role in shaping talent acquisition strategies and compliance management, the CPO typically focuses on the big picture by shaping the workplace experience. CPOs, therefore, assist in keeping employees engaged, which can aid in a company’s retention rates.

How CHROs Benefit Your Boardroom

Most boards are discovering the wisdom of inviting CHROs, CPOs, and other HR professionals into the boardroom. The following are just some of the ways leadership teams are leveraging the full range of expertise at their companies.

Human-Centric Decision-Making

Boardroom decisions drive the company forward. However, CHROs can help executive teams make decisions that align with the needs of their personnel. In other words, HR professionals can assist board members by anticipating how new initiatives will affect employee engagement, helping to align quantitative data with workplace culture.

Aiding in Succession Planning

One of the most challenging seasons for any board occurs during a leadership transition. Having a CHRO at the table can help you prepare for a CEO succession long before it happens by nurturing a pipeline of potential candidates. 

During the transition phase, HR professionals can hone your communication strategy as well as participate in screening candidates.

Talent Acquisition and Retention Strategies

Companies are facing challenges when it comes to attracting, retaining, and engaging top talent. This isn’t just an HR problem; it has a direct impact on a company’s ability to meet its goals. It’s vital that CHROs collaborate with other critical C-level positions to devise strategies that keep workers motivated in ways that fit your operating budget.

Creating Stakeholder Value

External stakeholders — including your investors — have a vested interest in the composition of your senior management team. Naturally, they may have questions or even raise concerns about your company culture. 

How can a CHRO or CPO address these concerns? HR professionals can pursue transparent communication regarding company policies. Clear communication can spark goodwill among skeptical stakeholders and lead to greater confidence in the company as a whole.

Adapting to External Challenges

It’s no secret that recent years have brought significant challenges to the world of business, most notably through issues with the global supply chain. These disruptions have forced workers from multiple industries and departments to adapt to challenges in the procurement and distribution processes. 

Boards can turn to a CHRO to understand how these sorts of challenges will impact the company, as well as assess the capacity of their workers to rise above these circumstances.

Diversity and Representation

CHRO positions present another opportunity to build diversity into your leadership team. HR positions already tend to be heavily female, and according to recent data, 71% of new CHRO appointees are female. By onboarding a female CHRO, you’ll increase the diversity of your executive team, and that same individual may serve to amplify the underrepresented voices in your workplace.

A Strategy for Preparing HR Professionals for a Board Role

Adding a CHRO or CPO to your board can be a positive change. But how will you go about preparing potential candidates for this role? Here are some tips for preparing HR professionals for the boardroom.

Recognize Changing Models

First, even within the HR community, there have been changes to the way leaders manage human capital. For instance, many HR leaders have been moving beyond the historic Ulrich model to various other systems that accent employee flexibility, as well as leveraging technology to manage performance. 

Understanding these changing HR models is important for potential CHRO candidates, as it will give them the flexibility they need to adapt to shifting business conditions.

Promote Technical Expertise

Technology exerts a powerful influence over the business world. HR professionals are not immune, which is why tomorrow’s leaders should be familiar with the latest HR management tools and how this technology might integrate with other tools, such as your ERP software. 

Candidates who are fluent in the latest innovations will have an edge when it comes to boardroom discussions and can better navigate the intersection between human capital and the tools you use to manage it.

Nurture Soft Skills and Leadership Abilities

A board position requires HR professionals to take on a larger advisory role in addition to simply managing personnel. Candidates can expect a greater emphasis on soft skills such as communication and collaboration. 

Find ways to mentor and nurture future leaders so that they have the technical skills to manage others and the soft skills to contribute to a healthy leadership environment.

A Strategic Vision

With so much emphasis on employee engagement and retention, boards can benefit from the input of a CHRO or CPO. In fact, by nurturing strong HR leaders, your board can cultivate greater resilience and align your strategies to the needs of your employees.