People strategy: The importance of a CPO/CHRO on boards

The last two years have seen businesses face up against major challenges – HR and the people function have been at the front lines.

With requirements changing day-to-day, systems needing complete overhauls, and staff requiring unprecedented emotional support, it’s fair to say that without HR organizations would have been lost.

But two years into this transformation of work, the challenges haven’t gone away. The ‘Great Resignation‘ is top of mind for leaders and the war for talent has picked up the pace with no signs of slowing down.

A recent survey by Workvivo of more than 2,500 employees found that 60% plan to leave their jobs in 2022.

In any organization, your people are your competitive advantage and, though it’s taken a while, leaders are slowly waking up to this and realizing that more focus must be put on the employee experience and retention.

But when you look at the governance of organizations, and particularly the breakdown of company boards, you won’t see many people with a background in HR.

Typically, a huge emphasis is placed on finding board members with a CEO or CFO background, aka those with knowledge of finance, the industry and the market.

In writings on the ideal makeup of a company’s board, it’s rare to see mention of people leadership or organizational design or other skills in the domain of the CHRO (chief human resource officer) or CPO (chief people officer).

It’s time for HR to be given a seat at the table

Throughout my career, I’ve often noticed that it’s only when there is a problem – for instance, ongoing retention challenges or perhaps a company indiscretion – that people with a HR or people background are brought in at a high level.

But people with experience and skills in HR and people functions have so much more to offer than helping an organization recover from a major incident.

Oftentimes, leaders will make decisions without considering the impact on employees and will suffer the consequences later. Adding the HR perspective from the top-down means that these factors will always be considered.

They can answer questions like how can we grow at this rate without burning out our staff? Is this a sustainable move with our turnover so high in this department? Are we thinking long-term about our hiring strategy?

Today the majority of HR leaders are female, while boards are struggling with an underrepresentation of women. An increase in the representation of HR would help address this gender imbalance and would lead to better overall governance, as research increasingly indicates that the more diverse your governance is, the better performing your organization is.

HR leaders are also adept at dealing with risk and crises and have valuable experience and perspective to contribute, especially when a company might be struggling.

Most HR professionals are trained to address issues with empathy, a skill that has been undervalued in leadership roles. But this so-called “soft skill” has become crucial when you think of the challenges leaders have had to face in the last two years.

The future of HR

Ultimately, the future of every company is tied up in the future of work. Organizations will be faced with a host of new people-related challenges that will need experts to guide them on how to address these.

From diversity and inclusion to sustainability, so much will change over the next few years and how boards deal with these challenges will determine the wider success of the organization.

The role of the board is to ensure the company’s prosperity and typically the focus of this is in finance. To ignore the impact of HR on this would be shortsighted.

PwC estimates that 85% of a company’s costs are related to people. Now we’re seeing the real hit to every company’s bottom line as the ‘Great Resignation’ ravages many organizations and leaves the talent market in turmoil.

Rising generations have new perspectives and expectations about work and recruitment and retention have never been more difficult. People leaders are dealing with these issues on the ground and should have input into high-level strategy for the organization when it comes to its greatest resource.

Already the tide seems to be turning. The number of board members with HR backgrounds has nearly doubled in the last three years, reaching 11% up from 6% according to the National Association of Corporate Directors.

Companies today have a great opportunity to embrace change in their corporate governance and not just add new members but focus on issues like talent strategy and company culture as the crucial ingredients to the organization’s success. It’s outdated to say that HR is simply a support function or just another overhead.

The paradigm is changing and CPOs and CHROs will go on to take leadership roles. Recently Unilever’s CPO Leena Nair was appointed the youngest and first female CEO of Chanel – a role model for HR leaders around the globe.

We need more of these role models – along with Nair, I look to Kathleen Wilson-Thompson, formerly of Walgreens, and Liz Joyce of Ireland’s Central Bank for inspiration.

On an organizational level, HR is often relegated to the director level rather than in the C-suite within the organization’s structure. This sends a message that this function does not have an equal share of voice within the company or that the company does not value strategic HR.

As CEOs become more aware of the people challenges facing them, they should recognize the role of HR and elevate these executives.

On an individual level, HR professionals must make their voice heard and advocate for increased involvement in governance.

They should apply for seats on boards because they have so much to contribute and corporate governance needs their perspectives to meet the challenges of the future.