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Column

Dr. Michael W. Howe
Executive Associate
LeaderSource Inc.

Where Is HR in the Boardroom?
Too often MIA during board deliberation on succession and leadership development.

By Michael W. Howe

More and more boards are waking up to the reality that ultimate responsibility for the continuity of top-tier leadership rests with them. The charge is a big one, as numerous obstacles stand in the way of integrating practices like talent development and succession into the corporate enterprise. Consider the finding of a recent National Association of Corporate Directors study: Nearly half of large American corporations don’t yet have a meaningful CEO succession plan.

Boards that are “best in class” for talent development and succession understand the need to collaborate with the CEO or other members of top management on frank discussions about the strategic leadership needs of the organization. But even those who have managed to get out front in developing high-caliber leaders often still leave room for improvement in one area: To their detriment, boards often overlook in this collaborative process the company’s human resources leader.

Leadership development expertise has historically been the domain of HR, yet it is interesting that HR leaders are not more fully involved in this task when it comes to governance.

Your HR executive likely does not have a seat on your board. HR executives typically are not sought out to serve on most boards; in fact, they often have no interaction whatsoever within the boardroom. For whatever reason, they are completely left out of the discussion of talent development as it relates to governance.

To maintain a sustainable talent pool, boards must work closely with their internal chief HR officers, who need to be steady advocates for broad-based, integrated leadership development programs and should take a hands-on approach to guiding top-level executive talent management programs.

Dialogue Must Be Established
The jury is still out on whether it’s best for CEOs, chief HR officers, or board chairs to initiate the conversation, but somehow an ongoing dialogue must be established in which HR leaders can regularly and confidently engage with the board and the organization’s leadership about which succession and development processes best fit current needs.

Specifically, directors, HR professionals, and CEOs should put their heads together to discuss, at a minimum, the following core talent management program elements:

• A Company-Specific, Strategy-Driven Leadership Model — The HR officer should advocate for establishing a set of desired leadership dimensions and resulting competencies for the CEO position and other top-tier executive roles. These competencies should build upon the long-term strategy implications for the organization’s structure and resulting leadership expectations. The leadership requirements should be distinctive, measurable, and tied to practical selection, coaching, and development practices.

• Annual Executive Talent Reviews — The CEO should annually review the organization’s challenges and general leadership issues. He or she should discuss each top-tier executive and describe their development needs, career interests, vulnerabilities, and readiness for new responsibilities. The HR officer should become an internal consultant to the CEO as well as a leadership coach to other top executives within the company.

• Individual Development Plans — Each executive should have a development plan tailored to his or her short- and long-term career interests. The CEO should demonstrate evidence of coaching executives to the best advantage of the company and individual executive needs. In addition, the HR officer should be the person responsible for the success of these plans.

• Closed-Door Sessions and Face-to-Face Exposure with Key Talent — The board committee charged with succession management should discuss the implications of the annual executive review in executive session to ensure that succession issues are openly discussed and potential successors’ capabilities are fully and fairly assessed. The CEO should be apprised of the discussion and provide input into the conversation. Opportunities for direct board contact with top-tier talent should be frequent and varied, including board presentations, one-on-one business and social interactions, mentoring, and internal development assignments.

• CEO Compensation Tied to Program Success — Just as executive compensation is tied to business results, it should also depend on the success of the leadership development and succession management plans. This establishes clear program expectations for talent development and retention and engages the CEO in a more active manner. Because executive compensation design is familiar territory for HR officers, they should partner with the CEO to ensure program success.

Today, only a handful of chief human resources officers have been elected to serve on boards. However, the good news is that this may be becoming more commonplace. According to HR Executive (September 2005), “a growing number of working [HR] executives … are serving on the boards of their employers.”

Voice Must Be Heard
Whether it’s ultimately the right decision for HR executives to serve in a governing role varies from organization to organization. However, as more demographic and global business changes occur, HR’s voice must be heard within the boardroom.

HR leaders bring broad experience not only with strategic management and leadership succession practices, but also with executive compensation, compliance, and other critical business issues. By being readily engaged in these board discussions, HR executives can fill a void in organizational talent management and provide an important link to many critical front-line employee issues.

Dr. Michael W. Howe is executive associate at the leadership development and executive coaching consultancy LeaderSource Inc. (http://www.leadersource.com). He can be contacted at mikehowe@leadersource.com.