For too long, HR leaders have been kept out of the boardroom, dismissed as specialists within their own niche who lack the all-round strategic understanding required to drive the business forward. Companies of old were often more focused on operations and products than on the people tasked with running or building them.
Even when HR leaders have been awarded a seat at the table, this has often been in name only – consulted on HR-specific issues, but otherwise sidelined. Anecdotal evidence from within our network indicates that some organisations view board-level HR leaders as an opportunity to improve their diversity figures; 43% of HR directors are women, compared to just 17% of sales directors.
Yet now more than ever, the expertise offered by HR leaders makes them extremely valuable at supervisory board level.
Talent and culture play a central part in organisations achieving their strategic objectives. This is particularly true today, when unprecedented access to information has heightened the war for talent. CEOs, boards and investors are becoming increasingly aware that talent is key to achieving their business goals, with the percentage of organisations that discuss talent during earnings calls increasing by 25% since 2010.
But HR leaders have far more to offer than their expertise in talent acquisition, retention and compliance. The HR team is the spine of the organisation, connecting to all other departments and the human capital of which they are composed. No other business function boasts such a wide remit. This gives HR leaders a unique opportunity to contribute to, and even lead, conversations around communication, growth and strategy.
With this in mind, Morgan Latif have deep-dived into the topic of HR leaders on supervisory boards. In this article, we will discuss:
- Why this issue is so important (and timely)
- Why HR leaders have not traditionally been part of the supervisory board
- What HR leaders can do to elevate themselves
- How business leaders also have a part to play in leveraging the skills of senior HR figures
Why is it important to have HR leaders on the board?
HR is a specialist discipline. Leaders within it boast key skills that enable them to manage all aspects of an organisation’s human capital. So why are we encouraging them to step out of this niche and become more involved in general business strategy?
While individual HR leaders will naturally boast a wealth of specific characteristics, experiences and skills, the following five traits demonstrate why anyone who excels within an HR leadership role has huge value to add at board level:
1. HR leaders are business leaders
HR has a perception problem: it is often considered a support function. Asked about the perceived importance of various business functions to forming business strategy, executives ranked HR leaders as less valuable than the finance director, operations director, strategy director and CEO.
Yet in most organisations, HR leaders form part of the management team and know the business well. Fundamentally, they are business leaders. They possess abilities and traits that allow them to add substantial value outside of their niche. According to a report published by Harvard Business Review, the top quartile of HR leaders excel not just at the traditional strengths of their profession, but also in areas that are often seen as weaknesses of the human resources department. These include the ability to:
- Establish stretch goals
- Solve problems and analyse issues
- Develop strategic perspectives
- Connect to the outside world
2. HR leaders are best placed to prepare workplaces for the future
As we discuss in “The Ultimate Guide to Future-Proofing Your Leadership Team”, the workplace of 2030 will look very different to that of today. In a world where simple tasks will be highly automated, the most successful organisations will be those that are best able to augment human skills with advanced technology.
We can already see this in action. Consider the example of aeronautics giant Boeing. The process of assembling wiring looms that transmit signals or electrical power throughout its aircraft is extremely complex, causing slow build times and placing great strain on its workforce. By phasing out the digitised manuals used to reference-check the thousands of connections in a wiring loom, and replacing them with augmented reality headsets capable of displaying and describing the next possible connections, production time has been reduced by 25%.
In this example, technology is not replacing human skills. Instead, it is making the human workforce more productive, and by extension more valuable. But such transformative change simply cannot happen without workforce buy-in – and HR leaders are best placed to achieve this. They work directly with stakeholders throughout the organisation, meaning they are well positioned to enable the necessary changes in behaviour throughout the workforce.
3. HR leaders help organisations win the “war for talent”
As the workplace changes, the makeup of workforces will shift significantly. By 2030, robots are expected to displace 20 million manufacturing jobs – positions that have traditionally represented a significant proportion of the Life Science and Industrial workforce.
The continued rise of automation will, in turn, necessitate a substantial increase in talent with harder-to-access skills. It is therefore no surprise that just 9% of HR professionals and hiring managers within the Life Science space cite challenges with filling manufacturing roles, compared to 21% for data analytics, 22% for engineering, and 28% for product / process development.
HR leaders are naturally best placed to help their organisations compete in this growing war for talent. And as human capital becomes increasingly essential to businesses in the age of technological automation and augmentation, the person with ultimate responsibility for talent acquisition and retention must have a seat on the supervisory board.
4. HR leaders drive positive change
Corporate social responsibility (CSR) has long ceased to be a luxury. Research shows that three-quarters of people believe it is important for businesses to take a stance on social movements, while three in five would likely stop supporting a company that backs an issue they disagree with.
With themes such as diversity and sustainability now so central to business success and consumer appeal, organisations can ill afford to “fake it”. Instead, they must create a culture of genuine corporate responsibility. As with all matters related to culture, HR leaders should take a central role.
By acting as a natural link between the issues that employees care about and how their employer can action positive change in these areas, HR effectively makes the workforce part of the solution. This, in turn, helps CSR to become ingrained within the organisation, creating an environment that upholds the board’s vision through self-regulation.
5. HR leaders are effective crisis managers
The need to respond swiftly and intelligently in a crisis has always been important. Cyber attacks, floods, data loss and other damaging events can strike at any time and demand immediate, effective action. But the issue of crisis management has unsurprisingly taken on even greater significance given the unprecedented impact of the coronavirus pandemic.
In times of crisis, an HR leader’s core strengths – around talent, leadership and organisation – become even more valuable. They are best able to take the lead on:
- Providing empathetic support to employees;
- Offering meaning and purpose in the face of uncertainty;
- Defining and promoting new behaviours;
- Instilling confidence and buy-in from stakeholders;
- Reinforcing the “right” culture and enacting existing values.
But to lead effectively in these key areas, they must have direct access to other decision-makers at board level.
What can HR leaders do to reach board level?
There is a clear need for HR leaders on supervisory boards, but this alone does not guarantee them a place at the table. If they possess genuine ambitions in this direction, HR leaders must take matters into their own hands. We surveyed a number of HR leaders within our network to identify the following five ways in which senior HR figures can position themselves to reach – and thrive at – supervisory board level:
1. Seek out CEO roles in smaller organisations
There is no better way to prepare for life at board level than by gaining hands-on experience in the CEO’s chair. Smaller organisations present far fewer complexities than large corporations, making them a superb proving ground for HR leaders.
2. Gain greater business knowledge
Why have HR leaders traditionally struggled to gain acceptance at board level? According to Dave Ulrich, professor of business at the Ross School of Business, University of Michigan and co-founder of The RBL Group, one of the biggest barriers has been an inability to speak the language of business:
“My coaching and counsel to an HR person is: go learn 20 words. It’s not having to get a PhD in accounting or finance; look at the business and see what language they use, and if you don’t understand it, sit down with someone and say: ‘What is this? How is it calculated? How is it used?’. I come out of a degree in English and a PhD in organisation theory, and I’ve been able to learn business language. I’m not a CFO, but I can have a discussion about the language of business.”
3. Work in other business functions
Despite its relevance to every department within an organisation, HR has traditionally been kept distant from the customer. Failing to adequately grasp how their company actually makes money is another major stumbling block for HR leaders aiming at the supervisory board.
It is unsurprising, therefore, that some of the most successful people to make the relatively rare transition from HR leader to CEO had previously worked in other business functions. Mary Barra, CEO of General Motors, began her career with the automaker as an engineering intern before climbing the ranks to VP of Global HR. Former Xerox CEO Anne Mulcahy started out as a sales representative. And Nigel Travis, former CEO of the Dunkin’ Brands group, transitioned from Head of HR at Burger King to the fast food giant’s MD for EMEA.
Nils Semmelhack, HR Director at Webasto, notes that companies within the Industrial space typically have a lot of industrial engineers at board level, whereas more specialist functions – such as HR and IT – have traditionally been viewed as less business or customer-focused:
“Historically, HR leaders need to prove that they are not just people managers. Can they actively change their role in the organisation? Work in a business function like Purchasing or Controlling? HR leaders need to have a broader knowledge, working in the business in general.”
4. Be more vocal
When it comes to challenging current business strategy or making key business decisions, HR professionals are often less vocal than their peers from backgrounds that are traditionally viewed as more “business-focused”.
There is little reason for these stereotypes to persist. As Steffen Fischer, Managing HR Director (CHRO Executive Board Member) and Head of Professional Group Strategic HR Management (BPM) in Germany, notes: “HR management is not a soft topic; it’s a robust topic.” After all, happy people are more productive, which links directly back to revenue. But too often, HR leaders are not strong enough to make themselves heard, Fischer says:
“They need to have strength and the ability to fight their corner. Everybody has their own perspective, but you have to fight your corner in order to be valued. They should be more confident, important and an integral part of the entire company.”
5. Think more strategically about your network
With such a people-centric role, HR leaders will by definition have extensive professional networks. They must use this to their advantage, seeking out the right connections in the right places to make their case for top-level jobs.
The role of businesses in elevating HR leads
As we have shown, there are several key ways in which greater proactivity can support HR leaders in their efforts to reach board level. But businesses also have a significant part to play. From our conversations with HR leaders, we frequently heard about the importance of challenging legacy beliefs on the human resources function.
Many businesses still fail to grasp the true impact of people, because human capital is harder to measure than EBITDA or net present value. Furthermore, HR is often seen as an administrative process role, rather than a fundamental pillar of the business with a direct impact on objectives and strategic plans. Businesses must alter their mindset if they are to unlock the wide-ranging benefits of giving senior HR figures a seat at the table.
Morgan Latif can be an HR leader’s greatest ally. By sourcing top leadership talent within the Life Science and Industrial sectors, and supporting them through the challenging onboarding period (and beyond), we empower the HR function to add genuine value across the business. To learn more about what we do, get in touch with our team.
