Board members are responsible for steering organizations into the future by ensuring ethical and legal governance and sound financial management. 2020 has foisted extraordinary challenges on Boards. From Covid-19 to racial justice and equity to recession fears, smart Board members realize they need to ask as many questions about an organization’s People agenda as they do about the balance sheet to really understand how an organization is performing.
Leadership Response to the Pandemic
The Covid-19 pandemic is providing Boards with a unique and unprecedented opportunity to evaluate an organization’s leadership. Warren Buffett famously said, “You never know who's swimming naked until the tide goes out.” Right now, Board members are getting a very transparent look at the organizations they serve.
Board members should consider the following questions:
- Is the organization living its values in response to the pandemic?
- Do response plans clearly reflect those values?
- How do those plans impact the organization’s employees, arguably the most valuable asset of any organization?
- Are leaders committing their time and using technology to stay connected to staff members across time?
- Is the organization’s leadership working effectively together to resolve current issues and anticipate future ones?
- Is leadership a calming influence on the organization or causing more chaos?
These questions allow board members to monitor and evaluate leadership’s ability to make future decisions responsibly. There is another overarching reason why Board members should know the answers to the questions above: the organization’s employees are keeping track and those answers will shape the future of the organization long after the pandemic is over.
Commitment to Equity, Diversity, Inclusion and Belonging
All Boards must lean in to diversity, equity, and inclusion. Work in this area is not new, and research supports the connection between diversity of staff and an organization’s enhanced innovation and increased profitability. Right now, however, smart Board members should dig deeper and ask questions to understand how an organization is tackling this topic. If the rationale for DE&I efforts is not crystal clear, the organization will not have the fortitude to do the tough work associated with making and sustaining real change. The rationale must be tied to something fundamental, like the organization’s mission or values. The commitment needs to be authentic or employees will sniff out DE&I as window dressing.
This is not an area where organizations can host a few unconscious bias trainings, hire a diverse leader or two, form a few employee resource groups and declare victory. Real work in this area is comprehensive. A few questions for Board members to ask:
- What is the current level of effort associated with this work within the organization, i.e. current diversity of staff, leadership, Board?
- Who are the primary drivers of this effort, i.e., HR, employees, managers, executive leadership?
- What resources are dedicated to this effort, i.e., staff, time, money, change management?
- What processes have or will be assessed—solely talent acquisition, or other areas inside and outside of HR like staff development, compensation practices, work assignments, work environment, suppliers, business development?
- What is the organization’s current appetite for discomfort?
Talking openly about systemic racism or gender bias is uncomfortable. Acknowledging organizational blind spots or past mistakes and keeping commitments to this work in the face of new and competing priorities is incredibly hard work. Board members should challenge organizations to think through these questions. The overarching goal is to create a sense of belonging for everyone within an organization. Boards should hold organizations accountable to create a culture where every single employee feels the sense of acceptance as a part or member of the group. Belonging is an important human need that cultivates value and positive outcomes, and that’s what drives the organization’s ultimate and long-term success.
Traditionally, Human Resources (HR)-related Board topics focus on compensation-related items. No disrespect to the importance of setting responsible executive compensation levels and bonus plans, but shortchanging HR expertise and focusing solely on more traditional Compensation Committee items is outdated. Smart Board members know an organization’s human capital is a source of market value. They spend as much time with an organization’s CHRO as they do with the CFO.
More and more, smart Board members are asking tough questions to understand the organization’s People agenda because they fundamentally appreciate the adage that nothing works unless the people do. For employees to do their best work, they need to feel valued and connected to the organizations for which they work.
In the past, the CHRO role was about the basic blocking and tackling of HR: hiring, paying, and firing employees. The role has evolved to include new areas of focus:
- Setting and sustaining an employer’s value proposition and brand. Why would someone want to work for this organization, and how is that differentiated from every other employer?
- Stewarding the creation of a work culture where all employees can thrive and do their best work.
- Cultivating the organization’s people investment by aligning, growing, and pruning the talent in a such a way that, through attraction, development, and succession, the organization has the skills and capabilities to address current business needs and the ability to adapt to future business strategic priorities.
Board members should ask themselves whether the organization’s CHRO has the ability and influence to bring these topics to the forefront, so they are lived at the leadership level, tied to business strategy, tracked for progress and course correction, appropriately resourced, and linked to and guiding other organizational decisions across time.
2020 has been a doozy. Instead of wringing their collective hands, smart Board members ask the right questions to delve into an organization’s People agenda and hold themselves and the organization’s leadership accountable for performance by growing and sustaining a compelling culture. This is one important way Board members fulfill their fiduciary duty and guide organizations into the future successfully. After all, 2020 is almost over, and who knows what 2021 will bring?