Human resources strategy

Developing a robust human resources strategy has become a critical responsibility for company boards. Directors play a role in shaping HR strategies that will position their companies for long-term success. This article covers the key considerations for boards in overseeing human resources strategy and offers insights for directors seeking to enhance their effectiveness in this area

Key points

• Boards must evaluate restructuring proposals and retain essential skills
• Directors should engage directly with HR leadership through workforce audits
• Critical areas include future skills, diversity and inclusion, and employee wellbeing
• HR expertise is vital for informed decision-making on talent and organisational capability
  

Why is human resources strategy important for boards?

Resources strategy directly impacts an organisation's ability to attract, retain, and develop the talent needed to execute business objectives. A well-crafted HR strategy can be a key differentiator in organisational performance. As noted in Directorship in Context, boards "shouldn't action a sizable workforce change without discussing it directly with their CHRO." By engaging deeply with HR issues, directors can help ensure their organisations have the human capital necessary to navigate an uncertain future.

How can boards effectively evaluate restructuring proposals?

To effectively evaluate restructuring proposals, boards should request comprehensive workforce audits from their HR departments. These audits should provide insights into current skills, future capability needs, diversity and inclusion metrics, and employee wellbeing indicators. Directors should scrutinise these audits to understand the potential impacts of proposed restructures on organisational capability and culture. It's imperative to balance short-term cost considerations with long-term strategic needs.

What future skills should boards be focusing on?

Boards should focus on skills that will be critical for future success, including adaptability, curiosity, imagination, and resilience. Digital literacy is particularly important across all levels of the organisation. Training and role-modelling desired behaviours is also essential. Directors should encourage HR to identify employees who possess or can develop these core capabilities and ensure that upskilling programs are in place to build these competencies across the workforce.

How can boards promote diversity and inclusion through HR strategy?

Boards can promote diversity and inclusion by ensuring it's a strategic priority in HR planning. This involves more than just meeting compliance requirements. Directors should push for workforce audits that provide a diversity and inclusion lens, as noted by Bruce Cowely FAICD: "People want their workforces to reflect the customers they serve. This is also a wellbeing issue – everyone should be able to be their authentic selves at work." Boards should set clear expectations for diverse hiring practices, inclusive cultures, and equitable advancement opportunities.

Why is employee wellbeing a board-level concern?

Employee wellbeing has become a board-level concern because it directly impacts organisational performance and resilience. The pandemic has highlighted the importance of supporting employee mental health and work-life balance. Boards should ensure that workforce audits provide holistic information on employee wellbeing, including prevalence of anxiety, drivers of retention, and appetite for transformation. This is particularly important if workforce reductions are planned, as remaining employees may experience "survivor syndrome".

How can boards leverage HR expertise for strategic decision-making?

Boards can leverage HR expertise by elevating the role of HR leadership in strategic discussions. This involves regularly inviting HR leaders to board meetings, seeking their input on major business decisions, and ensuring HR metrics are included in board dashboards. As Bruce Cowley FAICD notes, "HR leaders are ready for these conversations... HR has taken more than one step up in the last few months. They should stay there." By treating HR as a true strategic partner, boards can make more informed decisions about talent, culture, and organisational capability.