More boards need to signal the importance of talent to the organisation and that means directors spending more time on the “people” issues.
When was the last time your board had a conversation about people? A recent AICD Director’s Briefing on Board Oversight of Talent Strategies heard that boards needed to increase the focus to reflect the rising importance of human capital to value creation and strategy.
Holly Kramer MAICD (Australia Post deputy chair, a non-executive director of Woolworths, AMP, GO Foundation and Southern Phone, and a Western Sydney University trustee) and Kathleen Bailey-Lord FAICD (a director of Melbourne Water and QBE ANZ) said finding, developing, keeping and properly rewarding talent requires more attention.
“How often do we really put people at the centre of the business?” asked Kramer, who as CEO of retailer Best&Less from 2012 to 2015, led a turnaround with a focus on people and culture.
“Over the past 20 years, the assets on corporate balance sheets have swung from roughly 80 per cent physical assets to predominately intangibles, where most assets are now generated by human capital such as intellectual property, brands and trademarks. So it’s more than just a slogan when we say that people are our most valuable asset.”
The recent Cricket Australia crisis also underscored the importance of adequate board oversight of culture and people.
Boards have reflected this change through board committee names, said Kramer. Out with the remuneration committee of old and in with people and performance or people, strategy and culture. “They have evolved to have a much broader remit than just nominations and remuneration. That speaks to the fact that boards now must monitor culture, monitor talent and the future of their human capital,” said Kramer who chairs the Woolworths People and Performance Committee.
For boards, talent should be widely discussed. This is no longer something you can just fob off to the HR department.
Bailey-Lord chairs the relevant committees at Melbourne Water and QBE ANZ. A director for more than a decade, it still surprises her that boards don’t pay more attention to talent.
“For boards, talent should be widely discussed. In many organisations, there’s a lot of talk of governance and a huge focus on the financials and so forth. Sometimes you have to be the person on the board who drives that discussion. This is no longer something you can just fob off to the HR department. It is no longer [enough], at a board level, [to] merely deal with the remuneration side of things. Remuneration is merely an outcome. It is important to take a strategic HR perspective.”
“A people strategy should be at the forefront of the CEO’s mind; if it’s not, it’s something the board should be asking for,” said Kramer. “Culture is too important for the board to limit their exposure to the boardroom only.”
Basic ways boards can improve their oversight of talent include:
- Reviewing board committee charters and the board agenda for the year;
- Determining when to talk about talent development and succession;
- Allocating regular time in strategy sessions to ensure it’s part of the discussion.
Kramer and Bailey-Lord outlined approaches for directors to keep in touch with issues when not inside the organisation day-to-day; and also to keep an eye on data such as attrition rates, safety, engagement surveys, cultural pulses, bullying and harassment and asking questions. Bailey-Lord said it is important there are key performance indicators around talent development throughout the organisation.
Four quick questions
- What is the talent strategy that supports our business?
- Which trends are affecting our organisation’s talent and how is this affecting our strategy?
- How are we developing our talent to produce strong candidates for succession to executive positions and throughout the organisation?
- How do we use corporate governance principles and practices to address succession?
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