EDITORIAL: THE BOARD AND HUMAN CAPITAL

‘Our people are our greatest asset.’ How often has that been said by companies of whatever size and sector? But how many truly believe it, or act on it?

Following the global pandemic, tightening labour markets, inflation and recession concerns, remote work and technological disruption, effective boards today view addressing people issues as fundamental to strong stewardship – how companies create and preserve long-term value.

A recent survey of global board members conducted by WTW and Nasdaq found that board members view human capital as a high-priority topic.

More than 90 per cent of S&P 100 companies have broadened their compensation committee's charter to include broader human capital management. This may include succession planning, leadership development, broad-based compensation and benefits programs, and diversity, equity and inclusion efforts. Human capital governance is now also a core element of the enterprise risk management framework in a growing number of organisations.

Effective boards are looking further than just looking at vast reams of data when considering human capital management. They have broader discussions around context and business priorities and ensure that management is given clear guidance and tangible and actionable feedback from the board. 

Effective boards focus on outcome-based metrics that evaluate how people contribute to the business, with metrics and reporting that are simple and contextualised. Such metrics demonstrate a clear connection to key business priorities and align with the risk profile and growth ambitions of the organisation.

It is still rare to have the chief HR officer (CHRO) as a board member but good boards are now having regular conversations with the CHRO outside formal board meetings. Board members recognise that such conversations can be important to ensure the right conversations are happening in the right forum at the right time.

You can read the full report here.