Opinion – Talent management: a place on the board’s agenda
In the aftermath of the Covid-19 pandemic, talent management is gradually gaining traction on corporate boards globally, prompting boards to reconsider talent management and its impact on strategy of business. Common practice has always been that the board’s responsibility for managing the talent of its organization begins and ends with the CEO and senior management. This is understandable, given that boards are reluctant to be seen as micromanaging or undermining their management team.
However, common principles of corporate governance require board members to lead effectively with a forward-thinking and transformative mindset. The issue of talent management in foreign jurisdictions such as the UK and the US is gradually evolving from an agenda only for the succession planning or compensation committee. Talent management is now a necessary process to guide strategic decisions aimed at fostering innovation, development, value creation and the potential to outperform the competition.
The idea that the team you build is the business you build could become the new mantra in the future, and it’s for this reason that talent management deserves a place on the board’s agenda. administration.
The quality of an organization’s talent management processes is closely linked to its financial performance. According to a report by Accenture Modern Boards, its 2020 survey found that Covid-19 improved board member engagement in the company’s workforce strategy by 70%.
Survey results revealed that modern boards demonstrate visionary leadership and outperform traditional boards in terms of workforce strategy, revenue and innovation. Compared to their competitors, their substantial involvement in workforce strategy has resulted in 10% revenue growth over the past three years. Boards less engaged in workforce planning experienced a 5% decline in revenue growth.
Moreover, the 23rd Annual PwC Global CEO Survey said the Fourth Industrial Revolution has brought about new business models and innovative ways of working that require essential technological, digital and soft skills. Some CEOs have identified critical skills shortages as one of the top 10 “serious concerns” that impede business growth and innovation.
In light of this, the need to upskill and prepare for the future workforce should no longer be a side discussion or a topic of debate. Instead, board involvement in talent management should be a new oversight function as part of the board’s fiduciary duty to act in the best interest of the company.
As board members, how can you embrace this new responsibility for overseeing talent management in your organization?
Hire the CEO:
Ask the CEO about the quality and effectiveness of your company’s talent management processes. Areas of inquiry should focus on the company’s efforts to attract, assess and hire top talent, develop, reward and retain talent, and how the company’s workforce strategy work aligns with its mission, values and vision.
Take the pulse of the business by requesting a talent assessment of your organization from the CEO at least once a year. Allow enough time on the board agenda to allow for a full discussion of the results of the assessment. The assessment will also help you understand and assess the health of the company culture.
The CEO should be willing to discuss the assessment of staff strengths and weaknesses and the strategies available to meet development needs, such as offering coaching or professional development training.
The director of human resources and the governance and nominating committee can lead the talent assessment process, setting out the criteria and expected results on behalf of the board.
Monitoring of the C suite:
You need to consider the makeup of the company’s management team. The same techniques used to measure your effectiveness as a board member can be easily applied to the management team, such as looking at the company’s skills matrix if one exists.
Ask senior management if any recent or planned changes in business strategy have significantly altered the skills/expertise required, and if these changes have resulted in a skills gap in the existing management team.
Also, take note of the demographics of the leadership team. Is the team made up of a diverse group of people? Is the team representative of the employee population and base of the company? Has a strategic assessment been conducted to determine which positions are best suited for internal versus external candidates?
Elevate the role of the Chief Human Resources Officer (CHRO) to the boardroom level:
With oversight of human capital strategy becoming increasingly essential, your human resources manager should serve as a trusted advisor in the boardroom. The CHRO must be aware of what is happening at all levels of the company, particularly in terms of hiring, rotation, commitment and corporate cultural issues. Combining this with business strategy and performance is a powerful combination.
A CHRO can provide the board with valuable insights based on their expertise, which will be beneficial in talent and succession discussions. Some CHROs are actively involved in senior management succession planning, reviewing potential talent and determining the skills required for a position. They also understand compensation and how to instill practices that reward and inspire employees and recruit top talent.
In addition to the action steps above, PwC’s Governance Information Center recently published an article titled “A Deeper Dive into Talent Management: The New Consulting Imperative » , which provides additional recommendations for boards of directors to ensure that a company’s approach to talent management aligns with its corporate strategy. The publication also provides a list of talent questions directors should ask management about critical areas such as overall business strategy, succession planning, diversity and inclusion, and board composition.
So, as boards evolve, I believe there will be an increased desire to get involved in talent management. More forward-thinking boards will actively seek to fulfill this obligation because they appreciate the value that strategic talent management adds to ensuring the long-term viability of their organization.
Therefore, I recommend that you bring your diverse perspectives and help your company shape its future talent needs and development needs. It would also be helpful to discuss the company’s industry or market segment, competitive dynamics, company strategy, skills and experience required by the workforce.
* Chisom Obiudo is a Chartered Lawyer and Corporate Governance Advisor. She is currently a member of the Governance Advisory Committee of the Board of Directors of VG Capital Partners (Pty) Ltd. She holds a master’s degree in commercial law and corporate governance. Email: firstname.lastname@example.org