Should HR Have a Seat at the Boardroom Table?

Written by EO Executives on Jul 19, 2018

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Should HR Have a Seat at the Boardroom Table?

It is no secret that the world around us is changing at a significant rate.

As a result, boards of experienced business leaders who focus on the strategic direction and protection of business interests are now finding that there is an ever-evolving focus on organisational change.

However, with employees providing organisations with competitive advantage, why in many organisations are HR (Human Resources) still having to ‘fight’ their cause as to why they should have a seat at the top table? This is a question I am continuously hearing amongst many industry leaders, and one that I wanted to get some greater understanding on.

Why?

Decisions are made by boards on the direction of the business, which impacts both employees and the future workforce requirements to support them in reaching these goals. Equally, more board Directors are understanding the importance of having ‘people’ experience within the boardroom. So, why is there an onus still being put on HR leaders to prove their worth to gain a seat at the table?

Why are HR not automatically board members?

Some HR functions will be challenged with firefighting, but this buys little credibility from commercial business leaders. Additionally, with HR dealing with the tactical day to day activities, they can be perceived as a managerial function as opposed to one that should be on the board.  

If organisations want to succeed they need to build a proactive and profitable workforce. However, unless HR is seen as a function which can truly add value to the board room, it risks being perceived by some as an unjustifiable overhead.

What is the role of HR in the board-room?

Once the basics are working effectively, it is about having a function that can work with mangers to ensure they are continuously delivering effective people management within their teams. This in turn should allow the HR function to move away from tactical activity to focus on finding solutions for business challenges and establish a HR strategy that drives the organisation forwards in accomplishing its goals.

This is where the role of an HR Director really comes into play.

In a world of significant technological innovation, we are seeing more automation in HR to streamline processes and improve employee and candidate experience. Whilst the implementation of a system can remove more administrative elements, it also provides an opportunity to access hard data that can be utilised within the boardroom to make more informed business decisions where people are key.

It is not just the HR agenda that today’s HR leader needs to have in their mind. A board level HR leader requires the same level of commercial acumen as other business leaders, to truly impact the overall direction of the business.

An organisation can either obtain competitive advantage or fail due to its people strategy and the board need to understand clearly where the organisation may be the most vulnerable. So, it is not only so the key questions around the right people and engagement they should be discussing.

Fundamentally, it is what all these things mean to the performance of the business. Without this, how can any debates around an organisations business strategy be complete?

So just why is that HR’s seat at the board table key to organisational success? Does it mean that the CEO truly understands the strategic impact of its people on their business? Or is it the message that organisations communicate with their employees, and they truly believe that their greatest asset is their people?

I am interested in hearing the views from both HR leaders and CEO/Directors. Do you think HR should have a seat in the boardroom? And what is their role within your organisation? Let me know by leaving your comments below, or if you would be interested in a confidential discussion please get in touch at lucy.bielby@eoexecutives.com.

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