Suits The C-Suite

(Second of two parts)

Chief Human Resources Officers (CHROs) have always been crucial to the success of an organization. However, as a result of current events, they may now be just as valuable to CEOs as the Chief Financial Officer (CFO). As such, it is imperative to deepen their strategic value.

In order to better understand why the connection between the board and the CHRO is becoming more crucial, insights from EY thought leaders and clients were gathered to fuel strategies to improve the board and CHRO dynamic along with the ways of working. Instead of merely reducing potential risks, organizations can find opportunities in current, unheard-of labor trends to gain a competitive advantage.

The first part of this article discussed challenges in talent, perception gaps identified with employees, and considerations for boards to make. This second part will discuss three strategies that boards and CHROs can implement to help each other succeed: strengthening and enabling the CHRO role, re-examining the risk framework to support the talent agenda, and supporting CHROs in developing a human-centric strategy and employee value proposition.

Organizational culture, which includes purpose, well-being, and social inclusion, has emerged as a critical factor in motivating present employees and attracting potential hires. Therefore, choosing who oversees this crucial sector is the first step for the board and the executive team.

Once roles are defined, the board should challenge the CHRO (or an equivalent role) on matters that are now within their purview. These include corporate activism and reputational talent risks. Boards must also communicate the significant financial value of having a strong employer brand to investors and other external stakeholders to support the CHRO role.

In addition, boards should inquire about whether the HR team has the right qualifications, experience, and support of top management. The CHRO should be subject to the same accountability standards as the other C-Suite members. The CHRO is responsible for engaging the board in important discussions about important issues that include the external market environment and an internal perspective that covers determining what talent the organization has, how to retain key personnel, understanding critical current and future skills, and how to address gaps in talent.

They should also draw attention to and thoroughly evaluate the significant developments that have an impact on the firm, and they should exhort the board to adopt fresh and unusual perspectives. In order to accomplish this, the CHRO needs early access to the board so they can establish and show their credibility, trust, and transparency. They will then be able to present innovative, game-changing ideas with assurance when the time is right.

And last, the board and the CHRO should keep putting first-class oversight of executive remuneration and C-suite succession planning at the top of their list of priorities. When properly implemented, the former ensures that rewards correspond to the cultural practices the organization wants to promote. Additionally, debates in boardrooms are showcasing the latter more prominently than ever due to evolving talent dynamics.

Talent is frequently at the top of risk agendas for organizations worldwide. However, because risk profiles vary by industry, organization size, and various other criteria, each organization handles its talent differently. In order to determine what is best for them, boards should consult with their respective CEOs and CHROs. These conversations do not have to wait until board meetings; they can take place during routine check-ins with other board members.

To avoid the temptation to micromanage, the board should discuss and decide what role it should play in supervising talent concerns as well as determine the best governance structure to support the CHRO. The board will also have to think about how to include the voice of the employees in the governance structure. They must pay attention to what employees want, even if not all requests can be granted.

Executive learning is also a key area. Historically, board members tended to have extensive backgrounds in more traditional fields such as law and finance. However, the board will need to supplement these skills with new perspectives in light of new risks and difficulties. By ensuring that the board has access to and is learning from industry best practices, the CHRO can support these initiatives, helping the organization become more performance-driven and purpose-led as a result.

In order to balance the demands of the people strategy and the business strategy, as well as to create and sustain the culture of the organization, boards must narrow their focus on their people, and look more closely into what the employees need from their organization as well as what the organization needs from them.

These discussions must be incorporated into the broader strategic talent plan to attract, nurture, and retain the talent required to carry out the organization strategy. The board can help the CHRO carry out this strategy by ensuring that each individual feels heard, appreciated, and supported.

Board members do not need to know the specifics of employee insights, but they should be made aware of any potential risks, opportunities, and impact. They can then ensure that the organizational employee value proposition, culture, and overarching strategy all take into account the needs of various employee groups while allowing for customization where appropriate. Culture is a particularly significant factor as well; research shares that businesses which thoroughly understand and reflect their cultures outperform their competitors by a factor of three, while those with serious cultural problems falter or even fail.

Boards should ensure that the cultures of their particular organization are in sync with their talent and retention strategies as they assume increased responsibility in managing this vital area. In exchange, the CHRO must thoroughly assess the organization’s employee value proposition with the board and assist in filling in any knowledge gaps.

All of these discussions should be supplemented by an effective use of data. It will be easier to engage the board and win their support if they are presented with clear, succinct, and well-researched recommendations.

The constant disruption in recent years has only exacerbated the war for talent, requiring the CHRO role to be even more strategic as people-related risks rise to the top board agendas across the globe. In order to overcome challenges in talent, CHROs and boards must collaborate to enhance the CHRO role, supporting as well as challenging each other to navigate the talent landscape and remain competitive.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.


Lisa Marie T. Escaler is the People Advisory Services Workforce Advisory (PAS WFA) leader of SGV & Co.