Few will dispute that these chaotic and calamitous times mean corporate executives face some of the toughest challenges of their careers.
More companies are recognizing and developing an often-overlooked in-house resource—their boards of directors—to help address new and emerging threats. With the interconnectedness of today’s world and the global events affecting it, corporate board members with expertise in stakeholder engagement, organizational behavior and external and internal communications are needed now more than ever. However, few companies have elevated, to the board level, two functions often at the intersection of organizational threats and opportunities: Human Resources and Communications.
Human Resources and Communications as board strengths
Organizations are charting unprecedented and unpredictable waters, and HR leaders can help anticipate and mitigate risks related to most organizations’ biggest investment: their people. “If the board is there to protect the interests of the stakeholders, part of doing so requires an understanding of the culture and the depth of talent within the organization,” Janet Candido, principal of Toronto’s Candido Consulting Group, wrote in the Globe & Mail.
Yet, most boards do not include HR expertise: Fewer than 3% of sitting directors on the boards of Fortune 1000 companies were current or former HR executives, management consulting firm Korn Ferry found last year. “If boards are discussing culture, values, succession planning and talent management, shouldn’t there be a successful and experienced HR leader on the board to guide these discussions?” Hema Crockett, co-founder of consultancy Gig Talent, recently wrote for Forbes Business Council.
Diversity, equity and inclusion today are hot-button HR issues for many companies, and boards are increasingly expected to play a hands-on role in ensuring their organizations are ethically and adequately addressing those challenges. In the past five months, lawsuits have been brought against at least seven major U.S. corporations—Oracle, Facebook, Qualcomm, the Gap, Norton LifeLock, Cisco and Monster Beverage—that seek to hold the companies’ respective boards and executives liable for statements about diversity within the company that shareholders contend have been financially and reputationally damaging. NASDAQ filed a proposal in early December with the Securities and Exchange Commission requesting that the more than 3,000 companies on the exchange disclose the breakdowns of their boards by race, gender and sexual orientation. Companies that do not comply could be delisted, or kicked off the exchange.
The Nexus of All Organizational Activity: Communications
The chief HR officer of a national professional services firm shared with me that her team is often expected to “fix problems,” confirming that HR is often the first department senior leaders look to when an urgent issue occurs. However, the Communications function is likely the first to hear of problems. The senior vice president of communications for a global medical device company told me that the department is often contacted even before more senior executives. Frontline managers facing serious issues understand that public opinion and blowback may be harsh, and they know that prompt—and often preemptive—communications will be critical to addressing and resolving the problem.
A shareholder lawsuit filed earlier this year against the Boeing Company’s board of directors underscores the critical need of board-level communications expertise and oversight. The lawsuit alleges that some directors and the company’s then-CEO and chairman, Dennis Muilenburg, didn’t adequately probe safety issues responsible for two fatal crashes of the company’s 737 MAX airplanes because they were unduly concerned about possible resulting negative news media coverage. An experienced communications professional on the board could have likely walked fellow members through the probable optics and fallout of such a flawed management decision and saved the company the serious reputational, financial and operational damage that misstep cost.
Elevating These Functions
The ability of HR and Communications in addressing organizational problems is critical. HR often will direct development of a solution or necessary behavior change, while Communications will manage how it’s rolled out to employees, investors, customers and other stakeholders. Board-level attention, input and guidance can inject needed expertise and perspective, and ensure that a solution is strategically focused.
While boards should never manage organizations, they should provide, guidance and strategic oversight. Those functional specialties should expand beyond the board’s traditional purview of governance and compliance counsel to embrace other essential functions, such as HR and Communications. The coronavirus pandemic should be the ultimate catalyst to incorporate this kind of expertise into boards. Doing so can better equip organizations and prepare them to manage or even preeminently anticipate and address today’s challenges.
Written by Stephanie Nora White.