HR on the board: HR professionals are providing some much-needed expertise as members of boards of directors

HR Magazine, June, 2004 by Robert J. Grossman

But consultants and head-hunters--including those at Spencer Stuart and Heidrick & Struggles, two leading recruiters of board talent--are challenging the assumption that CEO-level generalists make the best directors. General knowledge and big-picture experience are not always enough, they suggest. Some directors should be experts as well, steeped in the particular business and in the two all-encompassing functions that are the lifeblood of all organizations: finance and human resources.

"It would be hugely helpful for a board to have a repository of experience and credibility on the HR issues that impact organizations in a massive way," says Claudia Kelly, head of Spencer Stuart's HR practice.

Why HR? Because strategically managing change, culture, ethics, compensation, succession and labor relations is essential, according to research from Heidrick & Struggles. So essential, in fact, that when the recruiting firm studied the differences between top-performing boards and also-rans, it found that the best--like those at Pepsico and GE--never lost sight of HR's significance. Those boards:

* Know how to build a robust talent base.

* Foster a values-based culture.

* Offer fair but not excessive performance-based compensation plans.

* Conduct leadership transitions that are seamless and performance-based, not time-based.

CEOs and other generalists--unless they also have an HR background--can't provide the strategic focus and oversight needed to give these critical tasks their due, says Hal Johnson, global managing partner of HR practice at Heidrick & Struggles in Denver.

Howard Knicely agrees. A director at Agilysys Inc. and former top HR executive at TRW, Knicely points out that boards have been criticized for numerous HR-related failings--including poor management of mergers, succession, ethics, values and governance--and that no other executive pool is better equipped to handle these challenges than HR professionals. "All of these issues play into the set of competencies that senior HR executives have had to deal with in their careers."

But boards don't always recognize that HR issues already play a prominent role in their activities, says Bruce Carswell, who until March served on the board for AT & T Latin America.

While on the board, Carswell was "constantly being asked questions on HR-related issues even though they [were] not identified as people issues," he says. "On the typical board agenda, 50 percent of the issues have people implications. That being the case, someone with broad HR experience has much to offer. A financial person cannot answer the same questions I can."

Special Specialists

Strategic HR, similar to law or auditing, is not easily mastered by nonpractitioners, says Susan Bowick, who headed the HR function at Hewlett-Packard from 1997 until she retired last year. "The HR background gives you specific skill sets for managing change, organizational culture and global operations," she says.

At Hewlett-Packard, Bowick worked through the massive merger with Compaq (she is credited with helping to blend the workforces of the two companies), tackled post-merger integration issues, led the succession process and helped with the orientation of CEO Carly Fiorina.