Companies cannot properly deal with workforce issues if they don’t have a single board member responsible for its people strategy. Boards may claim that people planning is a real priority, but often do little more than control costs, deal with rogue behaviour or remove incentives to behave poorly. As individuals, employees can be seen as assets and are rewarded, but collectively they are viewed as a cost or potential risk.
If a single board member owned a company’s people strategy, he or she could align it better with the overall business strategy. I have seen how an engaged and motivated workforce genuinely adds value to manufacturers just as much as people-focussed businesses. Getting the staff strategy right is a real driver of profit.
The CEO and CFO typically take board responsibility for people issues. However, even those who take it seriously usually have greater demands on their time and attention.
Ultimately, the CEO should take responsibility (people are more than a cost code so the CFO is not the right person in my opinion). But do other board members play their part? When it comes to people issues, my experience is that board members often don’t feel sufficient ownership of the issue to challenge the CEO. They are typically drawn from a financial or operational background and they tend to default to issues rather than those where they feel less confident such as staff strategy and planning.
Putting a human resources director (HRD) on the board is unlikely to solve the problem immediately. They frequently have a more operational role that is not a natural fit there. That said, elevating them to the board would give the position of an HRD more strategic flavour and shift people strategy higher up the executive agenda.
Today, we tend to see certain people-related issues arise: maybe concerns about rogue traders, incorrect incentives or concerns about the pension scheme. Nobody looks at these challenges as part of a whole however. These particular issues are undoubtedly important, but if the executives do not deal with them as part of a wider strategy, their approach is unlikely to be consistent.
Without strong clear direction from the top, it is very hard for staff to see how they fit into an organisation. The way they work, how they are paid and what they do should all contribute to the business’s success. Staff are quick to identify inconsistencies in messages from management. In turn that creates questions as to the motives behind offers or opportunities made by the business. Attempts to engage staff might be met with suspicion.
The relatively narrow background of many non-executive directors exacerbates a people strategy that the board do not properly own. Without direct experience of workforce strategy or planning, they are unable to really challenge the approach taken by executives. They do not need to have all the answers themselves, but they need to be able to ask the right questions.
Boards need to view staff issues as a topic of strategic importance, not just muddle through. Until they focus on people issues, they will fail to get the maximum value from their workforce.
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