HR Leaders in the Boardroom: Navigating New Risks

Kira Ciccarelli

HR Leaders in the Boardroom: Navigating New Risks 

Listen to Episode 87 on Apple Podcasts

Guest: Keith Meyer, Global Practice Leader, CEO & Board Practice at Allegis Partners

Hosts: Dottie Schindlinger, Executive Director of the Diligent Institute, and Meghan Day, Vice President of Marketing for Diligent ESG & Data Intelligence

In this episode:

  1. HR Leaders in the Boardroom: Meyer discusses the impetus behind Allegis Partners’ latest report on the rise of HR leaders in the boardroom.
  2. The Importance of Multidisciplinary Leaders: Meyer talks about the other backgrounds and skillsets HR leaders are more likely to bring to the board table.
  3. Advice to Boards: Meyer ends with advice to boards looking to include new perspectives.

Summary:

In this episode of The Corporate Director Podcast, Keith Meyer, Global Practice Leader of Allegis Partners’ CEO & Board Practice discusses key takeaways from a recent report, “Human Resource Leaders in the Corporate Boardroom” and new trends in board composition.

HR Leaders in the Boardroom

Meyer begins by discussing the key findings from an Allegis Partners report titled Human Resources Leaders in the Corporate Boardroom, which was an updated report originally published in 2017: “In 2017, the report was about the underutilization of HR leaders in the boardroom. It got a lot of positive feedback at the time, and we thought that now was a ripe moment to do a recap.”

He explains the impact of the pandemic and other massive changes in the business world in the last few years: “The board’s agenda has really changed in the last five years. They are now dealing with new human capital issues around their workforce, racial equity, general inclusion, the #MeToo movement, employee retention and engagement and more. Five years ago, boards may have only been tackling one or two of those issues. This has created more demand for human capital experience.”

The report found that the percentage of HR leaders in the boardroom had increased by 300% since 2017. Meyer states that in the Russell 3000, there were 242 HR leaders in boardrooms at the end of last year. Additionally, the pace of HR leaders joining boards had accelerated, from about 15-20 per year to 70-75 per year.

The Importance of Multidisciplinary Leaders

Encouragingly, these HR leaders being elevated to the boardroom are more likely to be diverse beyond their skillset backgrounds: “About 90% of HR leaders in the boardroom in our sample are diverse from a racial or gender standpoint,” says Meyer.

The HR leaders being appointed to boardrooms are also bringing interdisciplinary skillsets: “We also found approximately 60 HR leaders who have a finance or legal background as well as HR. Some boards are very focused on the human capital agenda, but there are also boards looking for a broader range of experiences. This population of HR leaders spans all industries, sectors and company sizes,” says Meyer.

Meyer discusses this trend in terms of the idea of critical mass in the boardroom: “If you’re the only diverse director on a board of 12 people, you’re less likely to be able to make change. What we’re seeing is boards are beginning to have more diverse members, and they are becoming more experienced each year. We’re also seeing them become board leaders. This accelerates the pace of positive change, especially when it comes to board composition.”

Advice to Boards

“Current directors should fully embrace the opportunity to reshape the direction of their board appointment around richness of discussion,” says Meyer, “Take advantage of a watershed moment and think about the board’s future and composition differently. Relatedly, the breadth and depths of diverse talent in leadership in corporate America has never been richer, no matter what type of company you are. It’s a wonderful opportunity to tap into that market and change the direction of your board.”

Meyer’s advice is simple yet challenging: “Think beyond traditional sources or personal networks to cast an eye towards a broader set of executives. To do that, sometimes it causes a board to take a half step back before taking two steps forward.”

He explains, “The really hard part is thinking ten years out from now about the amount of turnover you have. In our own research, we found fewer and fewer cases of age and tenure limits. In my opinion, this causes boards to become stagnant, and creates a lack of energy or inertia to start thinking proactively about changing the composition of their own board.”

Also in this episode…

Meyer predicts that the role of the board will continue growing in complexity: “There will be a continual increase in the demands on board members’ time and their level of engagement, especially for public company directors, is going up. In five to ten years from now, maybe we’ll see directors serving on fewer boards for less time than they have in the past.”

Resources from this episode:

Kira Ciccarelli
Kira Ciccarelli is the Lead Researcher at the Diligent Institute. Diligent Institute is the modern governance think tank and research arm of Diligent Corporation, the leading provider in board collaboration software. In her role, Kira works to conduct and provide high-level modern governance research to inform director decision-making and identify best practices.