How Boards Can Help Harness Human Capital

Elevating board effectiveness is essential in a changing business and talent landscape.

In the modern knowledge-based economy, human capital has emerged as a crucial element for driving competitive advantage. For boards, integrating human capital expertise into their governance structure is not just beneficial; it is essential for effective leadership and organizational success. As the business landscape evolves, so too must the focus of boards on the people who are fundamental to their success.

Enhancing board decision-making with human capital expertise. Incorporating human capital experts into the boardroom enriches discussions and strategic planning. Leaders such as Patricia Fili-Krushel, former CEO of News Corp, emphasize that understanding workforce dynamics is critical for organizational performance. Her insights highlight the importance of shaping key areas such as culture, talent management and retention strategies. By having human capital professionals on the board, directors are empowered to make informed decisions that align organizational objectives with the needs and aspirations of their workforce.

Strategic oversight of human capital initiatives. Boards that prioritize human capital expertise are better equipped to oversee and influence human capital strategies at a high level. According to Josh Bersin, a renowned industry analyst and founder of Bersin by Deloitte, organizations with strong human capital strategies outperform their competitors. This includes ensuring that human capital considerations are woven into strategic planning processes. By treating human capital as a vital component of business success, boards can drive initiatives that enhance talent development, promote diversity and inclusion, and foster a positive workplace culture.

Navigating mergers and acquisitions with human capital insight. During mergers and acquisitions, the role of human capital expertise becomes particularly critical. Effective integration of people and culture can make or break a deal. David Schwimmer, CEO of London Stock Exchange Group, asserts that cultural alignment is often the most challenging aspect of M&A. Boards can leverage human capital knowledge to guide:

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  • Cultural integration. Emphasizing the importance of aligning cultures from the outset ensures that leadership prioritizes both financial goals and people-centric outcomes.
  • Due diligence. Encouraging comprehensive assessments of the target company's workforce and cultural fit allows boards to identify potential risks associated with talent retention and cultural alignment.
  • Leadership selection. Providing oversight on the selection of leadership teams for the newly merged entity is vital. Ensuring that leaders can navigate cultural complexities will contribute to a smoother integration process.
  • Change management. Advocating for robust change management strategies helps maintain employee morale and productivity throughout transitions.
  • Alignment with ESG principles. Boards can also ensure that human capital strategies align with ESG goals, reflecting a commitment to DEI.

For boards, the integration of human capital expertise is a strategic imperative in today's complex business environment. As leaders like Indra Nooyi, former CEO of PepsiCo, have highlighted, prioritizing this expertise enhances organizational resilience and adaptability, particularly during critical transitions, such as mergers and acquisitions. Ultimately, a board that values human capital expertise will not only drive sustainable growth and innovation but will also strengthen the organization's foundation for long-term success. By recognizing the pivotal role of people in achieving business objectives, boards can make informed decisions that foster a thriving organizational culture and competitive advantage.

About the Author(s)

Lisa Holmes

Lisa A. Holmes, MSHR, is a director of NXTClean Fuels and a human capital executive. She is the author of the best-selling book, Job Hunting. Now What?: Keeping It Real in the Modern Career Search, and a media contributor for Money, Fast Company and other publications.


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