How to win over directors and influence boards
While boards increasingly appreciate the strategic role HR can play, many HR professionals may lack exposure to their board or shy away from direct communication and engagement due to a lack of understanding of what the board needs or wants, according to the Australian Institute of Management (AIM).
“HR professionals are telling us that they are seeking a more strategic seat at the table,” said Daniel Musson, chief executive of the Australian Institute of Management.
“In recent years, boards have begun to better appreciate the strategic role HR plays within organisations,” said Musson, who noted that this has been driven by HR leaders who have sought to increase awareness of the ability of strong HR practices to drive revenue and increase profitability.
“We see the influence of HR at management and board level continuing to increase over time,” he said.
“Primarily, boards want the HR executive – and indeed all executives – to demonstrate a sound understanding of the legal frameworks that the board is working to.”
For example, in situations such as a merger or acquisition, he said HR needs to understand the process and principles the board will be considering commercial options under.
Or in a takeover or purchase, he said HR should be able to present information about the target company’s culture.
“The need for effective interaction between board and HR executive is also relevant to more routine matters such as HR strategy, employee engagement, remuneration policy, health and safety and collective contract negotiations,” he added.
Musson said a capability gap for HR executives in effectively communicating and dealing with board members is a simple lack of appreciation of how boards operate, including their legal obligations and governance frameworks.
“There is often a dependence on the CEO by both board members and senior executives to act as a conduit of information,” said Musson, who noted that AIM recently launched a Governance Foundations for Senior Managers and Executives course to help bridge such gaps at senior levels within organisations.
“However, boards are increasingly becoming more reliant on direct communication with senior executives, including HR executives.”
In order to bridge these gaps and develop a better and more productive relationship with board members, Musson said the first step for HR executives is to develop an understanding of the different perspectives between governance and management.
“Once this is understood and skills developed for balancing those needs, then building a bank of experience dealing effectively with the board, and delivering on promises builds a sense of capability and trust,” he said.
“The latter, we believe can be significantly fast-tracked by not leaving the development of these skills to chance and getting a clear understanding of how the board operates.”