May 9, 2019
May 9, 2019
Corporate boards have traditionally been reluctant to delve too deeply into talent issues, viewing them as the purview of senior management. But in my recent conversations with directors, it’s clear this is changing.
“If a board starts and stops at CEO succession, that’s only a small part of the role they should be playing in talent development,” one director told me during a panel discussion at PwC’s Corporate Directors Exchange in January. “If you look at any company that’s landed in the headlines because of a scandal, you will likely find there were cultural issues not being fully shared with the board.”
Corporate scandals are one reason directors have begun taking a greater interest in workforce issues. Transformation is another. As technological advancement continues to accelerate, companies are getting the chance to completely rethink what their workforces will look like. Which functions will they automate? Which ones will they augment? Which functions can be performed by contingent workers?
“As AI and automation take greater hold, boards need to understand where the capability to perform business functions will come from,” another director said during our Corporate Directors Exchange. “In 10 years, we may find ourselves with 100 employees and billions in revenue because so many things have been automated.”
The need for greater board oversight of talent and culture boils down to one word: strategy.
Now more than ever, a company’s culture and its ability to attract and manage talent is critical to implementing its major initiatives. So, although in the past it might have made sense for the board to be more hands off on these issues, today’s directors need to be more involved as part of their long-held responsibility to oversee strategy.
But talent management and corporate culture are huge issues. And directors only get glimpses into what’s really going on within the company. How can directors provide more substantive oversight without stepping into the role of management?
It starts by viewing these issues through the three levels of the organization: the C-suite, the up-and-comers, and the larger workforce (middle management, for instance). From that vantage point, here are some steps directors can take to improve their oversight:
1.The C-suite: Directors are already pretty clear on their responsibilities for managing and developing the company’s top executives. Where they can play a greater role is in ensuring that these top executives are making talent development a high priority—particularly in the face of skills shortages and other workforce challenges. They can do this by:
2. Up-and-comers: Directors are also well aware of their duty to make sure the company has a strong talent pipeline for all C-suite functions. This is easier said than done, and boards need to continue their efforts to get to know these high performers and assess their capabilities by:
3. The larger workforce: Getting a grasp on talent management at the middle management level is particularly difficult for board members. This is where they will need to do the most work to increase their oversight. Here, the board’s focus should be understanding the company’s talent philosophy, future talent needs, and culture. Assessing culture can be particularly challenging for board members, which is why PwC’s Governance Insight Center has written an entire paper about it. Here are the highlights:
Broadening board oversight of talent and culture is doable when you break it down into manageable pieces. And companies will benefit from greater focus on these issues. In fact, their future depends on it.
For more tips on how directors can better oversee talent, read our report, A deeper dive into talent management: the new board imperative.