By the time Lucien Alziari became a chief human resources officer, he had encountered nearly every type of issue around employees and corporate culture. He had overhauled executive pay plans, developed innovative ways to keep talented employees, and been the consigliere to a host of C-suite executives. His new CHRO role was going to broaden his experience even further, requiring him to create succession plans for the board of directors and the CEO.
His next step, he thought, would be to join a board himself one day, advising a company about all the challenges and opportunities around people. So several years ago, at a different firm than where he is today, he sought out one-on-one chats with each board member to find out what their concerns were and uncover what he should know about being on a board. He wasn’t prepared for their responses.
“A couple of them asked me, ‘Why are we having this meeting?’ and ‘Why is this a valuable use of my time?’” says Alziari. Forget being a peer on the board—the directors didn’t understand what actual guidance a CHRO could offer other than figuring out the CEO’s pay package.
Boards of directors are, in theory, supposed to be able to offer advice and guidance to a CEO on any aspect of an organization. One can look at any board in the Fortune 1000 and find current or retired experts in finance, strategy, and marketing. That’s why boards are typically filled with current or former CEOs. Two decades ago, after major changes in accounting rules, many boards added chief financial officers. These days, thanks to growing challenges and opportunities online, boards are looking for experts in technology and cybersecurity.
But one business function that still doesn’t get much representation on boards is human resources. Indeed, of the more than 10,000 directors on the boards of the Fortune 1000, fewer than 3% are either current or former senior human resources executives. Experts say that the absence of CHROs as directors is curious. Historically, boards haven’t entirely understood the CHRO role, and companies of old were often more focused on operations or products instead of the people who ran or created them. These days, though, of course, an overwhelming number of critical business decisions revolve around finding top talent, developing a healthy corporate culture, and other people-related issues.
“It’s a gap that should be addressed,” says Dan Kaplan, a senior client partner in Korn Ferry’s CHRO practice. “Heads of HR are at the confluence of a lot of issues that help or hurt a company’s ability to grow and evolve.” Their skills set, many point out, are not interchangeable.
“Directors with HR expertise bring in the ability to ask questions that others won’t think of, especially about culture. In today’s environment, that’s probably the top issue that boards are focused on,” says DJ Schepker, assistant professor of strategic management in the Darla Moore School of Business at the University of South Carolina and research director of the school’s Center for Executive Succession.