I was thrilled to be invited to co-author a piece with David Creelman (Canada) and Andrew Lambert (UK) of Creelman Lambert as we collectively continue to explore how to improve the linkage between Board-level governance processes and the necessary focus on human capital.Our key point is this:
What’s the solution? There are three things we need: a committee with a mandate to take a broad look at human capital; members who have time to fulfill this mandate; and executive teams that can communicate human capital issues in succinct dollar-denominated metrics. The obvious place for the mandate has been the comp committee. Yet we know many are struggling to handle their current workload. It may be necessary to create an HR committee with a broader role, freed from the minutiae of the exec pay wars.
I believe this will get worse before it gets better, as the current disjointed process with “independent” consultants to Compensation Committees further distances the Committee and the consultant from an integrated view of compensation issues in the organization and the business.
If the comp committee is pre-occupied with avoiding trouble, it can leave the topic of human capital an orphan. The best boards integrate human capital considerations into all of their discussions, but not everyone is blessed with such a truly “HR-capable” board.