5 Key Areas of Collaboration Between HR and the Board of Directors

The relationship between HR and the board of directors can make or break an organization. It is multifaceted and involves several key areas, including compensation, talent acquisition, labor practices, retention strategy, and diversity.

When these two groups collaborate effectively, it leads to better strategic planning, risk management, and governance. On the other hand, lack of alignment between HR and the board of directors can damage company culture, reduce employee engagement, and threaten business performance.

This article explores five key areas where close cooperation between HR and the board of directors is critical. From attracting top executive talent to navigating crisis situations, you’ll see why building trust should be top priority to any organization.

The good news is that strengthening the HR-Board partnership is often easier than you might expect. With the right focus and commitment to shared goals, HR and the board of directors can become highly synergistic allies.

1. Compensation and Executive Compensation

One of the most important areas where HR and the Board collaborate is determining compensation strategy. After all, salaries and bonuses (of top leadership down to employees) have a huge impact on company culture and success.

HR researches and proposes employee compensation and benefits packages ideally using market salary data sets that the board of directors reviews and approves. This includes salaries, bonuses, healthcare, retirement plans, paid time off, and other perks. The board ensures packages are fair, competitive, and align with the company’s financial position.

While for executive salary:

• HR gathers data on compensation trends and packages for comparable roles at similar companies.

• Then, the board of directors evaluates things like key performance indicators, long term strategic goals, and shareholder interests to determine what compensation levels will attract, retain, and properly motivate the right CEO and executive team.

• The board of directors ultimately approves the compensation packages to ensure they align with the company’s values and priorities. Compensation should be fair and equitable, but also achieve the goal of driving growth and innovation.

By collaborating on this critical area, HR and the board of directors set the tone for good governance and prudent decision making across the organization.

2. Talent Acquisition

When it comes to talent acquisition, HR and the board of directors must work hand in hand. HR typically oversees the hiring process, but the board of directors provides guidance on key positions to fill and the types of skills and experience to pursue.

Executive hiring

For C-suite roles especially, the board of directors leads the search and selection. HR supports by:

1. Posting the job on the company website and top executive job sites
2. Reviewing applications and resumes to determine the most promising candidates
3. Conducting initial interviews and assessments to narrow the field
4. Presenting the board with 3-5 finalists to choose from

The board of directors makes the final hiring decision but relies on HR’s input throughout the process.

Workforce planning

HR and the board of directors also collaborate on strategic workforce planning. HR tracks employee statistics like:

• Turnover rates
• Retirement eligibility
• Skills gaps

The board of directors reviews this data to anticipate future hiring needs and skills the company should focus on. Together, they determine how to build a workforce to achieve the organization’s long-term vision.

3. Labor Practices

The board of directors and human resources department work together closely on several key labor practices.

Recruitment and Hiring

HR leads the recruitment and hiring process, but the board provides oversight and approval for executive positions. The board also gives guidance on hiring strategies and policies to support the company’s mission and values. They aim to attract and retain qualified, diverse talent.

Training and Development

The board of directors allocates funding and resources for employee training programs proposed by HR. Ongoing education and skill-building help employees do their jobs well and prepare for career growth within the company.

Compliance

HR takes the lead on ensuring compliance with employment laws and regulations, but the board of directors is ultimately responsible. This includes compliance with discrimination laws, workplace safety standards, wage and hour laws, and other rules that govern how companies treat their employees.

4. Retention Strategy

A key area of collaboration between HR and the board of directors is developing an effective retention strategy. As an HR professional, you know that employee turnover is costly, reducing productivity and morale. Working with the board of directors to establish programs promoting job satisfaction and long-term commitment to the company is key.

Some things to ensure are:

• Competitive Compensation
• Growth Opportunities
• Work-Life Balance
• Recognition and Appreciation

Collaborating with the board of directors on these types of retention strategies will help ensure your company is an employer of choice, where people want to join, stay, and thrive.

5. Diversity & Inclusion

A diverse, inclusive company culture is increasingly important. Review hiring and promotion practices to minimize bias and barriers for underrepresented groups. Track and analyze employee demographics and experiences to identify areas of improvement.

An inclusive culture where employees feel valued and respected leads to greater innovation, creativity, and business success. As a strategic partner, HR should work closely with the board of directors to make diversity and inclusion a priority through policy, programs, targets, education, and leadership accountability. Promoting equity and belonging will position the company for a sustainable competitive advantage.

Evolving Trends in HR-Board Relationship

The dynamic between HR and the Board of Directors is evolving in several ways:

• Strategic Partnership: Rather than just focusing on administrative tasks, HR provides strategic counsel on talent management, culture, and risk.

• Greater Focus on Talent: The Board also looks to HR for advice on compensation, benefits, and development programs to keep talent engaged.

• Emphasis on Culture: The Board expects HR to define and cultivate a positive culture. The Board ensures adequate resources are allocated to support HR’s culture efforts.

• Data-Driven Decisions: HR provides metrics and analysis on areas like turnover, hiring, compensation, employee engagement, and performance. Armed with this data, the Board can make strategic choices with confidence.

• Risk Management: Human capital risks like harassment, discrimination, and compliance violations can damage a company. The Board relies on HR to put policies and programs in place to minimize risk, as well as mechanisms to identify and address issues early on.

Harnessing the Power Duo for Organizational Success

In conclusion, the symbiotic relationship between HR and the board of directors is a powerful force that can drive organizational success. The key aspects in this relationship are: compensation, talent acquisition, labor practices, retention strategy, and diversity and inclusion.

As organizations continue to face new challenges and opportunities, it is crucial for HR and the board of directors to work together seamlessly, leveraging their respective expertise and insights. By doing so, they can harness the power duo and ensure that the organization remains competitive and resilient in a rapidly evolving business landscape.