"Few issues of organizational effectiveness and performance have moved so decisively to the front burner in recent years as culture. Only two decades ago insistence on the importance of culture often drew blank stares and, occasionally, amused contempt. Few leaders now doubt the relevance of culture to company performance, employee retention, corporate reputation, customer loyalty, and a host of other areas that contribute to competitive success. Board governance is now shaping up as the next frontier in this extraordinary progress as boards increasingly recognize that accurate knowledge of company culture can enhance governance decisions..." (Heidrick & Struggles’ Governance Letter 2014)
At a Directors Update in Sydney in 2015, the top-ranked issue of concern for CEOs and Boards for the year was “organisational culture”. There was a general sense in the audience that culture was difficult to understand and assess and was complex and a bit mysterious, and yet there appeared no disagreement about its importance. People could see the results of a bad culture.
How to understand culture?
Organisational culture can be most simply defined as “how things are done around here”. An organisation’s desired culture is usually most evident in its Values, Code of Conduct and behaviour expectations that are often included in performance agreements. Clues to the actual culture of an organisation can be found in a range of information the Board receives – the staff survey outcomes, staff engagement metrics, staff turnover patterns, and various other signs that can warn Boards of impending trouble. People and culture is an area of expertise of Human Resources professionals and this is the profession that Boards would turn to for advice on culture.
Where are Human Resource professionals on Boards?
When Boards are faced with matters of financial or legal concern, most Boards can turn to fellow Board members who are accountants of solicitors - the two most common specialist professions on Boards. But when it comes to people and culture challenges, where are the specialists in People and Culture (Human Resources) on Boards? Often Human Resources is not even represented in the C-suite of the organisation.
I recently asked one of the top international search firms in Sydney about the demand for HR skills on Boards. I was told by the very experienced recruiter, that in all the years he had been recruiting Board Directors in Australia, he had never been asked to find a non-executive Director with HR experience! This search firm is likely to be recruiting Board Directors for the largest companies in Australia. If this reflects the situation generally on Australian Boards, is it any wonder Boards are struggling with how to fulfil their governance obligations on corporate culture. Understanding organisational culture is often more complex and difficult than understanding company financial accounts or law and yet they are unlikely to have a People and Culture specialist on their Board to turn to.
The fact that no one at the Director’s Update session commented on the absence of People and Culture (Human Resources) specialists on Australian Boards to assist with the issues of culture, suggests that the link between HR and their expertise in organisational culture needs to be more explicit in Board selection criteria. Maybe the term “People & Culture” should be added to the Board skills matrix. The penny may then drop and Boards may go looking for this critical missing specialist skill that exists in the Human Resources community of prospective Directors.
Finally, I pose the question - Does the absence of HR professionals on Boards create a blind spot in the governance role of Boards that will continue to exist until this notable absence of diversity of skills is remedied?
Susan Kehoe
Consultant | Mentor | Change Leader
Work with Susan
Susan provides consultancy advice, mentoring, program leadership and interim executive support to leaders and organisations where there is a need to challenge the status quo, engage people, shift culture and lift performance.
How to understand culture?
Organisational culture can be most simply defined as “how things are done around here”. An organisation’s desired culture is usually most evident in its Values, Code of Conduct and behaviour expectations that are often included in performance agreements. Clues to the actual culture of an organisation can be found in a range of information the Board receives – the staff survey outcomes, staff engagement metrics, staff turnover patterns, and various other signs that can warn Boards of impending trouble. People and culture is an area of expertise of Human Resources professionals and this is the profession that Boards would turn to for advice on culture.
Where are Human Resource professionals on Boards?
When Boards are faced with matters of financial or legal concern, most Boards can turn to fellow Board members who are accountants of solicitors - the two most common specialist professions on Boards. But when it comes to people and culture challenges, where are the specialists in People and Culture (Human Resources) on Boards? Often Human Resources is not even represented in the C-suite of the organisation.
I recently asked one of the top international search firms in Sydney about the demand for HR skills on Boards. I was told by the very experienced recruiter, that in all the years he had been recruiting Board Directors in Australia, he had never been asked to find a non-executive Director with HR experience! This search firm is likely to be recruiting Board Directors for the largest companies in Australia. If this reflects the situation generally on Australian Boards, is it any wonder Boards are struggling with how to fulfil their governance obligations on corporate culture. Understanding organisational culture is often more complex and difficult than understanding company financial accounts or law and yet they are unlikely to have a People and Culture specialist on their Board to turn to.
The fact that no one at the Director’s Update session commented on the absence of People and Culture (Human Resources) specialists on Australian Boards to assist with the issues of culture, suggests that the link between HR and their expertise in organisational culture needs to be more explicit in Board selection criteria. Maybe the term “People & Culture” should be added to the Board skills matrix. The penny may then drop and Boards may go looking for this critical missing specialist skill that exists in the Human Resources community of prospective Directors.
Finally, I pose the question - Does the absence of HR professionals on Boards create a blind spot in the governance role of Boards that will continue to exist until this notable absence of diversity of skills is remedied?
Susan Kehoe
Consultant | Mentor | Change Leader
Work with Susan
Susan provides consultancy advice, mentoring, program leadership and interim executive support to leaders and organisations where there is a need to challenge the status quo, engage people, shift culture and lift performance.