Questions the Board should ask the CHRO
(to ensure talent management rather than crisis management!)
One of the board’s responsibilities is to ensure that the company has the human competencies to execute its strategy. The board needs to feel confident that the company is promoting, recruiting, and retaining competent leaders and paving the way for smooth transitions. A company may lack the capabilities needed to meet corporate goals, or successors might not be ready when they are needed for key positions, and when these problems arise, the response might be crisis management rather than talent management.
Board members frequently come from CEO or CFO backgrounds, with very few having formal HR skills. As such, they often feel unprepared to guide HR strategy. Board members need to become more active in this area, ensuring a thorough routine review (at least once a year). Our guide below can be used for assistance. These are questions the board should ask the chief human resources officer (CHRO) in order to support vigorous and effective talent management and help avoid gaps and risks.
Uncovering leadership competency gaps
Corporate strategy is dynamic, changing with the shifting industrial and economic landscape. Yet internal capability development is often very static, focusing on an unchanging set of skills and competencies. Boards of directors should know what capabilities are needed to implement corporate strategy and whether these capabilities are in place. They should ask the company’s top leaders, led by the CHRO, to report on the competencies required immediately and in the future.
- What leadership, functional, and industrial competencies are needed to achieve our corporate strategy?
- What kind of framework would ensure high-quality assessments of our current leadership competencies?
- What competencies do we have?
- Who is responsible for closing any gaps that are identified and how do we follow up?
Closing the leadership competency gaps
After uncovering any missing leadership competencies, boards can help push measures to close these gaps. Corporate policies toward internal promotion and training and external hiring are crucial aspects of talent strategy that can boost leadership skills where needed. Key questions surrounding this area of talent strategy include the following:
- Should talent management include all employees or focus on select individuals or groups?
- What is the appropriate balance between internal promotion and external hire, and are we measuring it properly?
- What is the framework for developing internal talent, and how transparent should it be?
- What is the company’s value proposition for internal staff and external hires?
- How does the board ensure that any needed changes are implemented?
A critical aspect of any company’s talent strategy is its retention program. By keeping long-tenured leaders, a company preserves not only the competencies it has helped (and paid to) develop but also the institutional memories that support smooth and effective business operations. Veteran employees are the stewards of corporate culture, passing along the company’s approach to performance and success to younger leaders. Yet in our experience, retention policies are frequently a neglected dimension of talent strategy. Among the questions boards of directors should be asking regarding retention strategies are the following:
- What is the company’s position on staff turnover, including targeted levels?
- How do retention policies support corporate strategy?
- Why do talented people leave, and how do we address these problems?
- When a leadership position is filled, either by internal promotion or external hire, what is done to ensure smooth onboarding?
By asking the right questions, agreeing how to measure progress, and ensuring regular high-level reviews, the board not only underscores the importance of talent strategy but also helps uncover risks and weaknesses before they affect company performance. Establishing and developing the right team is vital for all business success, and the board should not hesitate to get involved.