This year make your resolution to be a Non-executive director
David Fairhurst, December 21, 2009
As non-executive directors in other companies, HRDs gain business insight and experience.
How are your new year's resolutions shaping up? If you're anything like me, there's a good chance your best intentions have already fallen by the wayside. Which is brilliant - because I've got a suggestion for a replacement resolution that has the potential to enhance the performance of your HR department and your organisation.
My suggestion grew out of the keynote closing address given by my CEO, Steve Easterbrook, at the CIPD Annual Conference in November. He said: "I expect my HR director to be fully integrated and engaged with the commercial aspects of the business, and I have to hold myself accountable as CEO for being fully integrated and engaged with key people issues."
It's a powerful idea - and one that is fully aligned to CIPD CEO Jackie Orme's vision of the whole of the HR profession as "made up of HR people who understand the way that the interplay between people and organisational factors impacts on business success". But it has also prompted many people to ask - how do we make this happen? Although the end objective is clearly a desirable one, getting started on the journey can be difficult.
It is difficult because, in some organisations, other departments may initially be reluctant to even admit to having issues, let alone throw open their doors and allow HR to 'integrate and engage' with those issues.
There is, however, another way of gaining this experience - by working for another organisation. I am not suggesting a mass defection but rather that more HR professionals should seek to become non-executive directors (NEDs).
The important role of NEDs has been highlighted in many Government reports, most recently the Walker Review. And when you look at the Combined Code on Corporate Governance produced by the Financial Reporting Council it's clear many of the responsibilities of NEDs fall into areas most HR professionals would find familiar:
"Non-executive directors should scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance ...
They are responsible for determining appropriate levels of remuneration of executive directors and have a prime role in appointing and, where necessary, removing directors, and in succession planning," it says.
Indeed in response to the 2003 Higgs Review, Geoff Armstrong, then director general of the CIPD, observed that HR professionals in NED roles would ensure an organisation's main driver of value - its people - is taken seriously at board level. He also added that given "pay and reward is HR's stock-in-trade - it would make a lot of sense". In return, the HR professional would have the chance to gain experience of a wide range of strategic and operational issues. What these issues are would reflect the size of the company and its stage of development.
For me, this is the most exciting aspect of the NED role because, of the 2.5 million limited companies registered at Companies House, less than 0.5% are plcs, the remainder being privately-owned businesses of all manner of shapes and sizes with kinds of different issues to deal with.
Add to that the 160,000 registered charities and all of the schools and colleges across the country where trustees and boards of governors perform a comparable role to NEDs, and it's clear there are plenty of potential opportunities out there for HR professionals at every stage of their career.
So fill the gap in your 2010 new year's resolutions with the promise to yourself that you will be on the lookout for the opportunity to become a NED. The value you will add is your objectivity, and your contribution to the strategic decision-making process. The value you will receive back are the insights and experience to begin the process of integrating and engaging with colleagues in our own organisation. Priceless.
- David Fairhurst is senior vice-president/chief people officer, McDonald's Restaurants Northern Europe