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Reputations at risk due to lack of HR board representation

UK businesses are facing a “people insight deficit” that is putting their reputations at risk, the CIPD has said.

Just a quarter (25%) of FTSE 350 companies have a board member with an HR background, whether executive or non-executive, according to a new report from the professional body.

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The value of people expertise on corporate boards, released this morning (21 July,) also found just 2% of these companies had an HR director on their executive board.

Instead, many chairs and senior independent directors have a financial background.

Remuneration and nomination committees, despite their relevance to key people issues of reward and talent, also lacked HR representation, with just 23% and 20% of committees featuring HR professionals.

Susannah Haan, the CIPD’s senior corporate governance advisor, said the lack of HR staff in key decision-making centres has opened up UK organisations to reputational risks.

She said: “Effective boards require a diverse range of skills and perspectives, so it’s concerning to see how few boards have people with HR expertise.

“It’s often said that people are a company’s greatest asset, but the make-up of boards simply doesn’t reflect this at the moment."

Speaking to HR magazine, she added that HR professionals looking to effect change should have a firm grasp on the strategic challenges facing the organisation.

She said: “They can approach either the chair, or a friendly non-executive director, to highlight these issues and gain an understanding of where any skills gaps may be on the board.

“This may spotlight the need for appropriate HR representation on the board, or at the very least, input from those with the right experience and expertise.”

Liz Sebag-Montefiore, co-founder and director of HR consultancy 10Eighty, told HR magazine that the skillset of a chief HR officer (CHRO) can be of enormous benefit to the board.

She said: “The skills of a CHRO can offer new fresh insights into key business decisions and help put the company on the right path for a successful future. 

“CHROs are also well placed to act as mediators between what is discussed by the board, and what is discussed by employees in the workplace.”

Sebag-Montefiore added that HR professionals looking to make the jump to board-level roles should seek out executive experience as CEOs in smaller organisations first.

She said: "Smaller organisations present far fewer complexities than larger ones which make them a fantastic place for HR leaders to prove themselves."

Similarly, any experience in other business functions would prove useful, she said.

"Despite HR’s relevance to every department within an organisation, it has traditionally been kept distant from the customer. 

"Failing to adequately grasp how their company makes money is another major stumbling block for HR leaders aiming for a seat at the table."