HR Is Key to Corporate Sustainability

Having observed leaders and leadership of all kinds and dimensions over many years, one success factor truly stands out regardless of economic circumstances.



Simply put, the best executives focus on outcomes and not themselves. They are “liberated,” in a sense, from their own personal ambitions but recognize that by doing so, they serve their own best interests as well as the shareholders for whom they work. The best leaders truly value human capital and the power and collaboration of teams.

The word “great” can be defined by any number of benchmarks. Still, those executives who check their egos are more highly trusted and the teams that they lead, assuming other common leadership traits of competency, etc., perform at very high levels. And, by definition, leadership requires followership.

Here is what The Koblentz Group has observed.

Every company says they place the importance of human capital at the top of their priorities as a true differentiator and one that creates strategic advantage. Yet, few, because of their leadership and the culture built around that leadership, act like it. And boards don’t focus on it, provide necessary vigilance, or make it an essential element in reviewing CEO performance.

Here’s an example.

In an informal survey that we conducted a few months ago, we asked 22 CEOs of mid-cap public companies a simple question. “If you were king/queen for the day, had to answer to no one, and could eliminate one function in your company, which one would it be?” Not surprisingly, 18 CEOs said they would eliminate human resources.



We found these results disturbing and profoundly shortsighted. The CEOs’ reasoning ranged from perceived functional ineffectiveness to CEO priorities in difficult times.

Three observations:

1. One obvious result is that CEOs perceive limited strategic or operational contributions from the human resource area at a time when gaining efficiencies is paramount. This suggests that CEOs in time of turmoil center on asking their executives only “what can you do for me now” and consider planning for the future as a limited priority.
2. Second, it clearly reflects a disrespect or disregard for human resources and that this has led to the denigration and perhaps the dismissal of the contributions of the human resource function.
3. Third, we observe that few CEOs know how to gain benefit from human resources under any conditions and thus do not “invest” in coaching their key human resource executives to be effective in aligning talent to results. Expectations are too often fuzzy and thus are rarely achieved or noted, internally or among key stakeholder constituencies. This translates oftentimes to the human resources leader not being at the table when critical decisions and strategic moves are decided. And, in fact, this may be the reason that we hear that only 10 percent of talent development programs are succeeding as planned in an era where succession planning, from the board of director perspective, is top of mind and considered by many boards as a true enterprise risk.
   

Currently, the pressure on CEOs is immense. Many view themselves as short-timers with a restructuring mentality and as such, don’t consider stewardship as an essential leadership priority. Their own survival as CEO depends on results gained swiftly. Recognition and rewards are oftentimes tied to the short term. Accordingly, here-and-now thinking dominates the leadership agenda with survival winning out over sustainability. Perhaps that is why CEOs find little value in HR.



To us, this is a high-value opportunity for corporate boards to stand tall and recognize the import of talent management as a strategy.


Boards should recognize that their CEOs, to whom they entrust their enterprises, may be miscalculating the systemic and strategic value of the human capital function. What could be more “risky” than not having a respected dedicated resource to assure that their company has the necessary human talent to sustain itself profitably in the future?

Boards have a duty of fiduciary responsibility and it’s more than just basic care. It is about corporate sustainability. Constant vigilance over the managerial talent pipeline is a key board responsibility.



Even in unsettling times, boards must hold their CEOs’ feet to the fire.






Atlanta Business Chronicle - by Joel Koblentz and Morgan Hamilton