Board Oversight: Talent | Newsletter

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Acute talent shortages across numerous industries underscore the risks emanating from outdated, reactionary approaches to managing people, succession and culture. The question arises, what is the board’s role in forging a 21st-century approach to managing talent?

Changing times have led to fleeting employee loyalty, as talented individuals have more options than ever before with greater transparency into available opportunities. The demand for specialized talent is high, as organizations face nontraditional competitors such as digital side hustles. These and other factors (including the pandemic, a stronger focus on diversity, “hybrid work environments, mental health awareness, social media and the upskilling imperative as technology advances) have empowered the workforce and elevated expectations for meaningful work, opportunities for growth, more flexibility and work-life balance, and shared values with their employer. The recruitment of a transient, multigenerational workforce no longer ends with onboarding. Success in the 21st century stems from creating, implementing and communicating a talent strategy that is aligned with the business strategy and focused on providing an exceptional employee experience. These dynamics place talent and succession front and center on the board’s agenda.

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Embrace New Talent Realities

The board should ascertain that C-suite leaders and chief human resource officers (CHROs) are adapting as talent markets and economic conditions change. Today’s talent challenges cannot be solved with yesterday’s thinking. Over time, the need for more sophisticated talent strategies will only increase — as will the risks triggered by relying on reactive strategies for managing talent. This issue of Board Perspectives explores four imperatives for directors to consider when engaging management on establishing a new normal for managing people — implement a sustainable talent strategy, foster a different mindset, align every talent-related action to the corporate culture narrative and encourage data-driven decisions.

Address Succession Planning and Leadership Development

A global survey of more than 240 organizations conducted by the Association for Talent Development notes that half of the organizations surveyed are engaged in succession planning while 60% of those not so engaged intend to develop a plan. The study also recognizes that the primary causes of shortcomings in succession planning include limited C-suite bandwidth, insufficient resources, and the lack of available knowledge and expertise. The bottom line: The notion that “We can go hire someone else” when a rising leader leaves does not reconcile with current market realities that will likely endure over time.

The sheer magnitude of change suggests that the competencies that led to up-the-ladder success in the past are not the same combination of qualities needed in the future. So how does the organization modernize its succession-planning capabilities? This issue suggests five high-impact actions for boards to consider when engaging with management — establish transparency, clarify who must stay, hold the right conversations with emphasis on an actionable plan, ladder up and measure up.

Organize the Board’s Oversight of Talent and Succession Planning

Asking the questions above offers directors an opportunity to engage in strategic conversation with management regarding what they are looking for in a comprehensive talent strategy and succession plan. The board’s focus on talent and succession planning requires a holistic, forward-looking effort, the success of which hinges on several enablers. These factors include an appropriate talent mindset among board members and executive leaders, the communication of the talent strategy and related objectives throughout the enterprise, and investments in supporting technology and human capital analytics. In discussing the above topics, this issue offers related questions that directors can use to send a clear message to management as to what they are looking for in terms of a comprehensive talent strategy and succession plan. It also offers suggestions for organizing the board’s oversight of talent management.

(Board Perspectives — Issue 176)

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