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Editor's Note: This article relates well to the Lawler & Boudreau research reported elsewhere in this journal. A slightly different version of this article appeared in the March 2005 i'sswe of Directors Monthly, a publication of the National Association of Corporate Directors, Washington, DC. www.nacdonline.org. Reprinted with permission.
Some boards have their Chief HR Officer (CHRO) regularly report to them about major HR issues, typically through the governance and compensation committees, about succession planning or officer compensation issues. Many board members do not expect regular interaction beyond those issues. From all indications, fewer yet view the HR function from a truly strategic perspective and the CHRO as a strategic business partner. With a firm's human and intellectual capital being increasingly viewed as the most important sources of competitive advantage, and leadership development and retention becoming a major challenge because of dramatic demographic shifts coming over the next decade, the HR function deserves closer attention by boards. HR does want to claim a greater role in the corporate governance process, as explained in the Human Resource Planning Society's 2003 book, Restoring Trust: HR's Role in Corporate Governance (WG Stopper (ed.), NY: HRPS). Several questions can therefore be asked the CHRO, preferably both in writing and in face-to-face conversations, as part of a regular board meeting at least once per year.
According to the Human Resource Institute's 2005 leadership survey of over 1,600 companies on behalf of the American Management Association (AMA), and Hewitt Associates' 2005 national survey, How the Top 20 Companies Grow Great Leaders, the most proactive boards are going much further than the historic norm. Boards are increasingly finding ways to shape and guide some of the most critical HR activities beyond CEO succession planning that drive long-term performance. A number of other HR-related issues require attention as well. Based on conversations with several senior HR executives, HR consultants, and several years of personal experience as a board member, here are at least seven of the most important "people-related" questions every CHRO should be expected to answer:
1. How strategic is the HR function...