Lets face it, thinking about a company’s human resources (HR) department can send chills down your spine.
Historically, many are conditioned to think that when HR calls, it’s time to start running.
The truth, however, is that HR serves as a supportive arm for many organizations and can help drive success throughout corporate departments. When companies are looking to hire and retain new employees, the HR role becomes a very integral part of the search and identification process. With the recent attention being placed on board diversity, compliance, ethics and transparency, some might wonder how helpful the HR department can be when trying to enforce strong governance practices – and corporate secretaries may also wonder what they can do to help facilitate an ongoing relationship with HR professionals.
HR’s role in governance
In a recent report entitled Why HR governance matters, HR consulting firm Mercer says, ‘HR executives face significant challenges, including managing a global function, realizing returns on technology, accelerating the pace of organizational change, leveraging human capital strategically, and reforming management practices in response to proliferating regulation.’ In essence, the study calls for HR managers to start engaging with other corporate departments – but the single most critical element to help HR achieve governance success is to team up with the corporate secretary.
The corporate secretary can create a symbiotic relationship with the HR function. In fact, there’s no one better than the corporate secretary to ensure that all regulatory and governance requirements are met within HR. According to Mike Johnson, vice president and human resources coordinator at UPS, ‘The HR function at UPS is closely aligned with legal for policy, strategy, training, compliance and workforce management. This ensures consistent application and governance.’
Johnson, who is responsible for the health and safety, compensation and benefits, and employee relations departments at the $53.1 billion logistics firm, says the UPS HR department maintains effectiveness collaboration with the legal department by building what he calls ‘focused knowledge’.
‘Rather than being generalists, legal are counterpart subject matter experts who collaborate on compensation, benefits, health and welfare, health and safety, employment structure, compliance reporting and employment litigation,’ he explains.
It may seem like a relatively new idea for corporate secretaries to buddy up with the HR department, but Johnson says UPS has always invested in the corporate secretary and HR relationship. In turn, this cross-functional collaboration has resulted in the retention of long-term and tenured employees at the company. Consequently, HR has transformed itself into a more effective resource, and many now see the department as a strategic partner.
Promoting diversity through HR
Some analyst reports indicate that the lack of female representation on boards may have contributed to a series of corporate disasters. Facebook, for instance, is currently under increased scrutiny for having an all-male boardroom, as many industry observers fear that over time this can take a toll on a company’s governance structure.
Diversity at companies is seen as a key ingredient for success. Whether it’s gender or cultural diversity, companies prefer having a larger talent pool to choose from, especially for the boardroom. According to the 2011 Catalyst census: Fortune 500 women executive officers and top earners report, about one in ten companies had no women serving on their boards between 2010 and 2011, while women of color still held only 3 percent of corporate board seats across the US.
Since HR handles hiring, it can have a direct effect on these statistics. However, HR is not the only department responsible for promoting a diversified boardroom and corporation.
Kathryn Komsa, vice president and chief diversity officer at insurance brokerage firm Marsh & McLennan, believes corporate secretaries can help HR professionals find the right candidates for the board.
‘The corporate secretary has the ability to influence the agenda of the board and its respective committees,’ Komsa says. ‘Therefore he or she can ensure that significant HR issues are delivered to the board’s attention, including topics such as talent management, compensation – especially the compensation of senior leaders – and risk management, all of which have a direct correlation to the firm’s progress in diversity and inclusion.’
When board seats become available, the corporate secretary can influence the selection process to ensure that a broad and diverse slate of qualified candidates is identified and vetted, Komsa notes. Furthermore, the corporate secretary can work with the HR department to seek out potential boardroom candidates.
Many board searches require a candidate who is already a board member or CEO. This immediately limits the pool of diverse candidates to a few individuals who already hold these positions. Instead, Komsa stresses that HR and the corporate secretary should work together to redefine the selection criteria – ‘not lower, but redefine’.
Part of the process of ‘redefining’ may mean a company puts greater emphasis on accomplishments rather than roles – an emphasis that will contribute to better strategic initiatives. The ability to turn around a business, analyze and manage risk, manage crises, access new markets or identify and attract top leaders to the company may be found in senior leaders other than current board members or CEOs, Komsa suggests. Therefore, reaching out to diverse board members and asking them to share their networks can provide access to talent pools that should be tapped.
Ultimately, best practices in governance are only achieved through a collaborative approach. If corporate secretaries and HR can work together more often, this will help companies reach new levels of effective governance.
Supporting the board
How can a corporate secretary get more involved in the HR function to help support the board? Teri Plummer McClure, pictured left, senior vice president of legal, compliance, audit and public affairs, general counsel and corporate secretary at UPS, says close alignment between the corporate secretary and HR function to enhance decision-making at the board level is built around:
· Collaboration: Support the board and balance information needs for compensation, investor concerns, candidate selection and orientation.
· Communication: Provide effective messaging to the board on management goals, priorities and resource needs as well as data on compensation trends and workplace issues.
· Conveyance: The corporate culture should occasionally be conveyed to ensure that outside directors understand and value the company’s unique issues and practices.
According to this new report from NAVEX Global, there has been a rise in employees reporting compliance and ethics problems in recent years, and the percentage of repeat reports has more than doubled over the last five years.
Find out why and discover a range of other key statistics to benchmark your compliance program against industry standards by downloading this free report today.
This briefing contains statistics and analysis on employee reports of problems via a range of helpline methods, including:
This data comes from more than 8,000 NAVEX Global clients and provides actionable insights for policy management, training, awareness, and more.
Helpline data that is carefully tracked, reviewed, benchmarked and presented with context often provides the early warning signs needed to detect, prevent and resolve problems.
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