The board should help ensure leadership talent

A company may lack the capabilities needed to meet corporate goals, or successors might not be ready when they are needed for key positions. When these problems arise, the response might be crisis management rather than talent management.

Board members frequently come from CEO or CFO backgrounds, with very few having formal HR skills. As such, they often feel unprepared to guide HR strategy. Board members must become more active in this area, ensuring a thorough routine review (at least once a year). Our quick guide below can be used for assistance. These are questions the board should ask the chief human resources officer (CHRO) to support vigorous and effective succession and talent management and help avoid gaps that might put the company at risk.

Uncovering leadership competency gaps

Corporate strategy is dynamic, changing with the shifting industrial and economic landscape. Yet internal capability development is often very static, focusing on an unchanging set of skills and competencies. Boards of directors should know what capabilities are needed to implement corporate strategy and whether these capabilities are in place. Hence, they should ask the company’s top leaders, led by the CHRO, to report on the competencies required:

• What leadership capabilities and functional experiences are needed to achieve our corporate strategy?
• How do we assess these in a high-quality and comparable way?
• Who is responsible for closing the gaps between what we have and need, and how do we follow up?

Closing the leadership competency gaps

After uncovering any misalignment between the company's leadership competencies and experiences and what it needs, boards can help push measures to close these gaps. Having the right corporate HR policies and processes is crucial to ensuring strategy execution. Key questions the board should ask the CHRO include the following:

• How are key leaders appropriately assessed so we can identify the right potential successors?
• What is the framework for developing talent and successors?
• What is the company’s value proposition for internal staff and external hires?
• What is the appropriate balance between internal promotion and external hire, and are we measuring it correctly?
• How can the board monitor, assess, and help implement needed changes?

Ensuring retention

A critical aspect of any company’s succession planning and talent strategy is its retention program. By keeping long-tenured leaders, a company preserves the competencies it has helped (and paid to) develop and the institutional memories supporting smooth and effective business operations. Veteran employees are the stewards of corporate culture, passing along the company’s approach to performance and success to younger leaders. Yet retention policies are frequently a neglected dimension of talent strategy. Among the questions boards of directors should be asking regarding retention strategies are the following:

• What is the company’s position on staff turnover, including targeted levels?
• How do retention policies support corporate strategy?
• Why do talented people leave, and how do we address these problems?
• When a key leadership position is filled, either by internal promotion or external hire, what is done to ensure smooth onboarding?

Conclusion

The board underscores the importance of talent strategy by asking the right questions, agreeing on measuring progress, and ensuring regular high-level reviews. It helps uncover risks and weaknesses before they affect company performance. Establishing and developing the right team is vital for all business success, and the board should not hesitate to get involved.

If you’d like to discuss this topic in more depth, please contact us at reception@leadershipadvisorgroup.com.