The issue of diversity can help in getting investors more interested in HR’s contribution within public companies, according to a corporate governance expert.
“Diversity is one area which could be a hook to get investors more interested in HR and people issues,” said Simon Wong, a visiting fellow at the London School of Economics and former head of corporate governance at Barclays Global Investors.
“There’s a lot of discussion about expanding the representation of women on Boards, and how companies can groom female employees for senior executive roles.”
While there is a growing interest in diversity from an investor perspective, Wong said shareholders haven’t paid too much attention to HR issues in general.
“I would certainly agree that what happens in HR in terms of longer-term planning is quite critical to a company’s performance,” he said.
“But I must say mainstream investors, institutional investors, are more interested in topics such as CEO succession.”
Wong said it is hard for some investors to come to grips with the leadership style and skill set required of a chief executive, and how this should change over time because of changes in a company’s strategy or competitive environment.
“For example, at some point you may need a chief executive who is more of a strategic thinker, and following this you may need someone who is more hands on in terms of operations,” he said.
“Investors need a qualitative way of assessing and understanding the investment value of this. You can talk to shareholders about these issues, but how do you put a value on it?”