Boards and CEOs need better and more holistic information around organisational health, and remuneration committees can play a central role in understanding and providing broad feedback to an executive team about key elements of organisational health, according to a leading Board director.
“Many organisations don’t have the information they need at Board level or the CEO level in order to make really good judgments around organisational health,” said Diane Grady, who is currently a director of companies including Macquarie Group and Spotless Group Holdings.
Remuneration committees can play an important role in helping steer executive teams in the right direction when it comes to talent management, and she said the charter of these committees can be expanded to include talent, succession and organisation health, but in a way so there is no interference in specific management decisions.
“For example, Boards can ask management to produce a people strategy that supports the business strategy, and ask to see that people strategy,” she said.
“Many organisations don’t actually have a formal people strategy, but this step can help lead organisations to think more holistically about what it takes to be successful in terms of developing talent.”
“Culture needs to be a key focus area for the Board and for the CEO; it should not be delegated to HR”
Another thing a people committee can do is to ask for better information about what’s happening with regards to talent in an organisation.
“I’m not just talking about engagement surveys; while it’s important to know if employees are motivated and feeling connected to the organisation, better information about the organisation’s health in general I think is a legitimate request from a board talent committee,” Grady said.
These committees should also ascertain that there are proper processes in place to manage talent, such as performance review processes, talent development practices and appropriate alignment between pay and performance.
While these committees should not intervene in specific decisions, Grady said they need to be sure that talent management processes are in place and working if they’re going to have an impact over time on making sure the organisation has the right people in place.
Grady also said the role of culture is “absolutely critical” to an organisation’s success, and needs to be firmly aligned with and support business strategy.
“Culture needs to be a key focus area for the Board and for the CEO; it should not be delegated to HR,” she said.
“While understanding the process of digging in and understanding culture can be led by HR, the thinking, decision making and reporting has to be to the whole Board, because culture is just too important to leave to one function area.
“Generally speaking, I think Boards have way too little information on culture.
“Engagement surveys can provide a small window into culture, but I think there are much better and more comprehensive ways of diagnosing and surveying organisational health as a whole which gets into factors such as risk management and innovation,” she said.
For the full interview with Grady, see the next issue of Inside HR magazine.
