HR Governance and Board – How Important Is It?

Trupti Karkhanis

03 Mar 2021

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“Management is about persuading people to do things they do not want to do, while leadership is about inspiring people to do things, they never thought they could.”

                                                                                                                                                      - By Steve Jobs

We understand the term ‘Human Resource’ in common parlance as the ‘People’ and the term ‘Human Resource Governance’ as alignment of all HR processes with core values and culture of the Company. As a matter of fact, it cannot be denied that an organization is run by its people. Its existence in the marketplace is all because of the human efforts made to help organizations attain greater heights. It is critical to pinpoint that the Board being a bunch of living and wise human beings, managing company affairs, must help entire organizational workforce to ingrain sensitivity towards terms like values, ethics, empathy and morals. Ultimately, it is all about inculcating a feeling of mutual respect for human resources i.e. valuing the worth of your people and their efforts in the organization.

Mature organizations usually develop a governance mechanism where the Board provides an oversight on HR management issues and is directly involved in the process of hiring, supervision and evaluation of KMPs. It is believed that Boards’ involvement in such processes can make a huge difference in building a positive mindset as well as effective organizational culture. We often try to adhere to and execute fascinating big terms like that of Corporate Governance in our organizations without even understanding its essence and how it would shape with different departments in the Company. I believe amongst all the departments in the Company, HR department is the one which is completely in sync with and reflects the thought process of how the promoters like their culture to be and hence, Human Resource Managers are considered to be the ultimate drivers of values in the organization. Therefore, in today’s time Governance is not merely a term that organizations would like to use for window dressing, but its execution in the right manner has to be in sync with the culture, people, values, beliefs, policies, charters and of course within the legal ambit.

Research says that there are organizations where Boards and HR department work hand in hand to ensure that right systems and processes are put in place, are highly sustainable, but at the same time, such organizations are very few in number. Considering the larger perspective of Indian companies, it is very important to focus on addressing issues like active involvement of Boards, hierarchical gaps, communication level and styles, leadership styles and more. These are some issues that requires attention because often these points create obstacles in effective implementation of proper structures. If we try to link each of the aforementioned issues to the Board and HR, we will get clear answers as to how things should be practically strategized and enforced:

a.      Involvement of Boards – It is extremely critical to understand that gone are the times when Boards only used to focus on earning quarterly profits. With the change in time and especially in this post pandemic era, Boards have gained an entrepreneurial mindset wherein they are getting agile and compassionate towards each and every function of the Company are rethinking their business model with better governance mechanisms in place. Yet if we try to relate the current engagement status of the Board, it is still not that significant specifically in areas when it comes to formulation and reviewing of existing organizational policies. Reviewing and understanding organizational policies is not only the job of HR, rather Board’s involvement in such activities creates a radical change in the mindset of the Company. A simple ‘Preface’ or a ‘Foreword’ at the start of any official document / policy by Board members creates trust and belief in stakeholders that firstly they are a part of very sensitive organization and secondly the culture of the organization is very strong when it comes to safeguarding the rights and dignity of its people. Another example that we could consider is involvement of Boards in hiring procedures. Organizations would be able to fetch far better talent when they use Boards’ expertise in screening candidates and providing useful perspectives. We do not say that the Board should be wholly solely responsible for the same, yet the guidance and involvement in terms of streamlining these activities with their expertise could bring a significant amount of change in the organizational culture of companies.

b.     Hierarchical Gaps – In the current times, communication is one of the biggest problems that probably every organization is facing especially when it comes to voicing out concerns. Somehow there are artificial gaps created at every level of the management and it is the last mile worker in the Company who ultimately faces repercussions of such practices. Therefore, at this point of time when we desire to define Board’s role in HR governance, it would be really important to smoothen communication channels at each level.

c.      Leadership Style – Each Board follows a unique leadership style. Many styles have been witnessed by us in the pandemic as well as post pandemic era. Interestingly, the outcome of each style of leadership is totally different. Some leadership styles bring people on one platform and introduce uniform thinking, whereas some styles do not even recognize human efforts in the company. At this point of time when we are keen on aligning HR activities with the Board, it must be noted that Boards’ leadership styles must take along every stakeholder of the company in its decision-making process and this is the need of the hour. Certainly, there is no doubt in existence of such Boards in our Indian history, yet, a big chunk of companies still lacks good leaders who think about their people and value them for their skills.

These are some practical examples through which the role of Board in HR Governance become very prominent wherein they could contribute to make a noticeable difference in not only the organizational culture but also helping HR department drive best practices at all the levels in the hierarchy to ensure a healthy workplace for all stakeholders.

In order to effectively introduce HR Governance in the Company and synchronize the same with the Board, it would be extremely important to ponder upon following questions and certainly thereafter, a better result could be achieved:

• How active is the Board in matters related to HR?
• Is there are separate HR Governance Committee set up by the Company comprising of Board members to observe the execution of HR strategies in the Company? If yes, does the HR Governance Committee promote HR innovation?
• How frequently does the Board participate in preparation and communication of sensitive policies on topics like POSH, Whistleblowing, Code of Conduct, Anti-Bribery Anti-Corruption issues and more?
• Is there an open channel of communication established by Boards to address issues of a last mile worker in the Company?
• Does your Board consist of a right mix of professionals including a sound HR professional who understands the value of people, their contribution and organizational culture?

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