By Dr Edwin Nharirire

When Boards are asked about the role of the Board of Directors in the attraction, deployment, development and retention of top executive talent, responses vary significantly. Research points to a relatively high positive correlation between best performing companies and their Boards’ involvement in executive talent conversations. Progressive companies should be concerned about the promotion of critical executive talent conversations at Board level, how boards can be effectively involved and share some executive talent metrics boards should be concerned with.

Executive Talent

The Board’s mandate to guide and give direction to the company portrays a helicopter’s view where they benefit from their vantage point and direct the efforts for the EXCO – ground troops executing the company strategy. In Executive talent, the Board can define the nature of talent that can take the company forward and in line with cultural aspirations. This oversight role involves the review of the robustness of the talent strategy and the definition of the key metrics that the company should focus on in executive talent management. Such processes would give the Board the right level of assurance around the executive talent pipeline.

Why Most Boards don’t effectively play this role?

There are various reasons why most boards do not effectively play their role in executive talent issues. The following are some of the pertinent ones:

• Board composition

Talent management issues are often relegated to non-human resources professionals who tend to focus on executive compensation and, worse still, purely from a staff cost perspective not a strategic human capital investment perspective.

• Pre-occupation with Executive Compensation

Research worldwide has confirmed that executive compensation forms at least 50% of the Remuneration and Nomination Committee agenda and still less than 20% of the Main Board Agenda.

• Compliance orientation vs strategic orientation

Most of the human capital conversations in Boards are focused on compliance rather than the strategic role of talent management.

• Over-delegation/abdication to CEOs

There is an unwritten belief that talent management is strictly the responsibility of the CEO. It should be noted that the Board should have an oversight role in checking key executive talent indicators for sustainability.

• Lack of understanding of critical human capital risks affecting the company

 People risk is often ignored in the matrix of things. When we appreciate that everything rises and falls with leadership, then every board must be interested in their Exco talent issues.

• Inadequate management information passed to the board

Sometimes this information is insufficient for Boards to make informed decisions pertaining to the given executive talent risks.

How Boards can play this role?

The Board of Directors, through the Remuneration and Nomination Committee (Which I believe should be christened Human Capital Committee to cater for the diverse risks not just remuneration), can do the following to fulfil their executive talent role.

• Review the company’s human capital strategy for robustness; especially on attraction, motivation and engagement of executive talent.
• Human Capital Risk review at least once a year.
• Executive talent review and interventions, including assessing and monitoring the executive talent gaps, assessing the bench strength and succession planning.
• Promote measurable talent KPIs important for the business.
• Check the alignment of executive talent with business strategy.
• Executive Talent as a Board Agenda
• Review of the CEO’s and direct reports’ performance and reward.
• Develop talent measures that are linked to shareholder value.

Key Metrics in Executive Talent

Some of the key executive talent metrics the boards should be seized with include:

• Leadership Pipeline for critical roles.
• Executive Succession Bench Strength.
• HR Investment in Talent as a percentage of Revenue.
• Top talent engagement levels.
• External Hires success rate.
• External Hire vs Internal Hires at Exco level.
• Talent diversity (age, gender, race, specialization etc.)

The Board, through its relevant committees, must set the executive talent agenda and set aside enough time to discuss executive talent issues as they are at the core of sustainable earnings and growth. Getting the right executive talent would mean achievement of organizational objectives.