By Jennifer T. Naylor | Advisory Board Member
As part of a settlement with the SEC, Tesla announced the appointment of two new independent directors in December 2018. One, to no one’s surprise, was Larry Ellison. The second, to everyone’s surprise, was Kathleen Wilson-Thompson, Global Chief HR Officer at Walgreens.
And yet, the appointment of Wilson-Thompson filled the company’s more critical need. Tesla is widely criticized for a hazardous work environment and a corporate culture defined almost exclusively by the eccentricities of its founder and CEO Elon Musk, a man driven by a relentless focus on solution engineering. By some accounts, the company spends little to nothing on any line item that doesn’t directly contribute to product engineering and delivery. To accomplish this, the company depends on attracting and retaining top talent. So, you being Tesla: if talent is your biggest asset and not getting it is your biggest risk, well, then your Board needs some operational fluency in human capital. Further, if corporate culture is creating publicly perceptible, downside risk, yeah, double down on the human capital expertise.
As portrayed so vividly in the Tesla experience, I would argue that Human Resources today is where tech was ten or more years ago: as that annoying Cost Center banging at the door instead of sitting at the boardroom table with the other strategic assets. Tech’s fortunes changed with the spectre of cyber threat which offered a risk to be managed; add mobile, cloud and ad tech, and suddenly, tech became an asset to be cuddled and strategically managed.
So then, what staggering need is going to pull people managers into the boardroom as directors? Workforce uncertainty created by talent scarcity, shifting skills needs, the changing health access landscape, and the realization that people are the primary strategic asset in this brave new economic landscape. Last year – 2018 – showed us in spades the impact of poor leadership, non-diverse teams and bankrupt corporate cultures on a company’s ability to succeed in the marketplace – as I argue with the Tesla example. Large institutional investors which have led the conversation on diverse boards and better leadership have prefaced their annual shareholder letters with pointed demands for better boards, more attention to executive compensation, succession planning and director training. We are also facing a very large handful of workforce challenges; in this landscape, human resource challenge is finally getting recognized as a strategic pillar and a prominent risk to be managed. Welcome to the boardroom, people officers!
Serving on a corporate board comes with several caveats. First and foremost, don’t quit your day job. While some boards pay a significant stipend, many recognize service with little more than some equity options and travel compensation for meeting attendance.
Second, know that board service will demand as many as 350 hours per year. In addition to the half dozen or more meetings that you will attend, you will also have committee work; and if your company is facing any major event from a crisis situation to negotiating a key strategic partnership, you may be putting in more hours.
Third, do your due diligence. Having spent your career burnishing your sterling reputation, you do not want to find yourself tethered to a company with ethics violations or problematic leadership (Hey there, Wells Fargo!).
To position yourself for board service, do all the things you do when you’re looking for a new position: leverage your network, take on projects and engagements that earn you professional attention, and let your allies know that you’re looking for a board position. Take a governance bootcamp so that you understand board argot and can position yourself accordingly. Research and follow companies whose strategic direction and growth trajectory will align with your skills, competencies and areas of interest. People officers, your time has come.