The Handbook of Board Governance, 2nd Edition

41Mind the Gap: How Human Resources Can Become More Integral to the Corporate Boardroom Agenda

Jay A. Conger

Henry Kravis Chaired Professor of Leadership Studies at Claremont McKenna College Faculty Chairman of the Kravis Leadership Institute

Edward E. Lawler III

Distinguished Professor of Business and Director of the Center for Effective Organizations in the Marshall School of Business at the University of Southern California

It is a time-honored adage that CEOs often repeat: “People are our greatest asset.” But it is more than folk wisdom. Indeed, research has shown a linkage between superior human capital management practices and superior shareholder returns. It is estimated that the value of intangible assets in the global economy in the year 2018 alone was approximately $57.3 trillion. Chief among these intangibles is human capital. Along with the intellectual and knowledge property it creates, human capital has become the most important intangible asset that a corporation possesses. Yet little time is spent on human capital issues in most corporate boardrooms.

In our research, we have discovered that boards focus on two human capital topics: executive compensation and succession. When boards take important strategic decisions, they rarely consider the overall workforce and talent management issues that are related to these decisions. The senior human resources leader, the chief human resources officer (CHRO), typically plays an advisory rather than a leadership role to ...