The Handbook of Board Governance, 3rd Edition

42Missing in Action No Longer: Why Human Resources Is Integral to the Corporate Boardroom Agenda

Jay A. Conger, BA, MBA, DBA

Henry Kravis Chaired Professor of Leadership Studies at Claremont McKenna College

Edward E. Lawler III, BA, PhD

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 chief executive officers (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 2022 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.

Until recently, however, time spent on human capital issues in corporate boardrooms was surprisingly little—often limited to a once-a-year briefing. A confluence of events, however, is amplifying the attention to these issues. A key driver has been the COVID-19 pandemic. Its profound impact on the workforces of most corporations raised alarms at the board level. For example, 47.8 million individuals in the United States quit their jobs in 2021, the highest number on record. The Great Resignation ...