Some HR Tips For Directors

• Published date: 19 July 2023
• Subject Matter: Corporate/Commercial Law, Law Practice Management, Corporate and Company Law, Directors and Officers, Shareholders, Human Resource Management , Diversity, Equity & Inclusion
• Law Firm: lus Laboris
• Author: Mr Jorge Toyama (Vinatea y Toyama)

Boards often take an interest in the 'soft' parts of HR, things like culture, values and branding. But could an increased focus on the 'hard' parts of people management be another important way to help make a company a better place to work?

The board of directors plays an essential role in any organisation. Overall strategy, improving shareholder value, maintaining healthy finances, the appointment and oversight of senior management, regulatory compliance and efficient risk management are all responsibilities of the board. In addition, directors are often responsible for maintaining good relationships among shareholders and other stakeholders.

Increasingly, HR matters are also dealt with at board level. This can include people management but also strategy and innovation. Boards often approach people management only from the 'soft' side: from purpose and culture, climate and values, talent and succession planning, inclusion and diversity as well as employer branding. In addition, board members often participate in committees on talent, compensation and benefits, employee satisfaction and human resources management.

It is rare, however, for directors to actually take a detailed look at symptoms of a company's problems when it comes to people management. And this is in spite of the fact that the identification of these problems provides key information for strategic talent management. Paying attention to the 'hard' parts of HR means thinking carefully about a company's common internal grievances, most frequent anonymous complaints, typical lawsuits and regulatory action, the reasons key personnel leave the company, the reasons for a walkout or strike, and levels of (dis)satisfaction.

Staff issues affect all businesses, and therefore the value of any company. A sale, a loan, a takeover bid, and the transformation of operational processes are all affected by workforce contingencies. A long strike, a poorly structured outsourcing, a fatal accident, the dismissal of a pregnant woman, and problems with community workers, for example, can not only lead to fines and liability but also affect operations. The company's reputation and financial results may be affected. In certain cases, even criminal sanctions may come into play.

The best strategic plans, high-impact measures and effective connections with employees are generated by identifying and paying attention to conflict and employee dissatisfaction. Understanding complaints and grievances can help devise...