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WORKSPAN
WORKSPAN DAILY |

Human Capital Management and the Changing Nature of Work

The nature of how organizations operate is changing and it has accelerated on two fronts from the pandemic and increasingly urgent calls for diversity in the workplace. However, how the workforce is managed and compensated has not kept pace with these changes.

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A report from WomenCorporateDirectors Foundation (WCD) and Pearl Meyer warns of the risks associated with this disconnect and offers a road map for boards to help organizations transform their approach to human capital management.

The report, which was researched and written with the input of 24 commissioners from leading public corporate boards and governance-focused industry and academia, identifies three areas that represent transformational opportunities for both boards and management teams to undertake.

“Three key areas have been identified where boards and management can work together to bring needed change: employee engagement, organizational structure and process, and leadership,” said David Swinford, president and CEO of Pearl Meyer. “Now more than ever, we need transformative leaders who can engage a highly diverse workforce in new ways. The compensation committee, with its increasing responsibility for leadership development in addition to rewards and incentives, has a significant role to play in this evolution.”

The three areas the report identified are:

  • The Changing and Disengaged Workforce: Organizations are asked to create a sense of purpose and help balance work/life demands, build an environment of continuous learning, and actively forecast the workforce skills and characteristics for the future.
  • Outdated Organizational Structure and Processes: Near-term solutions include actively moving away from command-and-control style models toward a more collaborative environment, leveraging the push for flexibility to create a fit-for-purpose workforce, and selectively and strategically deploy technology that builds efficiency.
  • A Stagnant Leadership Profile: Directors and senior managers can renew their commitment to succession planning and leadership development, looking long-term beyond just the C-suite and cultivating a diverse executive talent pool with unique experiences, skills, and attributes necessary to enact business strategy.

The report also notes the role of the workforce is evolving and that employee expectations of the companies they work for have become stronger and employees have much greater influence.

“Directors are recognizing that addressing workplace shifts and human capital transformation must become a priority to ensure the long-term sustainability of the organization,” said Susan C. Keating, CEO of WCD. “Boards have a fiduciary duty to tackle the heightened risk of employee disengagement and unproductivity. This report gives boards a roadmap when thinking about how to approach their human capital and leadership needs over the months and years ahead.”

The report also highlighted four ways in which the events of 2020 have accelerated change at organizations:

  • There’s a more urgent need for clear and deliberate succession plans, extending to the board and including emergency, mid-term, and long-term plans and clearly laid out rules and bylaws for the board regarding the quorum.
  • Racial and social equality has joined gender balance as an imperative.
  • Leadership teams now must have the capability to lead through uncharted and difficult times.
  • There is a more obvious opportunity and need to upgrade leadership talent using a new set of characteristics and skills matrices that better align with the evolving business and workforce needs.

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