Board oversight of talent has been saved
Board oversight of talent
Board Practices Quarterly, April 2023
By Natalie Cooper, Bob Lamm, and Randi Val Morrison
Prompted by evolving stakeholder expectations and demands, as well as the growing recognition of the impact of culture and talent on employee and corporate performance, companies are increasingly focused on new and emerging human capital-related topics, such as employee well-being, remote and/or hybrid work, and the retention, development, and promotion of employees throughout the organization, as well as on whether and how the board oversees these areas.
To keep pace, many boards have expanded their remits to include these topics, which traditionally have been solely within management’s purview. How this is being manifested in the boardroom is the focus of this Board Practices Quarterly. The report presents findings from a survey of members of the Society for Corporate Governance that sought to understand board and committee practices relating to oversight of talent and human capital matters and whether and how those practices have evolved over the past five years.
Respondents, primarily corporate secretaries, in-house counsel, and other in-house governance professionals, represent 129 public companies of varying sizes and industries.1 The findings pertain to these companies and where applicable, commentary has been included to highlight differences among respondent demographics. The actual number of responses for each question is provided.
Within the past five years, has board or committee oversight of talent and human capital been added or expanded? (125 responses)
70% of companies reported having added or expanded board or committee oversight within the past five years. Among large-caps, 80% reported oversight has expanded compared to 58% of mid-caps.
If the board or a committee added or expanded talent and human capital oversight within the past five years, have relevant governance documents (e.g., corporate governance guidelines, committee charter) been updated to reflect the broader scope? (116 responses)
Of those companies that added or expanded board or committee oversight within the past five years, more than 85% reported updating their relevant governance documents. Among large-caps, 92% responded “yes” compared to 80% of mid-caps.
How often are talent and human capital management topics on the full board agenda? (101 responses)
Respondents answering “every board meeting” included 18% of large-caps and 10% of mid-caps. Mid-caps are more likely to include these topics on board agendas “as needed only,” with 41% reporting this cadence compared to 29% of large-caps. Many respondents commented that an “annual” frequency is used.
1Public company respondent market capitalization as of December 2022: 51% large-cap (which includes mega- and large-cap) (> $10 billion); 43% mid-cap ($2 billion to $10 billion); and 6% small-cap (which includes small-, micro-, and nano-cap) (< $2 billion). Respondent industry breakdown: 28% consumer; 27% financial services; 21% energy, resources, and industrials; 16% technology, media, and telecommunications; and 8% life sciences and health care.
Small-cap and private company findings have been omitted from this report and the accompanying demographics report due to limited respondent population.
Throughout this report, percentages may not total 100 due to rounding and/or a question that allowed respondents to select multiple choices.
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