Pia Torreck, Equity Partner at Ingvardsen Partners – Executive Search | Board Evaluation | Business Psychology | Leadership Assessment | Executive Coaching
For many executives, the role of an HR director is often perceived as primarily focused on day-to-day activities such as recruitment, training, and employee relations. This perception tends to place HR at a lower management level, distanced from the decision-makers who typically occupy board seats. However, this view is being increasingly challenged as businesses recognize the critical role HR plays in shaping strategic direction and driving organizational success.
Fans of the Netflix series Billions will be familiar with Wendy Rhoades, a central figure behind Axe Capital’s success, and her profound influence on the CEO’s decision-making. While Billions is a work of fiction, real companies like Microsoft, Google, OpenAI, and Netflix also work strategically on culture, leadership, and talent retention—with remarkable business success.
In today’s digital age, most companies, including these tech giants, rely heavily on the engagement and innovation of highly educated employees. The strategic value HR brings to the table is now more apparent than ever.
The Role of HR in Business Success
What drives a company’s success? Is it culture, leadership, or the ability to attract and retain top talent? Companies that excel often credit HR’s influence in strategic decisions. When HR is integrated into the C-suite, it unlocks the full potential of the leadership team. Chief Human Resources Officers (CHROs) provide invaluable insights that help executives align their initiatives more closely with the CEO’s mission. This collaborative approach fosters a cohesive leadership team focused on long-term success.
HR’s Strategic Influence
When HR leaders participate in strategic discussions, they bring a unique perspective—balancing business needs with employee welfare. They can anticipate how decisions will impact the workforce and design initiatives that promote engagement, productivity, and retention. By influencing company culture, HR ensures that organizations not only attract the best talent but also foster their development and long-term success, which is essential for sustained growth.
CEO Perspectives on HR
New data from Accenture reveals that 89% of CEOs believe HR should play a central role in business strategy. However, only 45% feel they are creating the conditions for HR to lead business growth successfully. This gap underscores the need for businesses to better integrate HR leaders into their strategic planning processes, ensuring they have the resources and influence necessary to contribute to overall success.
The Future of HR in the Boardroom
As the business landscape evolves, the need for an integrated leadership approach becomes clearer. HR should not be seen merely as a support function but as a critical strategic partner. Companies that embrace this mindset are more likely to see improved alignment between their business strategies and their people strategies, driving enhanced performance. As more companies recognize HR’s value in shaping the future, we can expect a shift in how HR is perceived and utilized within corporate structures.
A New Generation of HR Leaders
Today’s business environment demands more from HR. A new generation of HR leaders is emerging, equipped with business acumen and psychological expertise. This combination allows HR to contribute meaningfully to both business operations and human behavior, making them indispensable at the strategic table.
Strategic Business Insight
HR professionals with a strong business background understand their company’s strategic goals and operational challenges. They align HR initiatives with broader business objectives, ensuring that talent management supports overall growth. This alignment is critical for driving innovation, efficiency, and profitability. With insights into financial metrics, market dynamics, and competitive pressures, HR leaders can contribute significantly to strategic decision-making.
Psychological Expertise
HR professionals with expertise in psychology offer deep insights into human behavior, motivation, and organizational dynamics. This knowledge is invaluable for developing leadership, enhancing engagement, and managing change. Their ability to address employees’ psychological needs results in higher job satisfaction, improved well-being, and lower turnover.
Bridging the Gap Between Strategy and People
The combination of business and psychological expertise enables HR to bridge the gap between strategy and people. This ensures that business strategies are not only well-conceived but also effectively implemented. HR leaders can foresee how changes will affect employees and create strategies to mitigate resistance and increase buy-in. This is essential for smooth transitions during organizational changes like mergers or restructurings.
Enhancing Organizational Performance
Incorporating HR at the strategic table leads to a more comprehensive leadership approach. HR can provide key insights into workforce trends, talent acquisition, and employee development—all critical for long-term success. By fostering a culture of continuous learning, HR helps companies remain agile and competitive in an ever-changing market.
No Seats Left at the Table?
As businesses evolve, so too must the composition of their boards and executive teams. The question of whether HR should have a seat at the table is part of a larger discussion on the roles of other functions—such as compliance, marketing, and communications—at the highest decision-making levels. This requires a strategic approach to ensure the board remains effective while leveraging the diverse expertise available.
Conclusion: HR’s Strategic Value
The case for HR having a seat at the table is undeniable. The new generation of HR leaders, with their expertise in both business and psychology, are well-positioned to drive organizational success. Their ability to align HR initiatives with business goals, understand human behavior, and bridge the gap between strategy and people makes them invaluable members of the executive team.
Companies that recognize and capitalize on this potential will be better equipped to attract top talent, foster innovation, and achieve sustainable growth. Giving HR a seat at the table is not just a progressive move—it’s a strategic imperative.
Source: https://newsroom.accenture.com/news/2023/ceos-identify-combination-of-data-technology-and-people-as-future-growth-driver-yet-only-5-percent-of-organizations-realizing-its-value
