If the goals of HR and the goals of a board of directors are to attend to the best interests of a company, and that company comprises humans, a messy and flawed species, then alignment between HR and board could help to monitor everyone—not just those without a key to the C-suite.
Employees tend to believe that HR exists in the business to support and advocate for those who are managed. It is not. HR is there to protect the company under the current leadership’s direction.
There may be nothing wrong with that arrangement as long as the purpose of HR, which stands for human resources, is understood by all and that HR is able to do its job. But arguably neither of these is true.
Most employees don’t realize that when they go to HR with an issue or are advocating for their own welfare, HR is not exactly on their side. At the same time, HR is not at full liberty to protect the company from threat or contribute to the company’s overall well being and sustainability, if it isn’t able to act independently of leadership.
Some HR departments may be very evolved, but among a small sample size of Mighty Pluck staff this has not been seen to be the norm. Our experiences across a multitude of companies—including working at small to big companies; privately- or publicly-owned; and being managed, manager or executive leadership—represent a good amount of jobs.
Traditionally HR is a department that can encompass a broad variety of activities from:
- hiring and firing
- compensation and benefits
- legal issues
- labor relations
- learning and development
- ensuring a safe work environment
- supporting employees
Executing these last two items—ensuring a safe environment and supporting employees—can suffer because of how a typical HR professional reports into the business.
The responsibilities of HR might fall to one person, several people, or many people, depending on the size of the company. But regardless of how big the company or the HR department is, the actual person who heads up HR normally reports into the so-called C-suite. The C-suite refers to those with “chief” and “officer” in their title: chief executive officer, chief operating officer, chief financial officer, chief legal officer, and even chief human resources officer.
Although HR is sometimes allowed into this figurative suite of people who have Chief and Officer in their title, the chief human resources officer (CHRO) tends to report to the chief executive officer (CEO). (Beyond the US, where titles are not quite so inflated, this whole arrangement might be that the head of HR reports into the managing director.)
Reporting into the CEO is not unusual. Many chiefs and officers without “executive” in their titles tend to report up through the executive branch of a business. But unlike the chief financial officer who can use financial projections or profit and loss metrics to argue a case or influence a decision, the head of HR doesn’t have a lot of leverage with the CEO or the company.
Fostering a safe environment and supporting employees can suffer because of how HR typically reports into the business.
Instead of power, the head of HR is awarded a title that bursts with pride: People’s Champion, Chief Talent Officer, Chief Wellness Officer, Chief Happiness Officer, Chief People Officer. These boosted heads swell up their own departments in turn with friendly descriptions like: Human Relations, People Experience, Partner Resources, Employee Success, People Operations. Some describe their remit with terms meant to project force, like Human Capital Management (harsh, but maybe the most honest description of the profit and loss that the variability of working with humans brings to a company).
Between pillowy titles, euphemisms and a suite seat, employees are led to believe that HR is their direct mouthpiece for reaching leadership. Yet if HR were really effective and there to protect the long-term sustainability of the company, it would be more like a business partner—neither in the pocket of the employee nor leadership, but an independent liaison with both entities’ interest at heart. Because, a business and the people who make the business are co-dependent in a good way.
Take fictional Company Z, for example. Employees at Company Z have requested (and even deserve) a raise. Projections, however, do not show a level of financial confidence to justify this increase in ongoing cost to the business. Without the raise, employees could collectively leave and the business might falter. With the raise, Company Z may fail to meet payroll consistently over time. A competent HR department should be able to represent the employees with the finance and executive branches, while at the same time represent the business (finance and executive) back to the employees until a solution is found that neither sacrifices the workforce nor jeopardizes the long-term health of the company.
Some HR professionals may say that is precisely what they do now, and that may be a straightforward scenario for an issue like employee compensation. It gets tricky when the topic concerns the very people to whom they report. Whoever supervises HR is where the buck stops, and therefore, that person can control what surfaces or doesn’t surface at the business, to the board, or to the outside world.
Rot in a company is like a soft hum that wears at its soul. It’s not because no one says anything that no one can hear the hum.
Let’s look at a common issue that should be brought to HR’s attention: toxic culture. In an ideal world, HR would validate the issue, find the root cause and address it directly.
But say the root cause of toxicity turns out to be the CEO, after all the fish rots from the top (or the intestines, but intestines are where a toxic CEO would be lurking).
Now let’s imagine the Chief Happiness Officer walking into the chiefs’ suite, drawing down an espresso from the shiny new Gaggia, and launching into a discussion around how the CEO is causing a noxious workplace by shouting at employees in meetings, building political fiefdoms, and spreading fear.
This discussion is unlikely to occur around any issue that is ignored, nurtured or perpetrated by members of leadership. And there are many problems that can be known, encouraged or stemming from a business’ chiefs.
If the chief legal officer tends toward sexual harassment; if the chief operating officer is known to be discriminatory in hiring and workplace environment; if the chief finance officer was seen cooking the books; if the chief technology officer allows favoritism to dictate priority; well, you see? None of this behavior or conduct can be good for the long-term growth and sustainability of a business. Technically, it’s in everyone’s best interest that these issues are exposed and resolved. Otherwise, good employees leave, the brand can be tarnished, and the business can face legal risks.
But if the source or a contributing factor involves the same person to whom one should report the problem and that person has the ability to fire and punish, it makes it less likely that HR (much less employees) will raise the topic.
To address an issue that appears to be known but not considered urgent or important requires bravery from first the employee(s) and then HR. Even if those two entities do carry forth with their complaint despite possible retaliatory punishment, someone needs to remain employed and retain enough power to see the issue through to resolution.
We can think that all these problems eventually right themselves when an employee sues, but employees can tell you that is rarely the case. Bad actors continue in plain sight in companies where everyone knows and lawsuits occur but nothing changes.
Depending on how big the organization, how serious the crime, and what legal rights an employee has, one could blow the whistle and be protected by public outrage or the country’s laws. But a lot of rot in a company is one step below whistle blower; it’s more like a soft hum. And that hum, like all seemingly harmless hums, can wear at the soul of a company and its people. It’s not because no one says anything that no one can hear the hum.
With a role that is independent of the direct leadership of the company, the HR department could continue to act in the best interest of the employees and the business.
Whereas if HR reported to a board or an outside entity, then the interests of the employee and the business would align through HR, and the head of HR would be more like an ombudsperson or employee advocate. With a role that is independent of the direct leadership of the company, the HR department could continue to act in the best interest of the employees and the business.
The intent and responsibility of a well-functioning board of directors is to oversee an organization. Directors generally comprise former and current members of the business, as well as members not employed by the company, who bring objectivity and diversity of experience.
Among the board’s direct responsibilities which overlap with an HR head’s purview are:
- hiring and firing senior executives (especially the chief executive officer, managing director or executive director role)
- setting executive compensation
The challenge for board members is to know what is happening on a day-to-day basis within the company. This matters if an issue arises that is not being discussed by leadership, such as financial malfeasance, discriminatory hiring practices, or unsafe work environments. An HR head, functioning independently of the company’s current leadership, can provide deep-level insight and guidance to inform the board’s decision on hiring, firing and setting pay.
This is not a solve for all organizations. Public companies do have boards, but not all private companies or non-profits have boards. Sometimes a CEO sits on the board, which makes it awkward for an HR head to address an issue under the CEO’s leadership. Sometimes boards are flawed or act as a rubber stamp for company leadership.
But for companies that do have a well-run, independent board of directors, ongoing reporting and honest input from HR could help directors do their job well. In turn, employees could trust that their voice is represented at the highest level with less fear of reprisal from leadership.
With HR, employees and leadership all monitoring the business, there is greater likelihood that any malfeasance will be identified and solutions will be prioritized, leading to stability and sustainability.
The benefits extend to all those affiliated with the organization regardless of role or goal. After all an organization can provide an income, purpose, friends, a challenge, prestige, résumé fodder, growth, expense accounts, etc., but if it falters or ceases to exist, then it’s not much use to anyone.
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Robin Rusch
