News: HRs are increasingly entering boardrooms: Allegis Partners Report

Leadership

HRs are increasingly entering boardrooms: Allegis Partners Report

By the end of 2021, HR leaders held 250 seats on 242 boards, with 52% of appointments made between 2019-2021, and with 31 leaders sitting on two or more boards.
HRs are increasingly entering boardrooms: Allegis Partners Report

The structure of the new workforce has been evolving since the onset of the digital transformation and pandemic. This has significantly increased the functions on the plates of the HRs. Consequently, the role of HRs has also evolved unlike ever before. 

According to a new report from Allegis Partners, between 2017 and 2021, the number of appointments of HR leaders to corporate boards increased by 300%. Its analysis is based off the Russell 3000, which represents 97% of the U.S. equities market by capitalization and identifies all HR leaders who served as a board directors of a Russell 3000 Company as of December 31, 2021.

The official report states that by the end of 2021, HR leaders held 250 seats on 242 boards, with 52% of appointments made between 2019-2021, and with 31 leaders sitting on two or more boards. In total, 8% of Russell 3000 boards count at least one HR leader among their directors. While HR experts on boards remain outnumbered by management and financial executives, their growing presence signifies an increasing interest from companies to prioritize talent and human capital-related issues.

Some of the important findings from the report are:

  • Diversification of board: 89% of the surveyed HR leaders on board are diverse by gender, race, or ethnicity. Specifically, 78% (or 164) are female – and of the 47 male HR leaders on boards, 49% are diverse by race or ethnicity.
  • More than half are first time directors: Data states that about 60% of the surveyed leaders are first time directors. Over time, companies have increasingly recognized the value of HR expertise in the boardroom and have been more willing to recruit HR leaders, even if they lack prior experience serving on a board. While in 1991, the three-year running average of board seats newly awarded to HR leaders was just 0.7 seats per year, it has surged to 51 seats per year as of 2021.

The events of the past three years in particular have been key drivers of demand for HR talent on boards. Between 2016-2018, 33 HR leaders were appointed to NYSE company boards – a figure that jumped to 77 leaders in the subsequent three-year period, between 2019-2021. Similarly, between 2016-2018, 30 HR leaders were appointed to NASDAQ boards, which jumped to 71 leaders between 2019-202

Commenting on the report, Keith Meyer, Global Practice Leader – CEO and Board Practice said, “Our report shows that not only are corporate boards recognizing the value of having human capital expertise in their ranks, they’re taking significant action to bring HR leaders into the boardroom."

Keith further added that in the past, HR leaders may not have been considered as strongly for board appointments due to several factors. However, companies are now demonstrating that this concern pales in comparison to the unparalleled value and unique perspective that HR leaders bring to board discussions involving their organizations’ most significant people-related challenges. "This has become a moment for the talent and expertise of HR leaders to truly shine in the boardroom," added Keith. 

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Topics: Leadership

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