In today’s corporate environment, the importance of human capital is gaining recognition, and HR leaders are becoming key contributors in boardrooms. As businesses shift their focus toward intangible assets, the strategic importance of human capital—reflected in the knowledge, skills, and capabilities of the workforce—is central to creating and sustaining value.  

This shift reflects a broader understanding of the role of culture and people in achieving strategic objectives, highlighting the need for HR’s insights to shape organizational direction. This article explores the role of HR leaders in the boardroom, focusing on their contributions to strategy and culture. 

Human Capital as a Strategic Priority 

Traditionally, board members focused primarily on tangible assets and financial performance. However, human capital now plays a central role in driving the market value of organizations. This is particularly evident in the S&P 500, where intangible assets constitute a significant portion of corporate value.[i] In response to this shift, HR leaders have transitioned from traditional roles to becoming strategic advisors, ensuring workforce strategies are central to achieving organizational goals. 

Organizations that prioritize workforce strategies see stronger financial performance, greater adaptability, and enhanced resilience.[ii] This development underscores how workforce management is now integrated into corporate governance, making HR a key driver of competitive advantage. 

HR’s Role in Workforce Strategy  

Effective boards recognize that a strong talent pipeline is vital for long-term success. HR leaders play a crucial role in identifying skill gaps, designing reskilling initiatives, and ensuring that organizations remain agile in response to industry changes. This agility, driven by proactive workforce planning, ensures that organizations can adapt to market demands and technological disruptions. 

Beyond talent strategy, HR leaders are instrumental in mitigating workforce-related risks, including compliance issues, reputational challenges, and disruptions. For instance, the COVID-19 pandemic highlighted HR’s leadership in creating remote work policies and prioritizing employee well-being. These proactive measures not only safeguarded workforce stability but also enhanced organizational resilience.  

In addition, HR leaders play a critical role in developing and monitoring workforce metrics that align with organizational priorities. Examples include measures of diversity, employee turnover rates, and well-being scores, all of which have become essential to board oversight. By continuously refining these metrics, HR leaders ensure alignment with broader goals such as sustainability and inclusion. These metrics also enable boards to assess workforce health and make informed decisions. 

The Board’s Focus on Culture: Embedding Culture into Governance  

Organizational culture has become a key area of focus for boards, serving as a critical driver of performance and resilience. Acting as a source of coherence and continuity, culture helps employees interpret and navigate their environment, contributing to organizational success. Companies with well-aligned cultures consistently outperform their peers in areas such as employee engagement and customer satisfaction. 

HR leaders are instrumental in embedding cultural priorities into governance. They provide actionable insights into the cultural dynamics that drive innovation, creativity, and collaboration, ensuring culture aligns with organizational goals. By helping boards shape and refine culture, HR leaders foster a climate conducive to long-term success and resilience. Their unique position allows them to bridge the gap between cultural values and strategic objectives, turning intangible cultural elements into measurable assets. 

A company’s culture, rooted in shared values and beliefs, directly influences outcomes such as talent attraction and retention, brand recognition, and stakeholder reputation. This elevates culture from a reflection of organizational identity to a strategic lever for success. Boards increasingly recognize culture as a strategic asset, essential for addressing complex challenges like mergers, leadership transitions, and diversity initiatives. 

To ensure culture’s impact is measurable and actionable, boards must adopt frameworks cantered on meaningful engagement, inclusivity, and professional growth. Metrics such as engagement scores, diversity benchmarks, and innovation indicators provide critical insights into cultural health and alignment with strategic goals. HR leaders play a key role in developing these metrics and ensuring they inform board-level discussions and decisions. 

Challenges and the Path Forward 

While HR leaders’ contributions are increasingly valued, challenges remain in ensuring their perspectives are fully integrated into board discussions. In some organizations, HR is still perceived as a support function rather than a strategic partner, limiting their influence. To address this, HR leaders must move beyond operational contributions and clearly demonstrate how investments in human capital drive business outcomes. 

Workforce analytics, such as turnover trends, engagement scores, and diversity metrics, can serve as evidence of HR’s strategic impact. By presenting these insights through the lens of organizational performance, HR leaders can strengthen their credibility in the boardroom.  

As organizations face increasing complexity and rapid change, the boardroom’s role is expanding. Boards are not only responsible for governance but also for shaping long-term strategy and ensuring that culture and workforce capabilities support organizational goals. 

HR leaders are integral to this effort, bridging the gap between talent strategies and business objectives. By emphasizing the importance of human capital, HR leaders help ensure that workforce strategies align with broader corporate goals.  

Article by Didier Cossin, IMD Professor of Governance, and Yukie Saito, IMD Senior Research Writer. Didier Cossin is the author of High Performance Boards: A Practical Guide to Improving and Energizing Your Governance, out now, published by Wiley  

[i] Ocean Tomo, Intangible Asset Market Value Study. 2020.   

https://oceantomo.com/intangible-asset-market-value-study/ 

[ii] McKinsey & Company. April 15, 2024. Increasing your return on talent: The moves and metrics that matter https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/increasing-your-return-on-talent-the-moves-and-metrics-that-matter?utm_source=chatgpt.com