Tackling Human Capital in the Boardroom: Why HR Expertise is Essential

Board members know that a business strategy is only as good as the organization’s ability to execute it. Which translates to having the right people in the right place at the right time to get it done. Which comes down to Human Resources (HR).

But despite the centrality of human capital to an organization’s success, HR expertise remains critically underrepresented in boardrooms. Data from recent assessments carried out a the Singapore Institute of Directors reveal that average scores in human capital competencies fail to meet a passing mark, and lag behind other areas by a significant margin. This stark gap highlights a real need for development in HR understanding if boards are to effectively oversee and guide the people strategies that drive long-term value. This, despite the fact that, when asked, most board directors would feel that they understand HR issues and, furthermore, that their HR management teams are not well equipped to address strategic issues.

From my perspective, having served on multiple boards, advised organizations on HR strategy, and chaired HR committees, I’ve seen that many boards are prepared to tackle financial and governance challenges head-on. Yet, they are often far less equipped to manage human capital strategy, risk, and workforce planning with the same rigor. This is a strategic vulnerability that can affect everything from talent retention and culture to corporate reputation and resilience. 

Here are three key areas where boards need to direct their focus if they’re serious about embedding human capital considerations into their governance framework:

1. HR as a Strategic Enabler of Business Success

Effective HR goes beyond recruitment, compensation, and engagement; it is a powerful lever for achieving business strategy. When HR is strategically aligned, it can drive workforce capabilities to meet organizational goals. Yet, for HR to act as a true strategic partner, boards must be directly involved in setting expectations for the people side of strategy. This means holding HR accountable not just for filling roles but for building a workforce that is adaptable, skilled, and aligned with the company’s vision.

From my experience, boards that take a proactive stance in guiding HR’s role in business strategy attain better  results. They oversee workforce readiness for future challenges, support a culture that aligns with corporate values, and ensure that employee engagement is a tool for sustaining high performance, rather than an end onto itself. 

In future blogs, I will explore how boards can elevate HR to a core strategic role, creating a synergy between business goals and the workforce that powers them.

2. The Need for HR Expertise to Address Human Capital Risks

Today’s board responsibilities encompass a broad spectrum of risks, with human capital among the most complex. This includes risks associated with succession planning, workforce agility, compliance, ethical conduct, and the rapidly evolving expectations around hybrid work and digital transformation. Yet, it’s precisely in these areas that board competencies in HR are weakest, as shown by the test assessment scores mentioned earlier, where human capital scored consistently lower than other board-level competencies.

When boards lack HR expertise, they may underestimate risks that, if unaddressed, can expose the company to reputational harm, disrupt operational continuity, or lead to missed business opportunities. 

A recent case in point involved a board-approved expansion plan that didn’t factor in hiring and training needs within the proposed timeline. The result? The company’s growth targets were missed, and share price suffered as a consequence. By strengthening HR oversight, boards can prevent similar scenarios and ensure that their strategic goals are supported by well-prepared people plans.

3. The Strategic Imperative for Board-Level Workforce Planning

An often-overlooked board responsibility is the alignment of strategic workforce planning with business goals. While most boards monitor financial and operational metrics, few have a structured approach to oversee the talent pipeline. This oversight gap is risky; if an organization lacks the right talent at the right time, even the best business strategies will falter. Boards need to press for more rigorous workforce planning beyond the c-suite, challenging management’s assumptions around talent availability and assessing whether HR is equipped to meet the company’s future talent needs.

For instance, boards should ask: Are we positioned to attract the skills required for emerging challenges, such as digital transformation? Are our succession plans for key roles robust enough to withstand sudden changes in leadership? By actively engaging in these questions, boards help ensure that workforce planning isn’t reactive but anticipates future demands. 

In upcoming posts, I will discuss best practices for incorporating workforce planning into boardroom discussions, enabling organizations to build a resilient talent pipeline aligned with their strategic ambitions. I will also dive deeper into examining specific steps boards can take to bolster their human capital oversight, and how HR professionals can ready themselves for board-level roles. 

For boards committed to making HR a strategic asset, it’s time to close the knowledge gap and bring HR into the heart of boardroom discussions.