The Rising Influence of HR in Corporate Boardrooms - Transforming Business Leadership

By the time you watch this video, Sam Altman may be the CEO again of OpenAI. But what could we learn from this entire situation? Let's talk about it, everyone. It's Anthony Honesto and this is my real time burn the box drop for this week after Altman, what could we have learned about the oust of CEO Sam Altman from OpenAI? I know everyone's talking about it, but I'm bringing an HR lens to this. I'm taking the opportunity to send a message to the business world. You need more HR people on your boards. That's the problem. Now, would that have solved this issue? I don't know. I don't know the specifics of what happened with this board, but I can tell you that if there was an HR person on that board, they would have been asking very different questions. Let's look at the numbers. What is happening with boards and HR people right now? I can tell you there's not enough and there's reasons why we're going to explore that in this video. So fewer than 3% of sitting directors on the boards of Fortune 1000 companies were former or current HR executives. 3%. That is a small amount. But what we're finding is over the last four years we have seen an increase. So that 3% also represents a 300% increase. So a couple of years ago it was much worse, 1%. If you look at the numbers, the irony here is that most boards, and there was a PwC survey rank talent and hiring and retaining talent as a major, major priority. 88% of say in this 2022 PwC board survey that hiring and retaining talent is very important. But yet here's the conundrum. No HR folks, or in this case, 3% of these boards are made up by HR folks. What would boards benefit from having an HR person? Let's look at the pros. And then of course we're going to look at why not. So one compelling reason is again, when you think about the value of companies and there's a great example of how the S and P value grown from tangibles to intangibles. And when we talk about intangibles, I've talked about this before, we talk about brand, IP and people. Now I will argue that all of it is about people. Your brand is created by people, at least for now, until AI can create brand your IP or your code or your software, again, created by people. So majority of company value is created by people. So having someone that is people focused and not just from a process perspective, but from an overall strategic perspective, given the fact that most boards are concerned about people and most value of companies these days is created by people, it just makes sense to have an HR person, to have an HR lens on discussions that are happening at board levels. So you can talk about risk mitigation, you can talk about core competencies, understanding market dynamics. As every company right now is moving into AI, I'm imagining that the HR person on the board would have told them, hey, there's going to be a lot of consolidation in terms of talent on here with the big players. And so we have to maybe think creatively on how we approach our own AI establishment or research and development. We're always looking at it from a people perspective. So what's happening in the market from a compensation perspective, where the company's going, what are we trying to tackle? And again, Ben from Revlio has changed my mind on headcount. The ins and outs of flows of headcount give an idea to or a signal to investors on where the company is prioritizing. That's a key factor. Where are we making investments and why are we making those investments? And then what's happening in the world that could cause us to, to, to miss our goals? If there's a talent shortage, we're seeing it in AI. There's already discussions of the same company, OpenAI, giving people $10 million packages to join their company. And I just think again, there's limited representation in HR and the importance of talent and culture really become very important, especially at the board level. And so having an HR person, super, super important to me it very obvious connecting talent to the business. So in most companies are going to have significant success in revenue and profitability by making sure that they're actually looking at talent and how it creates business value. Now let's talk about challenges. So why aren't there hr? Anthony, it's so obvious. You know, the boards are most concerned about talent, yet there's no HR people. 3% are sitting on boards. There's got to be something going on. And there is, I think there is one. A lack of understanding of really the strategic role of hr. And I think that has been evolving over time. But still there's a stigma of HR being the back of stage, the process, the compliance versus the strategic nature of it. I also believe there are unfortunately folks in our profession that aren't thinking strategically are still sitting in that process and compliance space. And I don't want to discount that. It's super important that the compliance and the processes work. If they don't work, none of it works. But it's still this, this, this understanding and the lack of understanding of the strategic role in business. I think it's also a lot of us in HR don't talk the language of business. And sometimes in cases where we're trying to build programs, we're not connecting the program to the business outcomes, we're talking it talking about in HR languages and not in business languages. I also think some board members is generally the construction of the board, unless it's a compensation committee, doesn't have the structure to include an HR person. I mean, normally boards have legal, have finance. There's typically a compensation committee where there is the HR person. But there's really not a structural focus on hr. And I think that needs to change from a board perspective. So. And I think, you know, unfortunately a lot of folks on the business side look at HR folks and don't think they have the business acumen. I think that's wildly changing. I think some of the smartest people that I know and Lattice actually had a really great advertisement post recently that said, you know, think and act like a CEO and a CEO, but do it from a human perspective. And that's what a CPO does. So I thought that was really good. So what can we learn from what's happened here? Do I think having an HR person on the board of OpenAI would have changed any of these things? Yes, slightly. The board is going to board, as the kids say, the board is going to do the things that they want to do. But if an HR person has a vote in whether or not Sam Altman was to be fired or not, I think there would have been discussions about the impact of that. And we're seeing it. You see it actually play out in real time. So whether or not you believe it, HR people should be on part of boards. You see the fallout here. You see majority of the OpenAI employees sending a letter saying, hey, we're going to leave unless you resign board and bring back Sam. So clearly they didn't understand the connection of the employees to their CEO and to the company itself into the direction that he was bringing. That's a big, big miss from the board. And now what's happening is again, by the time this recording is dropping, Sam may already be back in that CEO role. And the brand and the equity has taken such a hit right now when it could have been avoided if there was an HR person going, hey, how do we know what is going to happen? What is the people ripple effect of firing Sam Altman. So should HR people be on boards? Absolutely. That's my quick drop. We'll see you next time.