Even as unemployment rises some, thanks to layoffs and hiring freezes as a result of the pending recession, it remains challenging to retain the best talent—and given how expensive hiring continues to be, that’s a significant board issue, says Chris Beall, founder and managing partner of NOVA Infrastructure, a director at Integrated Waste Solutions Group and Hawthorne Global Aviation, and former director at Amtrak. In the following Q&A Beall lays out some of the biggest challenges his boards are facing today and his advice to directors who want to help management through a volatile period.
What are some of the big challenges you see ahead for companies and boards?
The availability of workers and labor is a really important and significant challenge for many companies, especially in the infrastructure sector where we operate. Retention has tremendous value relative to new hires who have to be trained and frequently have limited experience in the industries in which they’re starting. The retention rate for many of the blue-collar jobs that are involved in operating a company [like ours] is often lower just by the nature of the workforce and the kind of labor.
Inflation is a problem, but I think related to inflation and maybe more of a problem, the supply chain challenges that we see that, uh, that stem both from c and from response to the Ukraine invasion, it’s, it’s both of those have combined to create a rethinking of supply chain supply chains that can be very challenging. And then the increase in interest rates for companies that have leverage in their capital structure. Also, as more and more of our business lies in and is operated by computers and electronics, cybersecurity is increasingly important and it’s a particular challenge because the expertise around cybersecurity is a different kind of expertise than many boards are used to hiring for and used to focusing on in operations. And it’s a particular challenge to find that expertise at the board level.
What can the board do to help?
I think the first thing directors have to realize and understand is that they’re not managing the company. So you’re constrained by the number of tools that you have to help companies. First and foremost, directors can be helpful by connecting companies with expertise and helping them think beyond the day-to-day challenges that they frequently have to deal with. Sometimes it can be hard to lift your head up and find time to focus on the strategic things that will result in long-term success.
So it’s both setting priorities and helping management with securing and allocating the resources necessary to deal with some of these problems. That’s the best thing a board can do is to provide resources, make connections with people who have expertise or experience in the areas the company’s focused on, and then also encourage the company to make sure that they secure and allocate resources to these areas and that they’re not just focused on the day-to-day firefighting that is inevitably a part of a management team’s job.
Talent acquisition and retention can be both a short-term fire and a long-term strategic goal. How can the board be most helpful here?
Boards really have to set a priority around retention and culture and keeping the well-trained workers that they have in their employ and that are part of the teams in which they operate. The best tool for recruiting is a great culture and a team that really values the work they’re doing and values the company they work for, because those people will be your best recruiters. They will self-advertise and be out in the market introducing you to new candidates and potential new workers. It’s also important to appreciate that no matter how good a company is, there will be some inevitable level of turnover, so make sure that there are sufficient cushions and bench strength to handle that. And then, finally, in the current environment, really sound out the market and understand what your competitors for these workers are doing. Companies have to know the market, especially with the inflationary pressures that we have today, and really focus on retention versus trying to cut corners to be below-market on comp, because having to replace employees after they leave is really, really inefficient. We talk about it constantly—culture, culture, culture—and how having a workforce that’s engaged, that is valued and that is happy is really one of the best tools we have.
How as a director do you get a clear window into culture?
There are a number of tools you can use. Culture surveys, net promoter scores— there are things you can do formally to assess culture and companies should do those. The boards that I’m on do use those tools to assess culture. But I think importantly, culture starts at the top. So just seeing how managers comport themselves, seeing the things they set on the agenda, because inevitably companies will focus on the things that are measured and talked about. And so setting agendas in board meetings and talking to not just the C-level executives in the company, but really having vice presidents and other levels of employees in the company come in and interact with the board is very important. In many of the infrastructure companies I’m involved in, we also have the chance to actually use the company’s product. So riding trains, using waste services, being out in the field, walking through warehouses and talking to employees. If we’re able to do that consistently and outside of what I would call the manufactured opportunities for interaction, so really getting to understand what the companies are doing day to day, that’s critically important as well.
And then finally talk to customers. I should maybe use that a little bit euphemistically because there’s lots of places now customers can provide feedback. There’s online services, there’s surveys, there’s chat rooms and blogs. And so understanding what people are saying about the company and the market also I think can be very helpful. Because sometimes as a director you don’t get the average customer experience when you use a product. So finding out what the average customers are saying about the company is also important.