Even before Covid wreaked havoc on the collective American workplace, boards were ramping up the amount of time they spend on human capital strategy, thanks to retiring boomers, the diversifying workforce and a widening skills gap. Post-pandemic, talent shot to the top of the list of concerns in the boardroom, as companies sought to stave off the Great Resignation by building and strengthening pipelines capable of executing on strategy, not only now but in the coming months and years.
“Workers hold a lot more clout these days, and they’re demanding better leaders and better people managers,” says Mirian Graddick-Weir, who sits on the boards of Yum! Brands and Booking Holdings.
Graddick-Weir has had the opportunity to watch that progression over the course of her career: Before her retirement in 2018, she spent more than 20 years, collectively, managing HR at Merck and, prior to that, at AT&T. Back when she started in the field, CHROs were viewed as “functional experts,” she says, and whether on recruiting or training or staffing, HR heads were thought of as experts at managing those processes, whereas now they are expected to be accountable for outcomes. “Today, CHROs are strategic business partners with a strong and very influential seat at the table, both in the C-Suite and on boards,” she says.
In fact, the share of directorship roles across all companies in the S&P 1500 with specific HR skills increased to 19.4 percent in January 2022, compared to 11.3 percent two years ago, according to ISS ESG, the responsible-investing arm of Institutional Shareholder Services. “Everybody always knew that talent was critical, but now they’re beginning to realize that it’s essential in terms of their being able to execute their business plans,” says Graddick-Weir.
As she explains in the following interview, boards would be smart to recruit HR talent to help monitor culture, succession and D&I progress—but it won’t be enough to invite those candidates onto boards: “You have to make sure you’re listening.”
What are the biggest talent-related challenges you see for boards and management teams right now?
With the Great Resignation, with skills shortages, the expectations of workers that have just changed dramatically, boards and C-Suites are all wrestling with that. And [add to that] the social justice issues after George Floyd, diversity, equity and inclusion and the growing recognition that it’s great to have a diverse workforce, but if you don’t deal with inclusion and belonging and trust, you really don’t have the hearts and minds of people.
The sheer amount of time that C-Suites and boards are spending dealing with talent issues has grown significantly from the time when I first joined boards to now. There’s not a board meeting where we aren’t spending a good chunk of our time on talent, asking the questions about whether we have the right people, what’s happened to the talent since the last time we got together. How are they doing on their diversity goals and commitments? Do we have the right people in the right roles? It’s a huge part of not only the board agendas, but also comp committees that are now delving much deeper into talent than they did before.
Some of those talent goals are harder to quantify than others. How do you, as a board member, feel comfortable that you’re providing adequate oversight?
[You start by] sitting down with surveys, engagement scores and culture scores, and you look at cuts by gender, ethnicity and levels and that gives you an indication of what’s happening in the culture. Most companies that have diversity goals and strategies in place are now beginning to put in metrics, so as you go from one quarter to the next, you can look at how well the company is doing against those metrics.
But both of the boards I sit on have been really good about allowing board members to have more direct interactions with leaders beyond the boardroom presentations that are very orchestrated. On one board, for example, we have dinners where they’ll bring in leaders from the brands that will be presenting, sprinkle us throughout and allow us to have an entire dinner and interaction with the talent without the CEO sitting at the table. Another board I’m on has what they call the Seat at the Table program, where they identify around 10 high potentials annnually who are a couple of layers below the C-Suite, and they actually have sessions where we’re allowed to engage with those individuals, both as a group as well as one on one. So management is finding ways to ensure that board members have a chance to interact with leaders a couple layers down in the organization. You can kind of tell whether it’s authentic just by the nature of the conversations, and when you rotate around and talk to different people, you can see whether there’s consistency or inconsistency.
What are some of the questions you ask?
I would typically ask them, from where they sit, what do they see as the key challenges in the organization? What are they proud of? What in their mind is going well, and where do they see some of the gaps? Typically, if you’ve got leaders who are authentic, they share, “Here are some of the gaps, but here’s what we’re doing to mitigate those gaps or risks in the business.” Because as board members, we all know [the gaps] are there.
The other thing is that from the CEO’s perspective, you probably have some companies where CEOs and the teams are a little nervous, and so they may encourage the teams to put their best foot forward. But the CEOs I’ve worked with have said, “Hey, look, we’ve told them to share what’s on their minds, share the issues and challenges they’re having.” Because both my boards are very global, so you’ve got people sitting around the world who oftentimes are having different challenges in different markets. It takes the confidence of the CEO and the senior team to allow them to talk in an unfiltered manner and share with the board. Because at the end of the day, we’re all there to support the company and help it be successful.
As we know, culture resides not just at the top levels but several layers down in the organization. How do you get a feel for that?
I’ve learned a lot over the course of my tenure both as a CHRO and now as a board member, and there are a couple of important ingredients. One is, if you don’t have the CEO and the leadership team’s commitment, it’s very, very hard to get DE&I off the ground in any really meaningful way. So that’s a must-have. Another thing I’ve learned over time is that you’ve got to drive that accountability down into the organization. It can’t just sit at the leadership level, because the reality is people managers have more influence on a day-to-day basis as to the experience that colleagues have in an organization. I’m sure you’re well aware that the reason many people leave is their immediate supervisor or people manager.
One of the things people are beginning to do now that I believe will have some sustainability over time is trying to develop inclusive leaders at all levels of the organization. There used to be a time when you’d take people through unconscious bias training and things of that nature, but people are beginning to realize that had a very minimal effect. But if you can now begin to build the skills and the capabilities throughout the organization, where leaders learn how to create a culture around them of inclusion and belonging, that to me becomes a little bit more sustainable beyond just the top commitment.
And then those companies that have metrics in place that are focused on outcomes, they actually pay attention to what is happening, not just from a representation standpoint, but also what is happening from an inclusion and belonging standpoint, and they measure it and track it over time. Some companies are beginning to reward improvement in DE&I. So, I think you’re right that accountability has to get cascaded down. It has to get role-modeled at the top and cascaded down throughout the organization. There is a skill and capability among leaders and people managers that is about, how do I, as a people manager, learn to not just build a diverse team, but how do I make sure that I know how to leverage that diversity so that people feel that their voices are heard at the table, that their contributions are valued and that they can grow and learn?
What are some of the metrics a company can use to measure inclusion as opposed to diversity?
Well, it’s interesting that you would ask that question, because I think that’s still a work in progress. After the George Floyd murder, so many CEOs did what they called “listening tours.” And they had been tracking their engagement and their culture surveys. But I think they were shocked that they had people sitting in companies for very long periods of time who didn’t feel like they belonged, and where there was a minimal amount of trust. That caused [CEOs] to say, “Hmm, okay, people are responding to these surveys, but were they really speaking up and saying what was on their mind?” So that’s why I say it’s evolving, because people are trying to figure it out.
To me, one of the biggest indicators is, do people feel safe speaking up and saying what’s on their minds? During these listening tours, there was this period of time where people felt safe. What companies are trying to figure out is, how you maintain that. How do you create a culture where people are willing to speak up and say what’s on their mind? So, there are always going to be surveys, but you also have to supplement those with focus groups lower down in the organization, where you can keep your finger on that pulse in terms of the climate. Also, whether people are willing to stay versus leave, that’s another indication of whether you’ve got this inclusive climate. If people are leaving and your exit surveys suggest that it just wasn’t an environment where they felt it was trusting and belonging, that’s another indicator.
It sounds like you would need to get a bit granular with the people who are leaving, because it can be very specific to their departments.
Yes, exactly. That’s why I say it’s a work in progress. I know there are a lot of people focused on it. The reality is that while we have diversity, equity and inclusion, what many companies focused on was representation and trying to see if they could get a racially, ethnically, gender-diverse group. What’s become apparent now is that there’s still work to be done, especially in the more senior ranks, around diversity, but you could have people sitting around the table who are diverse who really don’t feel like they belong or their voices are being heard. Some companies are now starting with inclusion—they’re saying you really have to start with creating an inclusive climate where people have equal access to opportunities, and then diversity will follow.
How can boards ensure that their diverse directors are not only invited to the party but asked to dance? What does real inclusion look like on a board?
I love that question because having been on boards for years now and oftentimes being the only diverse person on the board, it’s been an interesting journey. Some boards have people who know each other already, they play golf together, there are already preexisting relationships—and then you appear, and perhaps you don’t have those same relationships. So, it’s one thing to say I have a diverse candidate on the board, but if you’re not leveraging our voices, you’re really not getting the benefit.
How can the lead director do that better?
The reality is there are some board members who just talk more than others, especially if they’ve had longer tenure on the board. One technique on one of my boards, and this has just been so effective, is that in the executive session, instead of just allowing people to speak up on their own, the lead director goes around to each person on the board and gives them an opportunity to reflect on the meeting. I find that to be a very powerful tool, because there are certain people who may not necessarily speak up, but when you know that you’re going to be given an opportunity to provide input, it gives everybody sort of an equal opportunity to share their thoughts and their reflections.
I’ve often also seen board members and CEOs call on board members if they know that they’ve got an area of expertise that they just want the rest of the team, especially the management team, to hear about. They’ll say, “Well, Elaine, I know that you operated in China and some Asian markets, what do you think about this particular issue?” Again, not waiting necessarily for somebody to speak up.
By the way, it’s been particularly challenging with these virtual meetings. On the one hand, the chat function has allowed people to type in their questions, so you probably get more questions than perhaps before. But I also think there’s this kind of distance, and if you’re a new board member and you haven’t even met the people in person yet and you’ve been sitting on a board for an entire year and haven’t had the opportunity to meet people, it’s difficult. You have to be proactive and find particular techniques to make sure that everyone’s voices are heard.
On the flip side, have you ever felt, as perhaps the only woman or the only woman of color on a board, the pressure to be “the expert” on diversity matters?
I’ve faced that—when you’re in a CHRO role and you’re a diverse person sitting at the table, and all of a sudden the topic around diversity opens up and they all turn to you. And I remember turning to the CEO in one of my coaching sessions to say, “You shouldn’t look to the woman when there’s a women’s issue that comes up—everybody around the table has accountability.” It can be an uncomfortable role to sit in, but again, one of the skills you develop as a good board member is to ask the right questions. So, it’s interesting, because there are times when they turn to you and they want your expertise because they know you’ve had a lived experience that maybe they haven’t had, and they’re seeking to understand.
In situations like that, there’s really value in having your voice at the table. You’ve got to have the courage to speak up. But the fact that they want a better understanding and experience that other organizations are having that they haven’t had and to really be able to understand it is a good thing—because it teaches people to be much more empathetic and be able to stand in other people’s shoes. If you’re in a situation where they’re just putting the burden on you, then that’s up to us to say, “Well, I don’t know, Bob, what do you think?” Or, “What has your experience been on other company boards that you’ve sat on?” So, it’s a balancing act. I feel like sometimes we owe it to our fellow board members to share our lived experiences. But they shouldn’t look to us all the time to either come up with solutions or solve problems, if that makes sense.
Do you have advice for the non-diverse board members at the table on how to create an inclusive boardroom and how not to turn off certain directors?
That’s a great question. Boards are getting much better about policing each other, if you will, so that if there’s a director who is being overly dominant in the discussion or creating a kind of gotcha environment, or if you see board members who are crossing that altitude line and going into more of managing vs. more strategic oversight, it’s beholden on all of us as board members who care about our colleagues to pull them aside and just say to them, “Maybe think about how you made that person feel,” or, “You might want to think about doing this differently.” So, there’s some accountability on individual board members to make it a very effective board to give each other feedback.
The other thing is most boards now have a board evaluation process, and these evaluation processes have evolved from being kind of a check-the-box exercise—“Yeah, we’re great, aren’t we? Everybody’s contributing, let’s give each other all As”—to being much more candid now about what’s working and what’s not working and where we need improvements. As the nom/gov chair, I’ve actually called individual board members to do the board evaluation to supplement the surveys and would give them the opportunity to articulate again what they think is going well and what they would like to see done differently in order to enhance the effectiveness of the board.
But just think about the pressure that’s on boards now versus 10 or 15 years ago, and the accountability and oversight of the risks. Board members are working harder than ever, and I think everybody wants to make sure that the board is effective. I also think that boards are finding creative ways of sort of exiting board members who may not necessarily have hit their tenure requirements because they need a certain skillset on the board.
And it seems like the skillsets that you need are constantly evolving.
Yes, they are, and that almost gives boards and CEOs a bit of a rationale for looking at that profile and saying, “Hmm, maybe we don’t have all the right skillsets,” and then approaching particular people, not because they’re performing poorly, but, geez, we really need to update and refresh the board. And so there’s no longer this expectation that everybody’s going to sit on the board until their tenure expires.
How do companies benefit from having a sitting HR chief on the board, and what should they be looking for in a candidate?
First and foremost, you really want somebody who can weigh in on not just the HR issues but on all issues, who can ask all the right questions and are really broad business thinkers. But beyond that, very much like finance or tech, who have specific expertise, CHROs bring a fair amount of expertise on succession planning. Most have been through succession planning in their own companies. Where I’ve often added value is just making sure that all board members understand the elements of a succession planning process and that they understand what the pitfalls might be, where it can be hazardous to shortcut those processes. So, ensuring that there’s a robust timeline and process for succession planning to make sure that there’s a smooth transition. CHROs bring world-class expertise in that arena.
Boards also are way more focused now not just on C-Suite succession but on making sure that the companies have their most talented people in the most critical roles and then providing oversight into who is in those roles and how they’re doing. It is a particular area of expertise that CHROs bring—culture and engagement and different ways you can go about measuring it and how you can get underneath the surface. The other obvious one is executive compensation.
The great thing about bringing CHROs onto boards is that most of them sit at the table of the boards they’re on. So they understand all the dynamics of management-board relationships and how to make sure that you really have good conversations and good processes in place.
Do you think the HR chief sometimes has to play peacemaker between the board and management?
I would raise a little caution with that. If I were advising, for example, a CHRO, [I would say] that is not necessarily an appropriate role to play. The lead director or the non-executive chair, that role is the liaison between management and the board. When you have too many people calling each other, that can lead to dysfunction. But I do think that CHROs can offer up helpful advice to the board. For example, the lead director might call them and say, “What can we, as a board, do to help a new CEO be more successful?” And if they then have the courage to speak up and offer insights around that, it can be enormously productive and helpful. So CHROs can play a role. At Merck, I would have very productive conversations with the comp committee chair around business and talent strategy and why we were looking at compensation programs the way we were, outside of some of the traditional comp committee meetings. The CHROs sit at the table each and every day, and again, they’re there to help the team be more effective. There’s a great role they can play in providing insights to the board that would be helpful. But getting in the middle of managing conflicts? I would say do that at your own peril.
When you were a CHRO sitting on outside boards, what was an example of how your HR expertise proved beneficial?
The biggest one I can think of is around succession planning. And I say that because, on the Yum! board in particular, I’ve been involved in two succession planning processes now. So, just bringing that expertise to the table around making sure that the timing and the succession-planning process makes sense, or oftentimes the board will want to bring in an advisor, and I’ve been helpful with opining on who the right advisors might be, the potential pitfalls. I’ve been through multiple C-Suite succession processes at Merck and had the opportunity to work closely with the board on a very successful CEO succession and transition, so just bringing that depth of experience to the table in a constructive way to help a board, that’s where I really brought a lot of expertise. And even more broadly, C-Suite succession and how do you think about different organizational models as you’re trying develop potential CEOs or C-Suite successors? What are different ways that you can develop people? How do you think about redesigning an organization to create opportunities for people? When do you look out versus in?
You mentioned that “altitude line” you don’t want to cross—is it hard to not cross that line when it comes to those issues that you’re living day to day?
The advantage that CHROs have is that they’ve sat at board meetings, because most CHROs attend board meetings now. As a result, you have a chance to see in real time board members who maybe overstep their boundaries or are asked questions more in an accusatory manner versus one where they’re truly trying to be helpful. So, many CHROs know what it’s like to be on the other side, what it’s like to be management, and all of a sudden board members are going way too deep in a topic or overstepping their boundaries. I would say most are much more sensitive to that. We’ve all been on the other side of it. And it’s funny, you don’t forget the fact that management huddles after board meetings are over, and they do their own debriefing on what happened at the board meeting and why. You’d be foolish as board members not to assume that they’re talking about individual board members and either how helpful they were or not helpful. You remember that.
You chair Yum!’s nom/gov committee. What advice would you have for fellow directors trying to recruit a sitting CHRO—what specifically should they be looking for in that person?
I’m looking for that strategic business advisor, a person who doesn’t just come in with a narrow vertical slice of functional expertise but who understands the business, can think very broadly about issues, ask questions that are outside of the HR domain. You can oftentimes tell that in an interview based on how many questions they ask about the business versus about HR issues. You’re looking for a business leader who happens to have an expertise in HR.
You’ve also got to do due diligence like you would on anything else and look at the companies that they’ve worked in and the track record those companies have had in tracking, developing, retaining talent, succession planning and engagement of talent. So, where have they worked and what has their track record been?
Also, the great news today is that all the board members see CHROs in action. I would urge them to go beyond just what headhunters might say but also speak to other board members who sit on the boards of those companies as CHROs and get their point of views about whether they think this person would make a good board member. Do they have the courage to speak up and offer their insights? Can they influence, based on their point of view, their high EQ and, as I call it, low ego—are they humble, authentic?
I do think that HR is an absolutely essential skillset and capability to have on a board these days, very much like we’re all looking for people with depth in technology, given how digital companies are trying to evolve their digital strategies and accelerate them. I think the same thing with HR. But you have to make sure you’ve got the right CHRO at the table and the right business leader at the table. I would not shortcut that due-diligence process.
What are the top HR challenges at the board level?
Getting the right skillsets on the board is going to continue to be a challenge. Given all the challenges in the marketplace, the investors, the activists, etc., that are on boards, just making sure that you’ve got the right members on the board with the right skills and capabilities. The worry I have is that, now they want a cyber expert, now they want a climate expert, they want all these experts that, again, if they’re not true business leaders and can’t look at an organization end to end, I worry that you’ll have all of these slices of expertise, but they’re not really capable of managing a company end to end.
And then I look at this whole challenge now of the future of work. Where are people going to be? Where are we going to be able to source talent from? And what are the capabilities that companies will need, and how are those capabilities evolving over time? These are huge issues. And then coupled with the changing expectations of workers—I have four kids who are millennials, and it’s just interesting to hear them opine on whether or not they’ll go back to work, and there’s a whole different set of expectations than when I grew up.
[Workers today] are just not willing to tolerate bullying or not being engaged or inspired in the workplace. They have more choices than perhaps we had, or perhaps we thought we had. And then you’ve got certain CEOs and other leaders who just want to get back to the way things were—and I don’t think we’re ever going to get back to the way things were. We’ve had this giant experiment over the last two years, and the more enlightened leaders are going to look at how to move forward and still maintain innovation, collaboration, all the things that make companies great. But it’s going to be done differently.
And we don’t know how that will be done?
No, it’s a work in progress, and people have a lot of experiments going on, but I don’t think we know yet. That’s why this is going to continue to be a huge issue at the board level.