The proportion of board directors with CHRO experience at Russell 3000 companies grew following the COVID-19 pandemic, according to a report released Aug. 30.
The report is from Equilar, a provider of executive compensation and corporate governance data, which examined the prevalence of CHROs serving on Russell 3000 boards. The Russell 3000 Index measures the performance of the 3,000 largest publicly traded companies. It includes healthcare organizations such as CVS Health, Anthem, Moderna, Cigna, and Stryker across sectors like pharmaceuticals, biotechnology, medical devices, and insurance.
Equilar found that the prevalence of new directors with CHRO experience serving on Russell 3000 boards declined from 2.6% in 2022 to 1.8% in 2023. Analysts noted that numerous companies, such as technology giants Meta and Google, have scaled back their human capital initiatives over the last year, primarily in response to economic downturns. They do not directly link the slowdown in appointments to such developments but characterize it as a trend worth watching.
A different pattern emerged when Equilar examined the overall percentage of Russell 3000 directors with CHRO experience. That number increased 22.2% from 2022 to 2023.
Equilar went on to explain the inconsistency.
"The evolving role of CHROs on corporate boards reflects the complex dynamics between talent management and broader business strategies. While the decline in new board appointments of directors with CHRO experience in 2023 may raise questions, it's essential to recognize the ongoing value these leaders bring to the table," the report reads.
"The overall increase in the percentage of Russell 3000 directors with CHRO experience suggests that, even amidst economic shifts and a reevaluation of human capital initiatives, the expertise of HR leaders remains critical to shaping the future of public companies. As companies continue to navigate an uncertain landscape, the strategic insights of CHROs and other HR leaders will likely become increasingly vital in driving long-term success and fostering resilient corporate cultures."
Jim King, senior partner and board services practice leader at WittKieffer, an executive search and leadership advisory firm, did not have data on CHROs on hospital and health system boards. However, he noted that the percentage is small, and agreed there's a need for more HR leaders on boards.
"Coming out of COVID, more boards expressed an interest in recruiting members with human resources and people management experience," he told Becker's. "Employee health and well-being was of course a top priority of hospitals and health systems at the time.
"While the COVID crisis has passed, workforce issues in healthcare persist. Trying to maintain a full staff and keep them happy is keeping boards and executives up at night. It makes sense to have someone on the board who can think strategically about how board decisions impact the workforce and to be an unwavering advocate for employees. Organizations too often fail to consider the full human impact of their decisions and having an HR leader on one's board can ensure that doesn't happen. Therefore, while few healthcare boards currently have an HR representative as part of their membership, they should certainly consider it for the future. There are many reasons beyond COVID that HR representation on boards is needed."