Why Are More CHRO's In Board Rooms Today? People, Risk, And More
Recent studies and board programs illustrate the increasing prominence and participation of chief ... More human resource officers (CHROs) on company boards of directors.
Recent studies and board programs illustrate the increasing prominence and participation of chief human resource officers (CHROs) on company boards of directors. As intangible assets represent a larger portion of company valuations, board skill requirements expand in a changing world and people play a larger role in driving material levels of performance and risk, effective boards incorporate human capital measurement into governance processes and engage those with HR expertise to guide them.
NACD's 2024 Inside the Public Company Boardroom report suggested a growing need for non-traditional skills on boards. These include technology, human capital, cybersecurity and digital skills. Leadership skills also are on the rise, according to the study. Another NACD piece suggested innovation skills are critical to board success over time. All these skills are highly people-focused and dependent.
The closing session of a new Corporate Governance for Chief Human Resource Officers course offered by the UC Irvine Paul Merage School of Business Leadership Development Institute and the UCLA Anderson School of Business Human Resources Roundtable (HARRT) focused on global board trends for 2025 and beyond. The central theme was people governance in a constantly changing business environment. Topics included people and risk implications of geopolitical factors, AI, cyber, quantum computing and talent shortages.
Matteo Tonello from The Conference Board recently posted an article in Corporate Governance Law at Harvard.edu on how CHRO-board engagement is evolving at publicly traded companies in the U.S. and Europe. Nearly 70% of companies surveyed reported increased CHRO engagement with the board over the past three years. Additionally, the share of directors with human capital expertise at publicly traded companies in the U.S. is rising (38% of S&P 500 and 25.5% of Russell 3000 companies in 2024).
Recent research from a collaboration between WTW and Directors and Boards explored the evolution of effective stewardship among boards. According to the study, the top five topics by business materiality that board members currently spend the most time discussing are:
• Financial performance monitoring and reporting
• Purpose and strategy development
• Human capital and culture
• Innovation and transformation
• Enterprise risk management
WTW's 2025 Global Directors and Officers Survey Report listed health and safety as the top risk for board members for the second year in a row, followed by data loss and cyber attacks. All three of these factors are directly connected to human capital governance (for example, there are strong links between employee wellbeing and data and cyber breaches).
According to the Directors and Boards study, directors are observing a shift in the topics that boards consider material to the business and their fiduciary duties. While financial performance monitoring and reporting remain the top priority, board members also find it important to spend more time in three areas material to the business: leadership succession and development; purpose and strategy development; and innovation and transformation. This combination of material issues further requires directors to focus on human capital factors. Effective boards use a variety of dashboards and trackers to monitor organization performance against key people indices (e.g. productivity, engagement, skill gaps, wellbeing, safety, pay and benefits competitiveness).
The Conference Board study reports that the CHRO's role is expanding to encompass greater responsibility for corporate governance as boards and senior management increasingly emphasize human capital strategies and as investors', regulators' and customers' expectations change. The study also suggests that boards and CEOs expect CHROs to act as enterprise leaders who align human capital strategy with financial, operational, and risk priorities and drive workforce strategy, succession planning, mergers and acquisitions, and business transformation in collaboration with the wider C-suite.
According to the study, key expectations for CHROs interacting with boards include:
• Business and financial strategy
• Workforce and labor market strategy
• Operational efficiency and leveraging analytics
• CEO and leadership succession planning
• Support for mergers and acquisitions and growth strategy
The top workforce-related topics cited as gaining prominence in CHRO-board interactions in the next three years are:
• Addressing generational shifts in the workplace (61%)
• AI and automation impact on the workforce (49%)
• Employee engagement and retention (33%)
• Mental health and employee wellbeing (33%)
• Reskilling and upskilling for future workforce needs (31%)
According to the study, effective CHROs take several actions when interacting with boards:
• Build professional credibility and trust with the board
• Demonstrate business acumen and financial expertise
• Foster informal and ongoing engagement with board members
• Steer board discussions on human capital
• Cultivate strategic alignment with the CEO before engaging the board
Effective directors and CEOs take the following actions when addressing human capital governance topics:
• Establish a direct board-CHRO relationship
• Enhance the depth and quality of board discussions on human capital strategy
• Support the CHRO in executive compensation and succession planning discussions
• Champion the people strategy to the board
• Build trust through open and honest dialogue
• Empower the CHRO as a peer in the C-suite
The Directors and Boards study also reports that effective directors and CEOs foster relationships with their CHROs outside the boardroom. This includes forging partnerships with other functional leaders such as legal, finance and risk as part of the CHRO's development plan so that together they build more business-oriented and multidisciplinary narratives about human capital risks and opportunities. They reduce board committee silos to find a common voice about human capital risks and opportunities across board committees.
Effective boards understand the relevance and value of human capital governance, engaging CHROs and board members with human capital experience to implement effective governance practices. These boards integrate human capital governance into their practices, achieving sustainable growth and navigating the complexities of today's markets.
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