Most companies have long said that their employees are their most valuable asset. COVID-19; the difficulty of finding, developing, and retaining talent in the current environment; and an increasingly knowledge-based economy have highlighted the importance of talent – and generated the phenomenon of employee empowerment – causing many companies and boards to rethink the employee value proposition.
While the most dramatic change in the employee value proposition took place during the pandemic, employee empowerment hasn’t abated, and employees are demanding fair pay and benefits; work-life balance, including flexibility; interesting work, and an opportunity to advance.
They also want to work for a company whose values – including commitment to a range of ESG issues – align with their own.
In 2023, we expect continued scrutiny of how companies are adjusting their talent development strategies to meet the challenge of finding, developing, and retaining talent amid a labor-constrained market.
- Does the board have a good understanding of the company’s talent strategy and its alignment with the company’s broader strategy and forecast needs for the short and long term?
- What are the challenges in keeping key roles filled with engaged employees?
- Which talent categories are in short supply and how will the company successfully compete for this talent?
- Does the talent strategy reflect a commitment to diversity and inclusion at all levels?
- More broadly, as millennials and younger employees join the workforce in large numbers and talent pools become globally diverse, is the company positioned to attract, develop, and retain top talent at all levels?
In addition, the Corporate Sustainability Reporting Directive (CSRD) imposes companies to report on information related to its key intangible resources and to explain how the business model of the company fundamentally depends on such resources and how such resources are a source of value creation for the company. This could include information about employees’ skills, competences, experience, loyalty to the company and motivation for improving processes, goods and services.
Pivotal to all of this is having the right CEO in place to drive culture and strategy, navigate risk, and create long-term value for the enterprise. The board should help ensure that the company is prepared for a CEO change – whether planned or unplanned, on an emergency interim basis or permanent. CEO succession planning is a dynamic, ongoing process, and the board should always be focused on developing a pipeline of C-suite and potential CEO candidates. Succession planning should start the day a new CEO is named. This is also true for other key governance roles, including the chairman of the board, independent directors, and other key executives.
- How robust are the board’s succession planning processes and activities?
- Has the succession plan been updated to reflect the skills and experience necessary to execute against the company’s long-term strategy? In many cases, those strategies have changed over the last two years.
- How does the board get to know the high-potential leaders two or three levels below the C-suite?
