Magazine article Management Review

Human Resources in the Boardroom

Magazine article Management Review

Human Resources in the Boardroom

Article excerpt

For each issue of Management Review, Group Editor Martha Peak and her staff identify a theme toward which a cover article can be devoted. For this issue they have chosen "Human Resources in the Boardroom." To those of us who have the privilege and responsibility of serving on boards of directors, this theme may come as something of a surprise, for the typical board agenda is addressed to other matters: financial results, investments, methods of financing, possible acquisitions, takeover threats and possibly) operations. The closest that most boards come to HR issues are recommendations from the compensation committee, and even these are often routinely received and approved.

Why, then, was this topic selected? Can it be due simply to the youthful idealism of our editorial staff Even if this is true, they are clearly on to something. After all, the ubiquitous claim in most annual report letters from the chairman is that "our people are our most important asset."

It is hard to argue with that claim. Yet for most American corporations, the downsizing phenomenon of recent years has resulted in a massive loss of human capital. One measure of the size of this trend is the development of the now nearly half billion dollar outplacement industry, created to serve only a fraction of the millions of middle managers, professionals and others who their jobs.

But a sad commentary on just how seriously top management is committed to their "most important asset" is today's common use of such terms as "head count" (sounds like body count) in referring to the unique units of that human asset, as though people represent some sort of fungible commodity.

Late last year, an article in USA Today reported that in 1985 Boston University School of Management Professor Fred Foulkes had identified 30 American firms that still maintained a full-employment tradition, but by late 1990, his list bad dwindled to eight companies, one of which admitted to anticipating layoffs in the near-term future.

Of these companies, several have aggressively (and not always wisely) offered generous early-retirement packages to help shrink their workforces; One wonders just how thoroughly these downsizing steps, and their consequences, have been considered at the board level--especially in view of the rapidly approaching skill shortage.

Corporate downsizing, of course, is now a fact of life, and few doubt its necessity. Such forces as foreign competition, technological change and productivity improvements continue to mandate leaner workforces. The question, however, is how well this process has been applied and how carefully corporations have assessed its consequences. …

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