Investors Launch New Push on Human Capital


Agenda | June 11, 2018

The Agenda article, “Investors Launch New Push on Human Capital," quoted Russell Reynolds Associates Consultant Constantine Alexandrakis. Investors are pushing companies to disclose information on their human capital management, and he explains that investors take a hard look at these issues, including addressing concerns about inclusiveness at the board level. The article is excerpted below.

Investors are pushing companies to disclose more information about how they attract, retain and manage their people. A focus on board oversight of human capital, driven by issues such as the #MeToo movement and the dynamic millennial workforce, is a focal point for many investors, including funds with trillions in assets.


Indeed, the “war for talent” is prominent as companies face “ever-accelerating change and uncertainty,” writes Constantine Alexandrakis, leader of the global leadership and succession practice at executive search and leadership advisory firm Russell Reynolds Associates, in an e-mail. “These companies then disclose it as a strategic risk to be considered and investors ask hard questions about what boards are doing to attract and retain top talent.”


Diversity is a top issue for investors these days. Kamerick says there is a continued focus on creating a diverse workforce with international experience that is current with technology trends. Board diversity has also been a hot topic, prominent in shareholder proposals in recent years. Alexandrakis says this includes the inclusiveness of the board’s decision-making process, board culture and effectiveness of board processes.


“Some top investors have been open about voting against specific board members, sometimes targeting nominating committee chairs, on boards who fail to address concerns around board diversity or other important human capital issues,” Alexandrakis says. “As a result, many top boards are increasingly diligent about benchmarking specific board practices against a peer group and seek to proactively engage top investors to communicate the board’s thinking on issues known to be important to them.”


Alexandrakis says it’s important for boards not to blur the lines between management and oversight in this area; however, he sees more boards today experimenting with different tactics for observing company activities between board meetings. “Not surprisingly, [companies] are increasingly seeking … board-focused human capital advice about how to balance objective oversight with the need to spend more time understanding top talent capabilities,” Alexandrakis says. Morris says that, ultimately, companies can benefit from paying greater attention to human capital.

To read the full article, click here.