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How Involved is Your Board in Talent Management?
Table of Contents
Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management? 2
Introduction
The Board’s Review of Broader Talent Management
Board Responsibility
Board Structure
Talent Management Data
Board Engagement in Leadership Selection
Talent Management Topics Being Discussed
Talent Management Scorecards and Measures
How Does the Board Hold Management Accountable?
CEO Succession Planning
Boards Engagement in Succession Activities
Survey Findings
Demographics
About Pearl Meyer
3
4
5
6
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8
9
10
11
12
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IntroductionOur Quick Poll survey How Involved is Your Board in Talent Management? is designed to provide organizations and their boards a perspective on how and to what degree their peer boards are involved in broader talent management issues and leadership succession planning and management. We look at this at a time when Environmental, Social, and Governance (ESG) issues are gaining directors’ attention and when boards are increasingly involved in guiding organizations to connect business strategy and growth with human capital strategy.
Survey results from 244 public, private, and not-for-profit organizations indicate that many boards do take a high-level, strategic role in talent management, predominantly in the area of leadership succession planning. Additionally, we see areas where boards can increase involvement in broader talent management and measure and hold leadership accountable for results.
We hope you find this information useful as you think about the role of your board and the importance for a connection of talent management to strategic goals in the future. If you have any questions or are interested in discussing these findings, please contact:
Kathy BaronVice [email protected]
Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management? 3
Talent Management
4Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management?
Boards Review of Broader Talent Management
Of the 244 organizations participating in the survey, 93% discussed and/orreviewed talent management issues beyond CEO succession—56% on aregular basis and 37% on an ad hoc basis.
This follows the trend of boards becoming more involved in talentmanagement, some more formally, many utilizing a more informal review.
Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management? 5
7%
37%56%
Does the board currently discuss/review your organization’s talent management issues, beyond
CEO succession?
No Sometimes, on an ad hoc basis Yes, on a regular basis
Board Responsibility
Compensation committees have been expanding their oversight in the talentmanagement area (42% of survey respondents). This is likely a natural outgrowthof their executive compensation responsibilities.
This responsibility does not fit neatly into most of the standing board committees.Most commonly it is found in the compensation committee or full board/executivesessions (85%); however, for 11% of respondents the responsibility falls with thenominating/governance committee, most likely related to CEO successionresponsibility.
Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management? 6
4%
1%
11%
42%
43%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Other/Ad Hoc
Risk Committee
Nominating/Governance Committee
Compensation Committee
Full Board/Executive Session
Which board entity has responsibility for broader talent management review?
Board Structure
Approximately half of our survey participants responded to this question ofchanging board structure to incorporate talent management responsibilities.Of those responding, a majority (70%) have not altered their board structureto incorporate talent management oversight.
Approximately 20% of compensation committees have taken on newresponsibility and some have renamed the committee to reflect that change.
A handful of respondents who selected “other” stated that the compensationcommittee has had this responsibility for years.
Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management? 7
6%
70%
5%
3%
16%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Other
No
Yes, we have revised charter of another boardcommittee
Yes, we have renamed committee and revisedcharter
Yes, we have revised compensation committeecharter and kept name
Have you changed your board structure to reflect talent management oversight?
Talent Management Data
Of the 128 organizations who share information with the board, a majority share summary information/data, one quarter provide all information, and a small group do not have a formal process to share information.
Frequency of discussing talent management issues/metrics/risks is most typically on a yearly basis (38%) but varies widely with a portion (21%) sharing ad hoc.
Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management? 8
12%
65%
23%
0% 10% 20% 30% 40% 50% 60% 70%
No formal sharing of information
A summary report ofinformation/data is provided
All information is provided
What level of talent management data/information does the committee
share with the full board?
3%
21%
38%
19%
19%
1%
0% 10% 20% 30% 40%
Other
Ad Hoc
Yearly
Twice per Year
Quarterly
Monthly
How often does your committee/full board discuss talent management issues/metrics/risks beyond CEO
succession?
Board Engagement in Leadership Selection
A clear majority (75%) limit involvement to oversight of the management team and information on the talent pipeline status/health.
Additionally, 13% responded “other” with the general theme being the board is involved in selection of c-suite or key executive positions.
Lastly, a small percentage (13%) feel they are very engaged in the selection of individuals.
Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management? 9
13%
75%
13%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Other
We have oversight of the management team andrequest information on the pipeline status
We have an engaged role in the selection ofindividuals
What is the level of committee/full board involvement in talent/succession?
Talent Management Topics Being Discussed
The organizations responding to this survey discuss a wide range of talent management topics. 228 of the 244 respondents reported talking about at least one of the talent management topics. Highest prevalence of discussion topics were leadership development, succession 2-3 levels below CEO, and diversity & inclusion, followed closely by culture and employee engagement.
Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management? 10
6%
56%
57%
70%
62%
70%
68%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Other
Employee Engagement
Culture
Diversity and Inclusion
Talent Pipeline Health (e.g., hiring,promotions, turnover)
Leadership Development
Succession two to three levels below theCEO
What topics of talent management are discussed?
Talent Management Scorecards and Measures
Formal talent scorecard review occur at only 20% of organizations participating in the survey.
For those organizations with a scorecard, the measurement categories include:• Hiring, promotion, and retention measures by diversity and gender
categories;• Succession readiness, percentage of leadership positions filled internally,
and high performer retention• Talent pipeline health, including missing talent and skills, performance
levels• Pay and performance equity• Employee engagement
Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management? 11
80%
20%
Does the committee/full board regularly review a talent management scorecard?
No Yes
How Does the Board Hold Management Accountable?
In the majority of reporting organizations (62%) there are no formal measures in place. Many boards are grappling with how to measure and hold the CEO and executive leadership team accountable.
For those that do have measures, many include in short-term plans and some include in both short- and long-term incentive plans.
One organization states under “other” that they include talent management goals as part of the key performance indicators for senior leaders.
Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management? 12
5%
4%
8%
21%
62%
0% 10% 20% 30% 40% 50% 60% 70%
Other
In long-term incentive calculations
In short-term/annual incentive plans as a specificnumeric goal
In short-term/annual incentive plans as adiscretionary measure
No formal measures
How does the board hold management accountable for talent management?
CEO Succession
13Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management?
CEO Succession Planning
Given the current pandemic, there is encouraging news for the organizations in our survey as 88% have emergency and temporary succession plans for the CEO (25%) and the CEO plus other key executive roles (63%).
92% of the organizations that have emergency/temporary succession plans had existing plans that were reviewed/updated. Only 8% created a new succession plan.
Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management? 14
12%
63%
25%
Does your board have a plan for CEO and other key executives' temporary/emergency
succession?
No Yes, CEO and other key executive roles Yes, CEO only
92%
8%
Was the emergency/temporary CEO succession plan created in response to
COVID-19?
No, we reviewed/updated an existing plan
Yes, we created a new emergency/temporary succession plan
Boards Engage in Succession Activities
80% of boards in our survey engaged in some form of CEO succession planning and management. The most prevalent forms of engagement included:• Regular review of high potential talent;• High potential exposure to the board through presentations at board meetings;• Social interactions with high potentials; and• Regular reviews of the leadership succession plan.
Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management? 15
8%
19%
32%
28%
17%
49%
51%
27%
49%
0% 10% 20% 30% 40% 50% 60%
Other
There are no specific actions/activitiesrelating to CEO succession planning
Selection of c-suite leaders
Board on-site visits
Mentoring from board member(s)
Dinner, lunch, other social interactions
Asking high-potentials to present to boardon specific topic(s)
Regular review of diversity metrics fortalent pipeline
Regular review of high potential talent
As part of the board’s role in CEO succession planning/management, does your board engage in?
Survey Findings
Boards do appear to be paying attention to talent management issues as they relate to their responsibility for oversight of the organization’s strategic plan.
A majority have formal responsibility for broader talent management and deeper dive succession planning but many processes are ad hoc and informal.
One area of potential improvement for boards is increasing the review of a talent management scorecard on a yearly or semi-yearly basis as well as creating a way to hold the CEO and executive leadership teams accountable for talent management and succession planning/management results.
Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management? 16
Survey Demographics
17Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management?
Demographics by Ownership and Board Membership
18Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management?
12%
26%62%
Ownership
Private, not-for-profit Private, for-profit Public
45%
55%
Respondents: Board Member vs Employee
Outside Director Employee
Total survey participation = 244 organizations
Demographics by Size and Industry
19Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management?
14%2%
1%8%
5%3%
6%10%
34%4%
9%5%
0% 5% 10% 15% 20% 25% 30% 35% 40%
OtherUtilities
TransportationTechnologyReal Estate
MaterialsIndustrial
HealthcareFinancial
EnergyConsumer
Business Services
Industry
5%
2%
7%
16%
20%
23%
10%
17%
0% 5% 10% 15% 20% 25%
$30B or greater
$20 billion to less than $30 billion
$10 billion to less than $20 billion
$3 billion to less than $10 billion
$1 billion to less than $3 billion
$300 million to less than $1 billion
$100 million to less than $300 million
Under $100 million
Revenue/Asset Size
Pearl Meyer is the leading advisor to boards and senior management on the alignment of executive compensation with business and leadership strategy, making pay programs a powerful catalyst for value creation and competitive advantage. Pearl Meyer’s global clients stand at the forefront of their industries and range from emerging high-growth, not-for-profit, and private companies to the Fortune 500 and FTSE 350. The firm has offices in Atlanta, Boston, Charlotte, Chicago, Houston, London, Los Angeles, New York, Raleigh, and San Jose.
About Pearl Meyer
Pearl Meyer Quick Poll: How Involved is Your Board in Talent Management? 20
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