Monday, December 14, 2009

HR Executives Increasingly Getting Seats On Boards

From the Wall Street Journal -- By Joann S. Lublin at

Earlier this fall, V. Michael Ferdinandi put out feelers about gaining board seats after he retires next year as the longtime chief of human resources for CVS Caremark Corp.

Mr. Ferdinandi says he quickly attracted interest from four publicly traded companies. Experience in human resources "is probably more valuable than I thought," he explains. He declined to name the companies.

Once considered denizens of a corporate backwater, more human-resources executives are being tapped to serve as outside directors because many have become strategic players with bottom-line impact. U.S. companies wooing them seek their insight on hot-button issues such as executive pay, management succession and integrating acquisitions.

At least 65 current and former human-resources managers serve as outside directors on 101 boards, a Wall Street Journal analysis found. "Ten years ago, the number would have been no more than a half dozen," estimates Harold E. Johnson, a managing director of recruiting firm Korn/Ferry International who specializes in HR.

Search firm Spencer Stuart says 7% of its U.S. board placements in the first 11 months of this year were present or prior heads of HR, up from 3.8% in 2004. Recruiters say demand is likely to grow amid increased government and investor scrutiny of boards, pay practices and chief-executive succession.

Even human-resource specialists are seeking boardroom help. Consulting firm Hewitt Associates Inc., which advises other companies on HR practices, last year recruited William J. Conaty, a retired HR chief at General Electric Co., for its board. Hewitt wanted Mr. Conaty's assistance attracting and developing top talent, says CEO Russell P. Fradin. "Bill has seen every HR practice known to man," Mr. Fradin adds.

HR on Board

See a list of 65 current and former HR managers serving as outside directors on boards.
Mr. Conaty says he declined directorship feelers from five bigger companies. He quickly dove into Hewitt's succession-planning program: At his first board meeting, in June 2008, he criticized Tracy Keogh, Hewitt's senior vice president of HR, for failing to detail specific strengths, weaknesses and developmental needs for each top executive.

Getting feedback from "one of the renowned folks in succession planning was a little daunting," Ms. Keogh says. But she says she values Mr. Conaty's counsel and "he never gets into the day-to-day running of things."
At Mr. Conaty's suggestion, Ms. Keogh began giving Hewitt's board compensation committee a quarterly minitalent review that includes less-visible rising stars. She also improved her latest succession-planning presentation for the full board, he says. Directors "had a clearer picture on where the gaps were."
Other directors with HR backgrounds advise managers about takeovers. When VF Corp. bought North Face in 2000, director Ursula Fairbairn says she insisted that the apparel maker communicate often with North Face staffers.

The advice reflected lessons Ms. Fairbairn gleaned about melding cultures from nine years running human resources at American Express Co. She retired in 2005, but remains a director of VF, Sunoco Inc. and Air Products and Chemicals Inc.

Ms. Fairbairn recently stirred objections from certain fellow directors at VF and Sunoco when she recommended hiring independent pay consultants to replace board advisers that counseled management, too.

Ms. Fairbairn says she wanted to avoid the perception of a conflict of interest. The boards of both companies ultimately agreed.

Juggling board duties can prove tricky when HR officers hold demanding day jobs—as Laurie Siegel discovered. The head of human resources for Tyco International Ltd. joined the board of telecommunications company Embarq Corp. in 2006.

Late the following year, Ms. Siegel sought the blessing of Tyco CEO Edward Breen before agreeing to lead the search for a new Embarq chief executive. He told her to get it over fast, she recalls.

Mr. Breen says she promised that the search "wouldn't drag on."

Ms. Siegel worked 20 hours a week on the search for roughly two months, often interviewing prospects on weekends. In March 2008, Embarq chose interim chief Tom Gerke for the permanent position. As chair of the pay panel, she led contract talks with him.

Some companies pluck HR experts from their boards for interim management gigs. In April, Starbucks Coffee Co. put Olden C. Lee in charge of human resources temporarily to replace an executive who quit because of a family illness. Mr. Lee is a retired top personnel officer for PepsiCo Inc.'s Taco Bell and KFC divisions. Mr. Lee says he managed the search for a permanent replacement, who arrived Nov. 14, and is now working on the transition.

Mr. Lee also helped stabilize an organization hurt by major staff cuts, according to Starbucks lead director Myron "Mike" E. Ullman III, CEO of J.C. Penney Co. Mr. Ullman was so impressed he now wants Penney HR chief Mike Theilmann to seek an outside board seat.
Write to Joann S. Lublin at

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