What a CHRO Will Bring to the Tesla Board
Over the holidays, on Dec. 28., Tesla announced the appointment of two new independent directors to its board: Oracle’s Larry Ellison and Walgreens Boots Alliance’s Kathleen Wilson-Thompson.
Not surprisingly, Ellison, the founder and chairman of Oracle who describes himself as a close friend of Tesla CEO Elon Musk and is a personal investor in Tesla, owning 3 million shares of stock, received the lion’s share of the attention in the press. But as a few of stories covering the news have also suggested, perhaps the more interesting of the two appointments was that of Wilson-Thompson, who currently serves as the global head of HR at Walgreens Boots Alliance.
In conducting the search, Tesla said it focused on identifying candidates with sound global experience who also hold a strong personal belief in Tesla’s mission of accelerating the world’s transition to sustainable energy.
Tesla’s board concluded that both Ellison and Wilson-Thompson—who will bring greater diversity to the board as an African-American woman—definitely fit the bill.
(The electric-car manufacturer was required to name two independent directors to its board as part of a settlement reached last September with the Securities and Exchange Commission after the commission charged the company with securities fraud.)
In a post on its corporate blog, Tesla specifically cited Wilson-Thompson’s global HR-leadership experience and her passion for building and promoting great workplaces.
Perhaps not coincidentally, Tesla’s workplace practices have come under scrutiny in recent months, with one recent New York Times story reporting repeated instances of racial discrimination and harassment.
“Interviews, internal communications and sworn legal statements filed by more than two dozen current or former Tesla employees and contractors describe a wide range of concerns among some African-American workers at the factory in Fremont, including threats by co-workers, demeaning assignments and barriers to advancement,” the story said. “Three lawsuits by former workers accusing Tesla of failing to curb racial discrimination and harassment have been filed since early last year … .”
Tesla rejected the workplace portrait painted in the complaints, saying it was inaccurate, the story said.
The company’s workplace-safety practices have also recently come under attack, with California’s Division of Occupational Safety and Health opening two new inspections into conditions at Tesla’s factory in Fremont.
Wilson-Thompson, who also serves on the board of Vulcan Materials Co., has held senior HR-leadership postions at Walgreens since January 2010. Prior to that, she held HR-leadership posts at Kellogg Co.
Dan Kaplan, a senior client partner in Korn Ferry’s CHRO practice, believes that Wilson-Thompson’s appointment to the Tesla’s board is indicative of the renaissance HR has had over the past decade.
HR leaders often possess a “unique set of skills, capabilities and experience” and are thereby able to add significant value to a board, says Kaplan.
Specifically, HR leaders can bring well-honed judgment on people and organizational dynamics, he says, noting that the very best ones are able to “speak truth to power” and hold “C-suite leadership accountable to themselves, each other, shareholders and the board. They are able to have tough conversations with leaders and CEOs that most executives aren’t comfortable having.”
Kaplan points out that adding HR experience to the board is an approach he and others at Korn Ferry encourage.
Statistically, he adds, it happens a lot slower than we think it should. “If you look at the Fortune 1000, if you look at the number of external directors, it’s in the thousands; but if you look at the number of CHROs [on boards], it’s going to be south of 50.”
But some predict more and more companies will follow in the footsteps of firms such as Tesla, as they begin to recognize the value of having a CHRO perspective on their boards.
“There’s been a huge push in recent years to diversify boards with more women and people of color,” says Tanya Axenson, vice president of human resources at Allegis Group, an international talent management firm based in Hanover, Md. “But diversity matters not just from a gender or race perspective, but also from the standpoint of diversity of thought. The more perspectives you can have on the board, the better it is for the business.”
Given the culture issues many organizations are facing today, Jason Hanold, whose boutique search firm based in Evanston, Ill., specializes in CHROs positions, predicts the demand for CHROs on corporate boards will increase in the coming months and years. (His firm, Hanold Associates, was responsible for recruiting Wilson-Thompson to Walgreens.)
So, what advice does Korn Ferry’s Kaplan have for CHROs serving on boards?
They should approach the role in broad terms, he says. “Don’t overcompensate for being the HR person in the room,” he explains. “Resist the urge to be the comp expert or the HR person in the room—and serve on committees other than remuneration.”